The Essentials of Finance and Accounting for Nonfinancial Managers

The Essentials of Finance and Accounting for Nonfinancial Managers

Edward Fields

Language: English

Pages: 320

ISBN: 0814416241

Format: PDF / Kindle (mobi) / ePub


As a department manager, the last thing you want to think about is numbers. But the truth is, that's the only thing your executives and senior managers are thinking about so it's crucial to understand key financial information like balance sheets, income statements, cash flow statements, budgets and forecasts, and annual reports. With over 40,000 copies sold, "The Essentials of Finance and Accounting for Nonfinancial Managers" has long provided readers with insight into the financial fundamentals. It demystifies the role accounting and finance play in a corporation, demonstrates how financial decisions reflect business goals, and shows how managers can connect corporate financial information directly to their own strategies and actions. Now revised to reflect new accounting and financial standards, the second edition includes: strategies for getting your share of the budget; new case studies and practice sessions; an explanation of Sarbanes-Oxley and its relevance to nonfinancial managers; how to manage cash flow in tough times; fraud detection tools; and, an expanded glossary including up-to-the-minute business concepts and terminology.

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necessarily decrease as sales decline. Diminishing sales, either because of tough economic times or because of the company’s inability to respond to competitive pressure, will cause the company to become timid in its collection processes. Providing credit is a sales tool. It is a competitive advantage versus companies that cannot afford to provide credit to customers. The more product is sold per selling event, the more profitable the sale and the company will be. Economies of scale and

dividends and buy back shares but are subject to a serious impediment, U.S. corporate tax liabilities. Most of these funds were earned and are deposited outside the United States. Companies have already paid taxes to the non–U.S. countries in which they earned these funds. They are not obligated to pay U.S. corporate taxes (often over 30 percent) until the funds are repatriated back home. To pay a dividend of $100 million, the company would have to bring these funds back to the United States and

decision to include them at all) is motivated by public relations considerations and supports the image and message that the company is presenting. Going back in history to a letter that was composed with great skill, we look at the CEO letter in Disney’s 1999 annual report. This letter provides some interesting perspectives. It is addressed to “Disney Owners and Fellow Cast Members.” Employees of all Disney theme parks are known as cast members. This letter indicates that this company holds

identify a plethora of suppliers—of any imaginable resource—anywhere in the world. Breakeven. The greater the proportion of the costs that are variable, the lower the volume necessary to achieve breakeven will be. If the warehouse cost is fixed, Raritan will have to sell 9,000 units in order to break even. If the warehousing function is outsourced, the breakeven volume is reduced to 8,846 units. This becomes even more critical if the budgeted project has to break even within a fixed time period

the use of the company’s money is the equivalent of the annual fee that a bank charges for a loan. The 15 percent is also the time value of money (TVOM) of that annual fee. In terms of the discounted cash flow technique, the 15 percent is called the factor. These four terms—ROI, interest rate, TVOM, and factor— are synonymous. Exhibit 10-1. (d) These decimals are the present value factors. The decimal given for each year is 15 percent less than the decimal given for the previous year. These

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