Managers are constantly expected to make decisions that reflect a full understanding of the financial consequences. In the absence of formal training, few people are prepared for the responsibilities of dealing with management reports, budgets, and capital proposals, and find themselves embarrassed by their lack of understanding.
This book is a practical guide to understanding and managing financial responsibilities. Each chapter examines actual tasks managers have to do, from “how to assemble a budget,” ”how to read variances on a report,” ”how to construct a proposal to invest in new equipment,” exploring the range of principles that can be applied to each task, illustrating practical ways these principles are used, and providing guidance for implementation
The Economist Guide to Financial Management will help the reader understand financial jargon, financial statements, management accounts, performance measures, budgeting, costing, pricing, decision-making and investment appraisal. This second edition has been fully revised and expanded with detailed examples from 100 leading businesses around the world.
About the Author
John Tennent is co-author of The Economist Guide to Business Modelling and The Economist Guide to Cash Management. He is an accountant, who for the past 20 years has been involved in training and consultancy with firms such as Unilever, BOC, BAE, Kraft, Thomson Corp, Cable & Wireless, BT, St Gobain and EMI.
Table of Contents
1 Defining a successful business 1
2 Business structures 13
3 The role of the finance department 20
4 Financial statements and accounting systems 30
5 Accounting concepts and principles 51
6 Investors 77
7 Cost to serve 105
8 Product pricing and profitability 130
9 Portfolio management 144
10 Investment appraisal 161
11 Business planning, budgeting and reporting 201
12 Operational ratios and measures 232
13 Stockmarket and investor measures 261
14 Working capital management 281
15 Published reports and accounts 305
16 Accounting complexities 318
Glossary of financial terms 330
List of companies 341