1、Finance forNon-FinancialManagersSicilianoFM.qxd 4/1/2003 2:01 PM Page 1Other titles in the Briefcase Books series include:Customer Relationship Management by Kristin Anderson and Carol KerrCommunicating Effectively by Lani ArredondoPerformance Management by Robert BacalRecognizing and Rewarding Empl
2、oyees by R. Brayton BowenMotivating Employees by Anne Bruce and James S. PepitoneBuilding a High Morale Workplace by Anne BruceSix Sigma for Managers by Greg BrueDesign for Six Sigma by Greg Brue and Robert G. LaunsbyLeadership Skills for Managers by Marlene CaroselliNegotiating Skills for Managers
3、by Steven P. CohenEffective Coaching by Marshall J. CookConflict Resolution by Daniel DanaProject Management by Gary R. HeerkensManaging Teams by Lawrence HolppHiring Great People by Kevin C. Klinvex, Matthew S. OConnell, and Christopher P. KlinvexTime Management by Marc ManciniRetaining Top Employe
4、es by J. Leslie McKeownEmpowering Employees by Kenneth L. Murrell and Mimi MeredithPresentation Skills for Managers by Jennifer Rotondoand Mike RotondoThe Managers Guide to Business Writingby Suzanne D. SparksSkills for New Managers by Morey StettnerThe Managers Survival Guide by Morey StettnerManag
5、ers Guide to Effective Meetings by Barbara J. StreibelInterviewing Techniques for Managers by Carolyn P. ThompsonManaging Multiple Projects by Michael Tobis and Irene P. TobisTo learn more about titles in the Briefcase Books series go Youll find the tables of contents, downloadable sample chap-ters,
6、 information on the authors, discussion guides for usingthese books in training programs, and more.SicilianoFM.qxd 4/1/2003 2:01 PM Page 2McGraw-HillNew York Chicago San Francisco Lisbon London Madrid Mexico City Milan New Delhi San JuanSeoul Singapore Sydney TorontoGene SicilianoA BriefcaseBookFina
7、nce forNon-FinancialManagersSicilianoFM.qxd 4/1/2003 2:01 PM Page 3Copyright 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Manufacturedin the United States of America. Except as permitted under the United States Copyright Actof 1976, no part of this publication may be reproduced or di
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15、s contained in the work will meet your requirements or that its operation will be unin-terrupted or error free. Neither McGraw-Hill nor its licensors shall be liable to you or any-one else for any inaccuracy, error or omission, regardless of cause, in the work or for anydamages resulting therefrom.
16、McGraw-Hill has no responsibility for the content of anyinformation accessed through the work. Under no circumstances shall McGraw-Hilland/or its licensors be liable for any indirect, incidental, special, punitive, consequential orsimilar damages that result from the use of or inability to use the w
17、ork, even if any of themhas been advised of the possibility of such damages. This limitation of liability shall applyto any claim or cause whatsoever whether such claim or cause arises in contract, tort orotherwise.DOI: 10.1036/0071425640ebook_copyright 7x9.qxd 7/23/03 11:05 AM Page 1ContentsPreface
18、 ix1. Counting the Beans: How Critical Is Good FinancialInformation, Anyway? 1Managing a Company in Todays Business Environment 1The Role of the Finance Department 5GAAP: The “Rules” of Financial Reporting 7The Relationship of Finance and Accounting to the Other Departments 9Managers Checklist for C
19、hapter 1 112. The Structure and Interrelationship of Financial Statements 12Tracking the Life Cycle of a Company 14Accounting Is Like a Football Game on Videotape 16The Chart of AccountsA Collection of Buckets 20The General LedgerBalancing the Buckets 23Accrual AccountingSay What? 25The Principal Fi
20、nancial Statements Defined 27Managers Checklist for Chapter 2303. The Balance Sheet: Basic Summary of Value and Ownership 31Assets and OwnershipThey Really Do Balance! 31Current AssetsLiquidity Makes Things Flow 34Fixed AssetsProperty and Possessions 39Other AssetsThe “Everything Else” Category 41Cu
21、rrent LiabilitiesRepayment Is Key 41Long-Term LiabilitiesBorrowed Capital 45vSicilianoFM.qxd 4/1/2003 2:01 PM Page vFor more information about this title, click here.Copyright 2003 by The McGraw-Hill Companies, Inc. Click Here for Terms of Use.Ownership Comes in Various Forms 46Using This Report Eff
