INSEAD Library

Includes bibliographical references and index

Digitized

Financial Intelligence for Entrepreneurs What You Really Need to Know About the Numbers Contents Preface: What This Book Is About xi PART ONE THE ART OF FINANCE (AND WHY IT MATTERS) 1. What Is Financial Intelligence? 2. A Primer on the Art of Finance Part One Toolbox: Financing your business; Building a financial staff 3 11 19 PART TWO THE (MANY) PECULIARITIES OF THE INCOME STATEMENT 3. Profit Is an Estimate 4. Cracking the Code of the Income Statement 5. Revenue: The Issue Is Recognition 6. Costs and Expenses: No Hard-and-Fast Rules 7. The Many Forms of Profit 25 30 38 43 54 Part Two Toolbox: Understanding variance; Calculating percent of and percent change 60 PART THREE THE BALANCE SHEET REVEALS THE MOST 8. Understanding Balance Sheet Basics 9. Assets: More Estimates and Assumptions (Except for Cash) 10. On the Other Side: Liabilities and Equity 11. Why the Balance Sheet Balances 12. The Income Statement Affects the Balance Sheet Part Three Toolbox: Employees as assets; Expense vs. capital expenditure 65 71 81 86 89 94 PART FOUR CASH IS KING 13. Cash Is a Reality Check 14. Profit # Cash (and You Need Both) 15. The Language of Cash Flow 16. How Cash Connects with Everything Else 17. Why Cash Matters Part Four Toolbox: Cash accounting; Free cash flow 99 103 110 114 122 125 PART FIVE RATIOS: LEARNING WHAT THE NUMBERS ARE REALLY TELLING YOU 18. The Power of Ratios 19. Profitability Ratios: The Higher the Better (Mostly) 20. Leverage Ratios: The Balancing Act 21. Liquidity Ratios: Can We Pay Our Bills? 22. Efficiency Ratios: Making the Most of Your Assets Part Five Toolbox: Which ratios are most important?; The power of percent of sales; Sustainable growth rate 129 135 141 145 148 154 PART SIX HOW TO CALCULATE (AND REALLY UNDERSTAND) RETURN ON INVESTMENT 23. The Building Blocks of ROI 24. Figuring ROI: The Nitty-Gritty Part Six Toolbox: A step-by-step guide to analyzing capital expenditures 161 168 178 PART SEVEN APPLIED FINANCIAL INTELLIGENCE: WORKING CAPITAL MANAGEMENT 25. The Magic of Managing the Balance Sheet 26. Your Balance Sheet Levers 27. Homing In on Cash Conversion Part Seven Toolbox: Working with your banker; Accounts receivable aging 183 186 191 195 PART EIGHT CREATING A FINANCIALLY INTELLIGENT COMPANY 28. Financial Literacy, Transparency, and Your Business's Performance 29. Financial Literacy Strategies 199 205 30. Putting Financial Intelligence to Work: Growing Your Business 211 Part Eight Toolbox: Open-book management; Understanding Sarbanes-Oxley 218 Appendix A: Sample Financials Appendix B: Exercises to Build Your Financial Intelligence--Income Statement; Balance Sheet; Cash Flow Statement; Ratios Appendix C: Under Armour and eBay Financial Statements Notes Acknowledgments Index About the Authors 221 225 255 263 265 269 285