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Finance and Accounting for Nonfinancial Managers: All the Basics You Need to Know, Sixth Edition

Book Description

In the current environment of cut-throat competition, razor-thin profit margins, and increasing scrutiny from stakeholders, mastering the fundamentals of financial management is a must for everyone with a stake in their companies and in their own professional futures. Packed with step-by-step examples and illustrative case studies, and updated to reflect the latest trends in the economy and in financial policy, Finance and Accounting for Nonfinancial Managers is a nuts-and-bolts guide for managers, entrepreneurs, seasoned executives, teachers, and students alike. Featuring new commentary on corporate accountability, updated interactive templates, study questions, and an online instructor’s guide, this new edition covers all the key aspects of financial management.

Table of Contents

  1. Title Page
  2. Dedication
  3. PREFACE
  4. PART I - Introduction
    1. 1 - Contemporary Financial Management
      1. (R)EVOLUTION OF THE FINANCE FUNCTION
      2. GOALS OF FINANCIAL MANAGEMENT
      3. ORGANIZATION AND STRUCTURE OF THE BOOK
      4. CONCLUSION
      5. SUMMARY
    2. 2 - The Tax Environment
      1. ORGANIZATIONAL FORM AND TAXES
      2. CORPORATE INCOME TAXES
      3. PERSONAL INCOME TAXES
      4. SUBCHAPTER S CORPORATIONS
      5. SUMMARY
  5. PART II - Financial Accounting Fundamentals
    1. 3 - Introduction to Financial Statements
      1. OBJECTIVES OF FINANCIAL ACCOUNTING
      2. THE AUDITOR’S OPINION
      3. THE BALANCE SHEET
      4. BOOK VALUE OF SECURITIES
      5. THE INCOME STATEMENT
      6. SUPPLEMENTAL “PRO FORMA” OR “OPERATING” EARNINGS
      7. ACCUMULATED AND RETAINED EARNINGS
      8. STATEMENT OF CASH FLOWS
      9. SARBANES-OXLEY AND FINANCIAL STATEMENTS
      10. SUMMARY
    2. 4 - Accounting—A Financial Information System
      1. THE ACCOUNTING PROCESS
      2. THE ACCRUAL CONCEPT
      3. DOUBLE-ENTRY ACCOUNTING
      4. THE ACCOUNTING CYCLE
      5. SUMMARY
    3. 5 - Special Topics in Accounting
      1. CHANGES IN THE EQUITY ACCOUNT
      2. DEPRECIATION ACCOUNTING
      3. INVENTORY ACCOUNTING
      4. ACCOUNTING FOR LEASES
      5. INTERCORPORATE INVESTMENTS
      6. SUMMARY
  6. PART III - Financial Analysis and Control
    1. 6 - Financial Statement Analysis
      1. OBJECTIVES OF FINANCIAL STATEMENT ANALYSIS
      2. RATIO ANALYSIS
      3. COMMON-SIZE STATEMENTS
      4. SEQUENCE OF ANALYSIS
      5. CASE STUDY: TECHNOSYSTEMS, INC.
      6. FINANCIAL ANALYSIS, FINANCIAL FRAUD, AND FINANCIAL STRESS
      7. SUMMARY
    2. 7 - Financial Forecasting and Cash Budgeting
      1. OBJECTIVES OF FINANCIAL FORECASTING
      2. SHORT-TERM FORECASTS AND CASH BUDGETING
      3. FINANCIAL FORECAST FOR THE CUTLER TOY COMPANY
      4. LONG-TERM FINANCIAL PLANNING
      5. SUMMARY
    3. 8 - Breakeven Analysis for Profit Planning
      1. ASSUMPTIONS OF BREAKEVEN ANALYSIS
