Commercial Awareness and Business Decision Making Skills (eBook)

How to understand and analyse company financial information

paul Rodgers (Autor)

eBook Download: PDF

2007 | 1. Auflage
272 Seiten
Elsevier Science (Verlag)
978-0-08-054517-2 (ISBN)

Infos

This book is designed to act as a financial statement phrase book and dictionary rolled into one. It will enable those new to the financial world to draw meaning from the wealth of information contained within financial documents that were previously considered out of bounds.

Furthermore, although the pages within this book will be an invaluable springboard to those starting out in the world of accountancy, its promary aim is to enable commercial managers working within every facet of a business to meet clearly defined objectives.

It will enable these professionals to take commercial documents and visualise how they interact with the work of an accountant, explaining why every board of management appears to focus on financial data.

* Explains the impact of choices in accounting treatment upon the financial data an entity produces
* Uses tools to complement the financial data, encourages asking perceptive questions that elicit answer that would not otherwise be made available
* Adds value within a commercial business environment

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This book is designed to act as a financial statement phrase book and dictionary rolled into one. It will enable those new to the financial world to draw meaning from the wealth of information contained within financial documents that were previously considered out of bounds.Furthermore, although the pages within this book will be an invaluable springboard to those starting out in the world of accountancy, its primary aim is to enable commercial managers working within every facet of a business to meet clearly defined objectives. It will enable these professionals to take commercial documents and visualise how they interact with the work of an accountant, explaining why every board of management appears to focus on financial data.* Explains the impact of choices in accounting treatment upon the financial data an entity produces* Uses tools to complement the financial data, encourages asking perceptive questions that elicit answers that would not otherwise be made available* Adds value within a commercial business environment

Inhalt

Cover 1
Table of Contents 6
Introduction to the book 11
Chapter 1 Why do Financial Statements Exist? 14
The expectation gap – do not believe first impressions 16
The division of ownership and hands-on management 17
Management accounts vs. financial statements 19
The stakeholder concept 20
The owner-managed business 22
So much more than numbers 22
The things every manager must know 25
Chapter 2 How are Commercial Transactions Captured? 26
The corporate paper trail 28
Capturing the data 29
The accounting equation 33
The things every manager must know 37
Chapter 3 The Balance Sheet: A Freeze Frame & The Concept of Articulation Using the Profit and Loss Account
Linking the separate legal entity concept to the balance sheet 40
The purpose of the balance sheet 43
The purpose of the profit and loss account (also referred to as the income statement) 44
The point of articulation 47
The real world 50
The things every manager must know 50
Chapter 4 A Brief Look at the Accountants’ Phrase Book 52
Understanding the label 54
Debits and credits 54
Confusion arising from day-to-day usage 56
Mr Big Ltd revisted 57
The things every manager must know 60
Chapter 5 Cash and Corporate Survival 62
Making profit does not mean you can pay the bills 64
Cash accounting vs. accruals accounting 65
Accruals and prepayments 66
Satisfying the needs of stakeholders who want to know about both profit and cash 69
Formalizing cash flow presentation 70
The things every manager must know 73
Chapter 6 The Impact of International Harmonization 74
The concept of a single GAAP 76
What is the timetable for change? 76
Presentational differences 77
The things every manager must know 84
Chapter 7 The Managers’ Analytical Toolkit 86
The lull before the storm 88
Commercial knowledge 88
Qualitative skills 90
Quantitative measures 90
The things every manager must know 101
Chapter 8 The Application of Knowledge 102
A basic approach to interpreting the numbers 104
Operational issues 104
Do not ignore the obvious 106
Case study 107
The things every manager must know 119
Chapter 9 Investor Analysis 120
The investment decision and why it matters 122
Earnings per share 122
The price–earnings ratio 125
Dividend yields 126
Other useful indicators 128
The things every manager must know 129
Chapter 10 Cash Ratios 130
The ability to pay 132
The cash recovery rate 132
Cash return on capital employed 132
Cash interest cover 133
Cash dividend cover 133
Looking beyond the financial pages 133
The things every manager must know 134
Chapter 11 Getting to Grips with Accounting Choice 136
Why choice matters 138
The origin of choice 140
What has this business done? 141
The things every manager must know 144
Chapter 12 Tangible Fixed Assets 146
What constitutes a tangible fixed asset? 148
Fixed or not? 148
Identifying cost 149
The concept of depreciation 150
Depreciation mechanics 151
Depreciation – further choice 152
Depreciation ratios 155
Revaluation 155
The mechanics of revaluation 157
Historic cost vs. current cost 162
Impairment – taking bad news on the chin 164
Capitalization vs. expensing 168
The costs of financing construction 171
The things every manager must know 171
Chapter 13 Hidden Value – Intangible Assets 174
What constitutes an intangible asset? 176
Goodwill 177
Negative goodwill 180
Research and development 180
Other intangibles 182
The things every manager must know 186
Chapter 14 An Introduction to Investments 188
Parent company vs. group 190
What constitutes an investment? 191
The things every manager must know 193
Chapter 15 Leasing and the Concept of Commercial Substance Prevailing over Legal form 194
Why choose to lease an asset? 196
The concept of commercial substance prevailing over legal form 196
Differentiating operating and finance leases 197
The transfer of risks and rewards 198
Accounting consequences of the lease decision 198
Analytical consequences of the lease decision 202
Off-balance-sheet finance 203
The things every manager must know 204
Chapter 16 Current Assets 206
A quick recap 208
Stock valuation and its impact on financial indicators 208
Long-term contracts – an overview 212
Trade and other debtors 215
Bank and cash 216
The things every manager must know 217
Chapter 17 Current Liabilities 218
Beyond the trade creditor/payable 220
Other creditors/payables 221
UK corporate taxation – a snapshot 222
What is deferred income? 222
Long-term contracts revisited 223
Have the days of big bath provisions really died? 224
The future of provisioning – a technical moment 228
Financial instruments – a warning shot 228
The things every manager must know 228
Chapter 18 Company Financing 230
Debt vs. equity 232
Preference share capital 233
So much more than a loan 234
Welcome to the new world of financial instruments 235
Are the new rules necessary? 238
Convertible debt 239
The things every manager must know 240
Chapter 19 Further Clues about the Future of the Business 242
Contingencies 244
Post-balance-sheet events 245
Capital commitments 247
Multi-year analysis 249
Segmental analysis 252
The things every manager must know 258
Chapter 20 Things You Always Wanted to Know But Were Afraid to Ask 260
Related parties 262
Deferred taxation and associated tax issues 266
The things every manager must know 269
Chapter 21 Group Financial Statements – The Basics 270
Problems associated with the veil of incorporation 272
Commercial substance prevails again 273
Gaining control 274
Influence only 275
The things every manager must know 275
Chapter 22 Putting your Skills to Use 278
The financial guru is born! 280
A systematic approach 280
The things every manager must know 282
Index 284

Produkt-Details

• Erscheint lt. Verlag: 23.8.2007
• Sprache: englisch
• Themenwelt: Sachbuch/Ratgeber
• Themenwelt: Recht / Steuern ► Wirtschaftsrecht
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Rechnungswesen / Bilanzen
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Unternehmensführung / Management
• ISBN-10: 0-08-054517-3 / 0080545173
• ISBN-13: 978-0-08-054517-2 / 9780080545172