22、ectively 49Managers Checklist for Chapter 3 494. The Income Statement: The Flow of Progress 51They Say Timing Is EverythingAnd Theyre Right! 51Sales: The Grease for the Engine 54Cost of Sales: What It Takes to Earn the Sale 55Gross Profit: The First Measure of Profitability 56Operating Expenses: Run
23、ning the Business 57Operating Income: The Basic Business Bottom Line 60EBITDAHe Bit Who? 61Other Income and ExpensesNot Just Odds and Ends 61Income Before Taxes, Income Taxes, and Net Income 62Earnings per Share, Before and After DilutionWhat? 63Using This Report Effectively 65Managers Checklist for
24、 Chapter 4 665. A Profit vs. Cash Flow: Whats the Differenceand Who Cares? 67The Cash Flow Cycle 68Cash Basis vs. Accrual Basis 74Net Profit vs. Net Cash Flow in Your Financial Reports 76Managers Checklist for Chapter 5 816. The Cash Flow Statement: Tracking the King 83Beginning Where the Income Sta
25、tement Ends 85Cash from OperationsRunning the Business 87Cash for InvestingBuilding the Business 93Cash from FinancingCapitalizing the Business 95Using This Report Effectively 97Managers Checklist for Chapter 6 987. Critical Performance Factors: Finding the “Hidden” Information 99What Are CPFs? Do T
26、hey Mix with Water? 100Measures of Financial Condition and Net Worth 101Measures of Profitability 105Measures of Financial Leverage 108Measures of Productivity 112Trend Reporting: Using History to Predict the Future 115Managers Checklist for Chapter 7 119ContentsviSicilianoFM.qxd 4/1/2003 2:01 PM Pa
27、ge vi8. Cost Accounting: A Really Short Course in Manufacturing Productivity 121The Purpose of Cost AccountingStrictly for Insiders 122Fixed and Variable Expenses in the Factory 128Controllable and Uncontrollable Expenses 130Standard CostsLittle Things Mean a Lot 132Manufacturing Cost VariancesAnaly
28、sis for Action 134Managers Checklist for Chapter 8 1369. Business Planning: Creating the Future You Want, Step by Step 138Why Take Time to Plan? 138Strategic Planning vs. Operational Planning 141Vision and MissionThe Starting Point 143StrategySetting Direction 145Long-Term GoalsThe Path to the Missi
29、on 145Short-Term Goals and MilestonesThe Operating Plan 147Managers Checklist for Chapter 9 15310. The Annual Budget: Financing Your Plans 155Tools for Telling the Future: Budgets, Forecasts, Projections, and Tea Leaves 156How to Budget for RevenuesThe “Unpredictable” Starting Point 157Budgeting Cos
30、tsUnderstanding Relationships That Affect Costs 160The Budgeting ProcessTrial and Error 162Flexible BudgetsWhatever Happens, Weve Got a Budget for It 166Variance Reporting and Taking Action 169Managers Checklist for Chapter 10 17111. Financing the Business: Understanding the Debt vs. Equity Options
31、173How a Business Gets FinancedIn the Beginningand Over Time 173Short-Term DebtBalancing Working Capital Needs 175Long-Term DebtSemi-Permanent Capital or Asset Acquisition Financing 181Convertible DebtThe Transition from Debt to Equity 185Capital StockTypes and Uses 186Managers Checklist for Chapter
32、 11 191Contents viiSicilianoFM.qxd 4/1/2003 2:01 PM Page vii12. Attracting Outside Investors: The Entrepreneurs Path 193The Start-up Company: Seed Money and Its Sources 194Professional Investors: Angels on a Mission 195Venture Capitalists: What You Need to Know to Attract Them 198The Initial Public
33、OfferingHeaven or Hell? 203Strategic Investors: The Path to a Different Party 204Acquisition: The Strategic Exit 206Managers Checklist for Chapter 12208Index 209ContentsviiiSicilianoFM.qxd 4/1/2003 2:01 PM Page viiiPrefaceWhy should you buy this book? There are certainly othersto choose from, each w
34、ith a viewpoint that reflects theauthors background and opinions. Why this one? Why this par-ticular authors background and opinions? The answer is com-munication: this book is in a sense a communication manualfor non-financial managers. I believe there is a great need for better communicationbetwee
35、n financial and non-financial professionals, for a bettertool to help the non-financial manager understand the languageof finance, and for the financial professional to learn the termi-nology that has meaning for the non-financial manager. Ibelieve this book will play a part in enabling that better
