The Manager's Pocket Calculator: A Quick Guide to Essential Business Formulas and Ratios

The Manager's Pocket Calculator: A Quick Guide to Essential Business Formulas and Ratios

by Michael C. Thomsett
     
 

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As a manager, you’re called upon all the time to justify budgets, estimate returns, prepare forecasts, and many more tasks that boil down to hard numbers. And although you might be good with the concepts behind these critical management roles, what about the math itself? If you’re not working with the numbers, you’re

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Overview

As a manager, you’re called upon all the time to justify budgets, estimate returns, prepare forecasts, and many more tasks that boil down to hard numbers. And although you might be good with the concepts behind these critical management roles, what about the math itself? If you’re not working with the numbers, you’re only doing half your job—and you may be seriously hampering your career.

But you can transform yourself from a competent manager into an invaluable and irreplaceable business asset almost overnight with The Manager’s Pocket Calculator. Prepared specifically for managers in non-finance departments and roles, this potentially career-saving tool helps you perform what might be the most important facet of your job: the specific application of formulas and ratios to the management decisions you make every day. The Manager’s Pocket Calculator contains more than 100 of these formulas, complete with step-by-step instructions and clear examples, for use in:

•Preparing and justifying departmental budgets

•Explaining variances

•Determining financial requirements and analyzing performance

•Preparing financial reports and presentations demonstrating financial outcomes and estimates based on analysis of current processes, proposed expansion, cost-cutting projects, and other potential parameters

•Communicating with accounting, auditing and other financial experts both internally and externally on financial matters

•And much more

These days, your success as a manager boils down to the reality of one number: the bottom line. If you want a better understanding of (and real skill with) the numbers that influence it, you’ll find The Manager’s Pocket Calculator a practical and indispensable tool for every management decision you make.

Michael C. Thomsett is the author of The Real Estate Investor’s Pocket Calculator, The Stock Investor’s Pocket Calculator, and dozens of other books on business, project management, investing, and accounting. He is a former accounting and financial services professional and consultant.

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Editorial Reviews

From the Publisher

"If you find preparing and justifying budgets, or even sitting down with accountants and financial advisors intimidating, pick up The Manager’s Pocket Calculator." --Niche magazine

Manager's Pocket Calculator…won't turn non-financial managers into accountants, but it will help them be better businesspeople.” --Accounting Today

Product Details

ISBN-13:
9780814416358
Publisher:
AMACOM Books
Publication date:
10/06/2010
Pages:
288
Sales rank:
1,368,787
Product dimensions:
5.90(w) x 9.00(h) x 0.80(d)
Age Range:
18 Years

Read an Excerpt

I N T R O D U C T I O N

The Basic Problem with

Numbers

It’s all in the numbers. Everyone has heard this statement and it is

true. Your performance is invariably judged by how much profit you

create or by how much cost you incur in your segment, team, or

department. The so-called bottom line—profit or loss—is the universal

means for monitoring performance and for determining whether an initiative

was worthwhile.

With the dominance of the bottom line in every aspect of how your

performance is graded, you have a distinct advantage if you are skilled

at conveying information in terms of profitability. Conversely, you are at

a distinct disadvantage if you cannot communicate the profit or loss

aspects of your work to management. On a most basic level, just asking

management for something is less effective than demonstrating how an

approval is going to create additional profits or cut costs (related directly

to revenues) and expenses (overhead, not related directly to revenues).

This is the rudimentary distinction between managers with communication

skills and those who struggle every day trying to find the best way

to communicate what they know and what they have achieved.

If you do not have background and education in finance, you probably

struggle with these issues on a daily basis. Even those with training

in accounting may find it difficult to summarize their requests in plain,

simple, and clear terms for management. No one is immune from the

difficulty in matching numerical information with a request or recommendation.

For some, even if the numerical aspects of the job are comfortable,

conveying their significance to management can be very

difficult. For others, even those with exceptional communication skills,

reducing the numbers (‘‘crunching’’) to the basics is the real challenge.

Your purpose in making effective use of numerical information is to

convey the essential data that management needs to make an informed

decision—and to make your case convincingly. Faced with an unending

array of choices, management’s desire is to make choices that are not

only the most profitable but that also involve the least risk. It is not

enough to demonstrate that a decision is likely to be profitable if it also

incurs unacceptable risks: potential liability, supply chain losses, reduced

customer satisfaction, or damage to brand and reputation. When an

esteemed company like Mattel contracted for its manufacturing in China

but failed to properly supervise quality control, toys were sold in the

United States containing harmful lead. The product cost aspects of this

mistake were easily rectified. However, the reputation to the company,

while less tangible, is likely to affect profits at an unknown level and for

an unknown period of time. So the analysis of risk involves both tangible

and intangible considerations, making it difficult to know how much risk

is really involved in creating x profits as the result of y decisions.

What this means for you is that any communication is going to be

based on an evaluation of profit and loss, many forms of risk, and the

time required for return on investment, just to name a few considerations.

How do you communicate the relevant facts to management?

How do you reduce the research to well-supported recommendations or

to caution statements? These are only a few of the issues you face in

managing information and in massaging it to create an effective, simple,

and honest method of communication.

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