      2. BREAKEVEN APPLICATIONS
      3. THE BREAKEVEN TECHNIQUE
      4. BREAKEVEN CHARTS
      5. NONLINEAR BREAKEVEN ANALYSIS
      6. SUMMARY
  7. PART IV - Working Capital Decisions
    1. 9 - Working Capital Policy
      1. IMPORTANCE OF WORKING CAPITAL POLICY
      2. SHORT-TERM VERSUS LONG-TERM FINANCING
      3. RELATIVE MAGNITUDE OF WORKING CAPITAL INVESTMENT
      4. INVENTORY CONTROL POLICY
      5. CREDIT POLICY
      6. ACCOUNTS PAYABLE PAYMENT POLICY
      7. SUMMARY
    2. 10 - Working Capital Management
      1. MANAGEMENT OF CASH AND MARKETABLE SECURITIES
      2. ACCOUNTS RECEIVABLE MANAGEMENT
      3. INVENTORY MANAGEMENT
      4. SOURCES OF SHORT-TERM FINANCING
      5. SUMMARY
      6. APPENDIX 10.1: MATHEMATICAL DERIVATION OF ECONOMIC ORDER QUANTITY
  8. PART V - Long-Term Investment Decisions
    1. 11 - Mathematics of Compound Interest
      1. COMPOUND INTEREST
      2. PRESENT VALUE
      3. PRESENT VALUE OF AN ANNUITY
      4. COMPOUND VALUE OF AN ANNUITY
      5. APPLICATION TO PERSONAL DECISION MAKING
      6. SUMMARY
    2. 12 - Capital Budgeting
      1. PAYBACK
      2. NET PRESENT VALUE
      3. INTERNAL RATE OF RETURN
      4. PROFITABILITY INDEX
      5. SELECTION OF METHOD
      6. DEALING WITH UNCERTAINTY
      7. CASE STUDY: DROPPITT PARCEL COMPANY
      8. SUMMARY
    3. 13 - Cost of Capital
      1. COST OF CAPITAL DEFINED
      2. MARGINAL COST AND CAPITAL BUDGETING
      3. CALCULATING THE AVERAGE COST OF CAPITAL
      4. THE CAPITAL ASSET PRICING MODEL
      5. CAPITAL STRUCTURE MANAGEMENT
      6. SUMMARY
  9. PART VI - Long-Term Financing Decisions
    1. 14 - Valuation of Financial Assets
      1. CAPITALIZATION-OF-INCOME METHOD
      2. SELECTING APPROPRIATE CAPITALIZATION RATES
      3. BOND VALUATION
      4. PREFERRED STOCK VALUATION
      5. COMMON STOCK VALUATION
      6. SUMMARY
    2. 15 - Valuing Closely Held Businesses
      1. VALUATION PRINCIPLES
      2. REVENUE RULING 59-60
      3. CASE ANALYSIS: VALUING HOME MEDICAL CARE, INC.
      4. SUMMARY
    3. 16 - Sources and Forms of Long-Term Financing
      1. THE MONEY AND CAPITAL MARKETS
      2. INTERMEDIATE- AND LONG-TERM DEBT
      3. LEASE FINANCING
      4. PREFERRED STOCK
      5. COMMON STOCK
      6. DIVIDEND POLICY
      7. SUMMARY
  10. PART VII - Special Topics in Finance
    1. 17 - Governance and Risk Management
      1. BASICS OF CORPORATE GOVERNANCE
      2. DIRECTORS’ FIDUCIARY DUTIES
      3. DAILY GOVERNANCE OF THE CORPORATION
      4. RISK MANAGEMENT
      5. SUMMARY
    2. 18 - International Finance
      1. CURRENCIES
      2. FUTURES, OPTIONS, AND SWAPS
      3. MONEY MARKETS
      4. CAPITAL MARKETS
      5. SUMMARY
    3. 19 - Mergers and Acquisitions
      1. A BRIEF HISTORY OF MERGERS AND ACQUISITIONS
      2. HOW COMPANIES CAN WORK TOGETHER
      3. HOW AND WHY TO DO AN ACQUISITION
      4. THE POLITICS AND ECONOMICS OF ACQUISITIONS
      5. LBOS, HOSTILE TAKEOVERS, AND REVERSE M & A
      6. SUMMARY
  11. INDEX
  12. Copyright Page