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

Overview


As an IT manager, you're expected to make key decisions and recommend major investments. And that means understanding your decisions' financial impact on your company. But if you're like many information technology practitioners, you may feel uncomfortable incorporating the 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 ...

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

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Overview


As an IT manager, you're expected to make key decisions and recommend major investments. And that means understanding your decisions' financial impact on your company. But if you're like many information technology practitioners, you may feel uncomfortable incorporating the 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 IT experts.

Drawing on their work training tens of thousands of managers and employees at leading organizations worldwide, the authors illuminate the basics of financial management and measurement and provide hands-on activities for practicing 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 reveal
· How to use ratios to assess your company's financial health
· How to calculate return on IT investments
· Ways to use financial information to support your company's business units and do your own job better
· How to instill financial intelligence throughout your team

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

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Product Details

  • ISBN-13: 9781422119143
  • Publisher: Harvard Business Review Press
  • Publication date: 5/6/2008
  • Series: Financial Intelligence
  • Pages: 296
  • Sales rank: 489,402
  • Product dimensions: 6.00 (w) x 9.10 (h) x 1.00 (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?

Part 1 The Art of Finance (and Why It Matters to It)

1 You Can't Always Trust the Numbers 3

2 Spotting Assumptions, Estimates, and Biases 10

3 Why Increase Your Financial Intelligence? 17

Part One Toolbox 28

Getting what you want

The players and what they do

Part 2 The (Many) Peculiarities of the Income Statement

4 Profit Is an Estimate 33

5 Cracking the Code of the Income Statement 39

6 Revenue: The Issue Is Recognition 47

7 Costs and Expenses: No Hard-and-Fast Rules 53

8 The Many Forms of Profit 65

Part Two Toolbox 71

Variance; Percent calculations; Line of sight

Part 3 The Balance Sheet Reveals the Most

9 Understanding Balance Sheet Basics 77

10 Assets: More Estimates and Assumptions (Except for Cash) 83

11 On the Other Side: Liabilities and Equity 93

12 Why the Balance Sheet Balances 98

13 The Income Statement Affects the Balance Sheet 101

Part Three Toolbox 106

Employees as assets

Expenses versus capital expenditures

Part 4 Cash is King

14 Cash Is a Reality Check 111

15 Profit [not equal] Cash (and You Need Both) 115

16 The Language of Cash Flow 122

17 How Cash Connects with Everything Else 126

18 Why Cash Matters 134

Part Four Toolbox 138

Free cash flow

Part 5 Ratios: Learning What the Numbers are Really Telling You

19 The Power of Ratios 143

20 Profitability Ratios: The Higher the Better (Mostly) 149

21 Leverage Ratios: The Balancing Act 155

22 Liquidity Ratios: Can We Pay Our Bills? 159

23 Efficiency Ratios: Making the Most of Your Assets 162

Part Five Toolbox 168

Ratios for the business; Ratios for IT

Leading versuslagging indicators

Percent-of-sales analysis; Ratio relationships

Part 6 How to Calculate (and Really Understand) Return on Investment

24 The Building Blocks of ROI 175

25 Figuring ROI: The Nitty-Gritty 182

Part Six Toolbox 193

ROI of an IT Project

Part 7 Applied Financial Intelligence: Working Capital Management

26 The Magic of Managing the Balance Sheet 203

27 Your Balance Sheet Levers 206

28 Homing In on Cash Conversion 212

Part Seven Toolbox 216

Understanding accounts-receivable aging

Part 8 Creating a Financially Intelligent It Department (and Organization)

29 Financial Literacy, Transparency, and Corporate Performance 219

30 Financial Literacy Strategies 225

Part Eight Toolbox 231

Understanding Sarbanes-Oxley

Appendix A Sample Financials 235

Appendix B Exercises to Build Your Financial Intelligence-Income Statement, Balance Sheet, Cash Flow Statement, Ratios 239

Appendix C Kimberly-Clark and FedEx Financial Statements 267

Notes 275

Acknowledgments 277

Index 281

About the Authors 297

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