Financial Intelligence for HR Professionals: What You Really Need to Know About the Numbers

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As an HR manager, you're expected to use financial data to make decisions, allocate resources, and budget expenses. But if you're like many human resource practitioners, you may feel uncertain or uncomfortable incorporating financials into your day-to-day work.

Using the groundbreaking formula they introduced in their book Financial Intelligence: A Manager's Guide to Knowing What the Numbers Really Mean, Karen Berman and Joe Knight present the essentials of finance specifically for HR experts.

Drawing on their work training tens of thousands of managers and employees at leading organizations worldwide, the authors provide a deep understanding of the basics of financial management and measurement, along with hands-on activities to practice what you are reading. You'll discover:

· Why the assumptions behind financial data matter
· What your company's income statement, balance sheet, and cash flow statement really reveal
· Which financials may be needed when you're developing a human capital strategy
· How to calculate return on investment
· Ways to use financial information to better support your business units and do your own job
· How to instill financial intelligence throughout your team

Authoritative and accessible, Financial Intelligence for HR Professionals, empowers you to "talk numbers" confidently with your boss, colleagues, and direct reports -- and understand how the financials impact your part of the business.

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Product Details

  • ISBN-13: 9781422119136
  • Publisher: Harvard Business Review Press
  • Publication date: 3/25/2008
  • Series: Financial Intelligence
  • Pages: 320
  • Sales rank: 489,380
  • Product dimensions: 6.00 (w) x 9.20 (h) x 0.60 (d)

Meet the Author

Karen Berman and Joe Knight founded the Business Literacy Institute. They train managers at some of America's biggest and best-known companies. John Case has written or collaborated on several successful books. He has also written for Inc., Harvard Business Review, and other business publications.
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Table of Contents

Preface: What Is Financial Intelligence?     xi
The Art of Finance (and Why it Matters to HR)
You Can't Always Trust the Numbers     3
Spotting Assumptions, Estimates, and Biases     10
Why Increase Your Financial Intelligence?     17
Part One Toolbox: Getting what you want; Knowing the players; Human due diligence     29
The (Many) Peculiarities of the Income Statement
Profit Is an Estimate     35
Cracking the Code of the Income Statement     41
Revenue: The Issue Is Recognition     49
Costs and Expenses: No Hard-and-Fast Rules     55
The Many Forms of Profit     67
Part Two Toolbox: Variance; Percent calculations; Line of sight     73
The Balance Sheet Reveals the Most
Understanding Balance Sheet Basics     79
Assets: More Estimates and Assumptions (Except for Cash)     85
On the Other Side: Liabilities and Equity     95
Why the Balance Sheet Balances     100
The Income Statement Affects the Balance Sheet     103
Part Three Toolbox: Employees as assets; Expenses vs. capital expenditures     108
Cash Is King
Cash Is a Reality Check     113
Profit [not equal] Cash (and You Need Both)     117
The Language of Cash Flow     124
How Cash Connects with Everything Else     128
Why Cash Matters     136
Part Four Toolbox: Free cash flow; Compensation and bonus plans     140
Ratios: Learning What the Numbers Are Really Telling You
The Power of Ratios     145
Profitability Ratios: The Higher the Better (Mostly)     151
Leverage Ratios: The Balancing Act     157
Liquidity Ratios: Can We Pay Our Bills?     161
Efficiency Ratios: Making the Most of Your Assets     164
Part Five Toolbox: Key business ratios; Key HR ratios; Understanding percent of sales; Ratio relationships     171
How to Calculate (and Really Understand) Return on Investment
The Building Blocks of ROI     177
Figuring ROI: The Nitty-Gritty     184
Part Six Toolbox: Step-by-step analysis of capital expenditures; Deciding about outsourcing     195
Applied Financial Intelligence: Working Capital Management
The Magic of Managing the Balance Sheet     201
Your Balance Sheet Levers     204
Homing In on Cash Conversion     210
Part Seven Toolbox: Understanding accounts receivable aging     214
Creating a Financially Intelligent HR Department (and Organization)
Financial Literacy, Transparency, and Corporate Performance     217
Financial Literacy Strategies      223
Part Eight Toolbox: The basics of Sarbanes-Oxley; HR and Sarbanes-Oxley     230
Sample Financials     233
Exercises to Build Your Financial Intelligence-Income Statement; Balance Sheet; Cash Flow Statement; Ratios     237
Kimberly-Clark and FedEx Financial Statements     265
Notes     273
Acknowledgments     275
Index     279
About the Authors     293

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