Finance Basics (HBR 20-Minute Manager Series)

Harvard Business Review

• Publisher: Harvard Business Review Press
• Year: 2014
• Print ISBN: 9781625270856
• eBook ISBN: 9781625270894
• Topic: Business
• Subtopic: Business Skills
• Index: Business

Intimidated by corporate finance? The numbers (and the jargon) can feel overwhelming--but you have to understand them to manage effectively. Finance Basics explains the fundamentals simply and quickly, introducing you to key terms and concepts such as:

• How to navigate financial statements
• How to weigh costs and benefits
• What's involved in budgeting and forecasting
• How to gauge a company's financial health

Don't have much time? Get up to speed fast on the most essential business skills with HBR's 20-Minute Manager series. Whether you need a crash course or a brief refresher, each book in the series is a concise, practical primer that will help you brush up on a key management topic. Advice you can quickly read and apply, for ambitious professionals and aspiring executives--from the most trusted source in business. Also available as an ebook.

Index

accounting methods, 11–13

—accrual, 12–13, 99

—cash-based, 11, 102

accounts payable, 21, 99

—ending, 35–36

accounts receivable, 20, 99

—ending, 35

accrual, 99

—accrual accounting, 12–13, 99–100

accrued expenses, 21

acid-test ratio, 37, 100, 113. See also quick ratio

allocation, 100

amortization, 100

assets, 17–22

—acquisition of, 18

—capital, 25

—cash flow statements and, 23, 25

—current, 20, 104

—current, minus inventory, 37. See also quick ratio

—in current ratio, 37

—definition of, 18, 101

—fixed, 20–21, 107

—fixed/long-term, 20–21

—return on, 33

—turnover of, 35, 101

—valuation of, 20–21

assumptions, in budgets, 52–58

—articulating, 53–58

—documenting, 56

—quantifying, 59–61

—sensitivity analysis on, 67, 77–79

balance sheets, 10, 17–22, 101. See also financial statements

—example of, 19

—measuring financial health with, 31

banker’s ratio. See current ratio

benefits, in return on investment, 66–68, 80

book value, 21, 40, 101

bottom-up budgeting, 50, 101–102

break-even analysis, 75–77

break-even point, 102

break-even volume, 76–77

budgets, 4

—articulating assumptions in, 53–58

—assumptions in, 52–58

—best practices for, 60

—defending, 61

—detail level in, 51–52

—example of, 55

—getting started on developing, 50–53

—line items in, 59, 86

—managing, 10

—preparing, 47–61

—quantifying assumptions in, 58–61

—steps for creating, 54

—strategic understanding and, 47–49

—term of, 52

—top-down vs. bottom-up development of, 49–50, 101–102, 115

—tracking, 83, 86–87

—variances in, 86–87

capital

—contributed, 22, 103

—cost of, 103

—working, 21–22, 116

capital assets, 25

capital expenditure, 102

capital investment, 102

cash, 20

—estimating for proposed investments, 67

—net, 25

cash-ba...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Why Understand Finance?
• Navigating the Three Major Financial Statements
• Using the Statements to Measure Financial Health
• Preparing a Budget
• Calculating Return on Investment
• Tracking Performance
• Test Yourself
• Key Terms
• Learn More
• Sources
• Index
• Back Cover