36、commu-nication. That is, in fact, its purpose. Why me? I spent eight years of my early working life as apracticing CPA. I felt the frustration that came from not speak-ing the same language as my clients and the difficulty in gettingthe information I needed from people who didnt really under-stand w
37、hy I could possibly need it or what I could do with it.Then there were the 14 years as a financial officer inside severalcompanies, responsible for trying to find a common languageso I could provide business managers what they needed to runtheir departments, divisions, and corporations. Most recentl
38、y, Ihave spent over 15 years as an advisor to business managersand entrepreneurs on financial matters. Over each of those phases of my career, Ive become knownfor my ability to translate complex or esoteric financial conceptsinto plain language. I understand better than most both theaccountants and
39、the business managers viewpoints. Not sur-ixSicilianoFM.qxd 4/1/2003 2:01 PM Page ixCopyright 2003 by The McGraw-Hill Companies, Inc. Click Here for Terms of Use.Prefacexprisingly, they often speak different languages. The results areusually less than satisfactory for both. This book is my attemptto
40、 facilitate a better understanding between them, since theircommon objective is the greater success of the enterprise thatemploys them both. What should you hope to get from this book, or any book onthis subject? I believe the answer is: The viewpoint of an author who speaks the language offinance,
41、but thinks more like a line manager than anaccountant, Examples of the typical, standard financial reports, withplenty of explanationin Englishthat will help youunderstand those same kinds of reports when you seethem in your company, Examples of financial reports you may not see in yourcompany yet,
42、but that you might want to, because theycould give you valuable information, and Some help in mastering the tools of finance where theycan be useful to you, without wasting time explaining thedeep details that will likely never benefit you.If you are now or intend to become, at some point in yourcar
43、eer, the manager in charge of a profit center or perhaps theowner of your own business, you will need to have a workingknowledge of a lot of the information in this book. You are ormay become: The person your staff looks to for guidance in budgetsand other financial management matters, The person yo
44、ur boss or the home office expects to con-sistently achieve your assigned financial targetsor eventhe person who sets those targets, The person who is responsible for directing the financeand accounting function that supports your unit or com-pany, and The person who can effectively explain to staff
45、, boss,SicilianoFM.qxd 4/1/2003 2:01 PM Page xPreface xiboard of directors, and perhaps even outsiders the finan-cial implications of the results you have achieved and theresults you expect to deliver in the future.Regardless of your path, your career success depends onyour doing these things reason
46、ably well, and you cannot do thatwithout a respectable knowledge of finance and accounting.Notice I didnt say a thorough knowledge and I didnt say youneed to understand how accountants process detailed informa-tion. I didnt even say you had to get it right every time,because accountants dont either.
47、 But you do need to be com-fortable talking the language of finance at the nontechnicallevel, so that you can communicate effectively in either direc-tion. And that is the purpose of this book.How to Use This BookChapter 1 sets the stage for the book. It discusses how events inthe business world tod
48、ay have increased the need for financiallysavvy managers. Business managers and owners today need tohave both financial integrity and a degree of financial compe-tence not previously expected of them. It is no longer goodenough to keep poor accounting records in the belief that theaccountants will c
49、lean it all up at the end of the year, so thecompany can file correct tax returns. It is no longer good enoughto scan a financial report to find the profit number for the month,so that the rest of the report may be ignored. It is no longer goodenough for a manager to be ignorant of financial terminology ifhe or she wants to climb the corporate ladder, or even bedemonstrably successful in a current job. You need more.Chapters 2 through 6 cover the basic financial reports youshould t
