Finance Basics Secrets: The Experts Tell All!

In this Book

• Finance Basic Secrets—The experts tell all!
• Financial awareness is fundamental to business success
• Know the different business entities
• Find out how a business gets money
• Find out how a business uses money
• Appreciate the need for record-keeping
• Know what a finance department does
• Understand the key financial systems
• Differentiate financial and management accounting
• Make sense of the jargon
• Discover why timing is essential
• Know about doubleentry bookkeeping
• See how accounting systems work
• Understand the balance sheet
• Understand the income statement
• Understand the statement of cash flows
• Watch out for non-cash costs
• Be aware of accounting regulation
• Know who uses financial statements
• Realize that not all ‘costs’ are the same
• Know what is meant by ‘profit’
• Differentiate mark-ups and margins
• Consider the impact of discounting
• Forecast costs, volumes and profit
• Know when to use CVP analysis
• Know how to manage profitability
• Be aware of tax
• Understand why cash is king
• Avoid the overtrading trap
• Understand the cash operating cycle
• Measure the cash operating cycle
• Improve cash flow – 1
• Improve cash flow – 2
• Collect cash from customers
• Prepare regular cash flow forecasts
• Understand budgets
• Follow the steps for preparing budgets
• Choose the best way to budget
• Understand participative budgeting
• Calculate variances from budget
• Monitor budgets effectively
• Focus on the relevant costs
• Work out if an opportunity pays back
• Calculate return on investment
• Understand the time value of money
• Use NPV and IRR to appraise investments
• Evaluate a business using ratios
• Measure profitability
• Measure short-term solvency and liquidity
• Measure long-term solvency and stability
• Calculate investor ratios
• Estimate the value of a business
• Jargon buster
• Further reading