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Financial Analysis: A Controller’s Guide, Second Edition

Book Description

"Steve Bragg has presented yet another comprehensive reference tool for the finance professional. Financial Analysis: A Controller's Guide is the perfect reference guide for today's controller, presenting not only traditional financial analysis information, but also various types of analyses that will benefit any type of organization. This book is a must-have for any financial professional desiring to make a relevant contribution to his/her organization."
—Jodi Nefzger, CPP Director of Finance, Masonic Home of Missouri

Today's proactive controllers can soar past their mundane responsibilities and become active participants in their corporation's success with the visionary tools found in Steven Bragg's Financial Analysis: A Controller's Guide, Second Edition.

Now updated to include analyses of intangible asset measurement and performance improvement as well as evaluation methods to determine which products and services should be eliminated, Financial Analysis: A Controller's Guide, Second Edition helps financial managers upgrade their skills so they can answer their organization's call for company operations reviews, investment evaluations, problem reporting, and special investigation requests. Controllers prepared to address this growing need for more innovative financial analysis will open doors to a variety of promotions and high-level interactions with other departments.

Become a highly valued member of your company's infrastructure with the indispensable tools found in Financial Analysis: A Controller's Guide, Second Edition.

Table of Contents

  1. Copyright
    1. Dedication
  2. About the Author
  3. Preface
  4. One. Overview
    1. Introduction
    2. 2. The Role of Financial Analysis
  5. Two. Financial Analysis
    1. 3. Evaluating Capital Investments
      1. Hurdle Rate
      2. Payback Period
      3. Net Present Value
      4. Internal Rate of Return
      5. Cash Flow Modeling Issues
      6. Capital Investment Proposal Form
      7. Postcompletion Project Analysis
      8. Problems with the Capital Budget Approval Process
      9. Summary
    2. 4. Evaluating Financing Options
      1. Types of Funding Options
      2. Costs of Funding Options
      3. Risks Associated with Funding Options
      4. Control Problems Associated with Financing Options
      5. Leasing
      6. Loans
      7. Common Stock
      8. Convertible Securities
      9. Preferred Stock
      10. Stock Rights
      11. Warrants
      12. Summary
    3. 5. Evaluating Cash Flow
      1. Evaluating Working Capital
      2. Creating a Cash Flow Model for a Capital Investment
      3. Creating and Evaluating a Cash Forecast
      4. Incremental Cash Flow Analysis
      5. Interpreting Variations in the Flow of Cash
      6. Summary
    4. 6. Evaluating Acquisition Targets
      1. Overview of Acquisition Analysis
      2. Obtaining Information for an Acquisition Analysis
      3. Personnel Analysis
      4. Patent Analysis
      5. Brand Analysis
      6. Capacity Analysis
      7. Asset Analysis
      8. Liability Analysis
      9. Profitability Analysis
      10. Cash Flow Analysis
      11. Fraud Analysis
      12. Synergy Analysis
      13. Complexity Analysis
      14. Contractual and Legal Issues
      15. Table of Analysis Topics
      16. Summary
    5. 7. Increasing Shareholder Value
      1. Linking Shareholder Value and Cash Flows
      2. Pricing
      3. Material Costs
      4. Labor Costs
      5. Interest Income and Expense
      6. Research and Development Efforts
      7. Taxation
      8. Working Capital
      9. Fixed Assets
      10. Debt
      11. Owner’s Equity
      12. Summary
    6. 8. Intangible Asset Measurement and Performance Enhancement
      1. Value of Intangible Assets
      2. Difficulty of Intangible Asset Measurement
      3. Metrics for Research and Development Intangible Assets
      4. Funding Decisions for Research and Development Projects
      5. Assigning a Value to Processes
      6. Summary
    7. 9. Breakeven Analysis
      1. Basic Breakeven Formula
      2. Impact of Fixed-Cost Changes on Breakeven
      3. Impact of Variable-Cost Changes on Breakeven
      4. Impact of Pricing Changes on Breakeven
      5. Case Studies in Breakeven Analysis
      6. Summary
    8. 10. Business Cycle Forecasting
      1. Nature of the Business Cycle
      2. Impact of the Business Cycle on a Corporation
      3. History of Business Cycles
      4. Theories Behind Business Cycle Forecasting
      5. Elements of Business Cycle Forecasting
      6. Business Cycle Forecasting at the Corporate Level
      7. Summary
      8. Endnotes
  6. Three. Operational Analysis
    1. 11. Evaluating Management Performance
      1. Choosing Performance Review Measures
      2. Behavioral Changes Resulting From Performance Review Measures
      3. Specific Performance Review Measures
      4. How to Compile Performance Review Measures
      5. Reporting Performance Review Measures
      6. Summary
    2. 12. Analyzing Process Cycles
      1. Definition of a Process Cycle
      2. Analyzing the Purchasing Cycle
      3. Analyzing the Revenue Cycle
      4. Analyzing the Order Fulfillment Cycle
      5. Summary
    3. 13. Product and Service Profitability Analysis
      1. Eliminating Unprofitable Products
      2. Profitability Analysis for Services
      3. Summary
    4. 14. Financial Analysis of Operational Topics
      1. Analysis of Accounting and Finance
      2. Analysis of Computer Services
      3. Analysis of Engineering
      4. Analysis of Human Resources
      5. Analysis of Logistics
      6. Analysis of Production
      7. Analysis of Sales
      8. Analysis of Outsourcing
      9. Reporting Results to Target Departments
      10. Summary
    5. 15. Capacity Utilization Analysis
      1. Relationship Between Profits and Capacity Utilization
      2. Uses for Capacity Planning
      3. Capacity Baseline
      4. Presenting Capacity Information
      5. Problems with Capacity Analysis
      6. Summary
  7. Four. Other Analysis Topics
    1. 16. Financial Analysis with an Electronic Spreadsheet
      1. Financial Statement Proportional Analysis
      2. Financial Statement Ratio Analysis
      3. Automated Ratio Result Analysis
      4. Leverage Analysis
      5. Trend Analysis
      6. Forecasting
      7. Cash Flow Analysis
      8. Capital Asset Analysis
      9. Compounding Analysis
      10. Investment Analysis
      11. Risk Analysis
      12. Summary
    2. 17. “What If” Analysis with an Electronic Spreadsheet
      1. “What If” Analysis with Single Variables
      2. “What If” Analysis with Double Variables
      3. “What If” Analysis with Goal Seek
      4. Summary
    3. 18. Financial Analysis Reports
      1. Types of Financial Analysis Reports
      2. General Management Reports
      3. Revenue Reports
      4. Material Cost Reports
      5. Labor Reports
      6. Standard Margin Reports
      7. Budget Reports
      8. Investment Reports
      9. Cash Flow Reports
      10. Breakeven Reports
      11. Capacity Reports
      12. Summary
    4. 19. Determining the Cost of Capital
      1. Components of the Cost of Capital
      2. Calculating the Cost of Debt
      3. Calculating the Cost of Equity
      4. Calculating the Weighted Cost of Capital
      5. Incremental Cost of Capital
      6. Using the Cost of Capital in Special Situations
      7. Modifying the Cost of Capital to Enhance Shareholder Value
      8. Summary
    5. 20. Analyzing Risk
      1. Incorporating Risk into Financial Analysis
      2. Data Collection
      3. Measures of Data Dispersion
      4. Graphical Representations of Data Dispersion
      5. Regression Analysis
      6. Reporting on Risk
      7. Summary
  8. Appendices
    1. A. Symptoms and Solutions
    2. B. Commonly Used Ratios