Financial Intelligence: A Manager's Guide to Knowing What the Numbers Really Mean
- 3h 23m
- Joe Knight, John Case, Karen Berman
- Harvard Business Press
- 2006
Managers in every business are expected to use financial data to make decisions, allocate resources, and budget expenses. But the truth is, many are uncomfortable applying the most basic financial tools in their day-to-day work. Even managers who consider themselves financially savvy may not understand what goes into a financial statement, and so may take the numbers as gospel when they should be questioning them.
In Financial Intelligence, Karen Berman and Joe Knight present the essentials of finance, but with an extra dimension. Succinct, easy-to-read chapters teach the fundamentals in a way that everyone can understand and put to work right away. But the authors also take you behind the scenes, to show where the numbers come from. Since nobody can quantify everything, accountants and finance executives always rely on estimates, assumptions, and judgment calls, which can skew the numbers in one direction or another. This book helps you recognize and understand those biases, challenge or correct for them when necessary, and use this information to be a better manager.
Based on their work training tens of thousands of managers and employees at many leading organizations, Berman and Knight provide readers with a deep understanding of:
- The basics of financial measurement: reading income statements, balance sheets, cash flow statements, and more
- The art of finance: separating hard data from assumptions and estimates
- The mechanics of analysis: calculating ratios, return on investment, and working capital
- Cash and profit: knowing the difference between them, and why cash is suddenly the "hot" number in corporate boardrooms and on Wall Street
- Financial literacy and transparency: recognizing how they can boost performance
Accessible, jargon-free, and filled with entertaining stories from real companies, Financial Intelligence will help nonfinancial managers add substantially more to their companies’—and their own—success. If you have ever wanted to "talk numbers" confidently with your colleagues, this is the book for you.
About the Authors
Karen Berman, PhD, is founder, president, and co-owner of the Business Literacy Institute, a consulting firm offering customized training programs, Money Maps, keynotes, and other products and services designed to ensure that everyone in organizations understands how financial success is measured and how they make an impact. Karen has worked with dozens of companies, helping them to create financial literacy programs that transform employees, managers, and leaders into business partners.
Joe Knight is co-owner of the Business Literacy Institute and co-owner of Setpoint Systems. He works as chief financial officer of Setpoint and as a facilitator and keynote speaker for the Business Literacy Institute, traveling to clients all over the world to teach them about finance. Joe is a true believer in financial transparency, and lives it every day at Setpoint.
In this Book
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Financial Intelligence—A Manager’s Guide to Knowing What the Numbers Really Mean
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You Can’t Always Trust the Numbers
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Spotting Assumptions, Estimates, and Biases
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Why Increase Your Financial Intelligence?
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Toolbox
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Profit Is an Estimate
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Cracking the Code of the Income Statement
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Revenue
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Costs and Expenses
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The Many Forms of Profit
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Toolbox
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Understanding Balance Sheet Basics
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Assets
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On the Other Side
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Why the Balance Sheet Balances
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The Income Statement Affects the Balance Sheet
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Toolbox
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Cash Is a Reality Check
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Profit ≠ Cash (and You Need Both)
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The Language of Cash Flow
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How Cash Connects with Everything Else
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Why Cash Matters
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Toolbox
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The Power of Ratios
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Profitability Ratios
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Leverage Ratios
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Liquidity Ratios
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Efficiency Ratios
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Toolbox
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The Building Blocks of ROI
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Figuring ROI
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Part Six: Toolbox
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The Magic of Managing the Balance Sheet
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Your Balance Sheet Levers
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Homing In on Cash Conversion
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Part Seven: Toolbox
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Financial Literacy and Corporate Performance
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Financial Literacy Strategies
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Financial Transparency—Our Ultimate Goal
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Toolbox
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Notes
