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The McGraw-Hill 36-Hour Course: Finance for Nonfinancial Managers

Book Description

Make simple sense of complex financial information!

The high-profile accounting scandals of recent years have made one thing clear: You can't know too much about the company for which you work. What are the numbers? Where do you find them? How do they affect you and your staff?

This fully revised and updated third edition of The McGraw-Hill 36-Hour Course: Finance for Nonfinancial Managers provides a firm grasp on what all the numbers really mean. Designed to let you learn at your own pace, it walks you through:

• The essential concepts of finance, so you can askintelligent questions and understand the answers

• Vital statements and reports, with sections on pro forma financial statements and expensing of stock options

• The auditing process--what is measured, how it'smeasured, and how you can help ensure accuracy and completeness

With chapter-ending quizzes and an online final exam, The McGraw-Hill 36-Hour Course: Finance for Nonfinancial Managers serves as a virtual professor, providing the curriculum you need to crunch the numbers like a pro!

Table of Contents

  1. Cover Page
  2. Title Page
  3. Copyright Page
  4. Contents
  5. Preface
  6. 1 Numbers, Numbers, Numbers: The Why and The How
    1. Statistics and Numbers That Confound Us
    2. Scores: Numbers We Enjoy
    3. Simplicity Makes It Easier
    4. Going into Business (Our Novel)
    5. Basic Concept (Cash Accounting and Accrual Accounting)
      1. Report Version 1
      2. Report Version 2
    6. When to Use and Not Use Cash Accounting
    7. A Few Basic Terms
    8. Financial Statements and Reports
    9. Generally Accepted Accounting Principles (GAAP)
    10. A Move to Replace GAAP with International Accounting
    11. Who Makes the Rules? Who Defines GAAP?
    12. Summary
      1. Review Questions
      2. Case Study Question
  7. 2. Keeping Score: Sales
    1. What Is a Sale?
    2. Types of Sales
      1. Cash Sale
      2. Credit Sale (Sale on Account)
      3. Consignment (Sale?)
      4. Secured Sale
      5. Floor Plan Sale
      6. Sale of Services
      7. Long-Term Contracts
    3. Reduction of Sales
      1. Bad Debts
      2. Sales Returns
      3. Sales Allowances
      4. Warranties
      5. Cash Discounts (Also Called Sales Discounts)
    4. Reports
    5. How to Fudge the Sales Figures
    6. Summary
      1. Review Questions
      2. Case Study Question
  8. 3. Keeping Score: Cost of Sales
    1. Cost of Goods Sold
    2. Inventory
      1. Inventory Value (FIFO/LIFO)
      2. Inventory Value (Average Cost)
      3. Lower of Cost or Market
    3. Freight on Purchases
    4. Discounts on Goods Purchased
      1. Trade Discount
      2. Volume Discount
      3. Purchase Discount
    5. Cost of Services
    6. How to Fake a Reduction in Cost of Goods Sold
    7. Summary
      1. Review Questions
      2. Case Study Question
  9. 4. Keeping Score: Expenses
    1. Expenses: What Are They? How Are They Reported?
    2. Expense Classification, in General
    3. Alphabetical or Size Order
    4. Detailed, by Department or Division
      1. Fine-Tuning a Departmentalized Report
    5. Controllable and Uncontrollable Expenses
    6. Summary Reports (Just the Essentials)
    7. Variable and Fixed Expenses, Breakeven Point
      1. Contribution Margin
    8. Direct and Indirect Expenses
    9. Summary
      1. Review Questions
      2. Case Study Question
  10. 5. Equipment and Other Things That WillBeAround for Years
    1. Depreciation: How Much Does It Cost to Have the Stuff Around?
    2. Which Way to Compute Depreciation?
      1. Straight-Line Depreciation
      2. 200 Percent (or Double) Declining Balance Depreciation
      3. 150 Percent Declining Balance Depreciation
      4. Other Declining Balance Methods
      5. Sum-of-the-Years Digit Method
      6. Units of Production Depreciation
      7. Group Depreciation
    3. Tax Depreciation vs. Financial Depreciation
    4. Small Bits and Pieces of Equipment
    5. Reserve for Depreciation
    6. When the Equipment Is Sold, Lost, Junked, or Stolen
    7. Trade-Ins
    8. Repair or Refurbishment of Equipment
    9. Intangibles (Profit-Making Things That Aren’t There)
    10. Summary
      1. Review Questions
      2. Case Study Question
  11. 6. Buying, Leasing, or Doing Without
    1. Justifying the Purchase of Equipment
      1. Payback Method
      2. Time Value of Money
      3. Time Value of Money Computations
      4. Present Value Method of Evaluating Investment in Equipment
      5. Internal Rate of Return
    2. Repair or Replace
    3. Leasing: Painless (?) Purchasing
    4. A Word on Income Tax Lease Rules
    5. A Budgeting Communication Problem
    6. Summary
      1. Review Questions
      2. Case Study Question
  12. 7. The Balance Sheet
    1. What’s a Balance Sheet? What Does It Mean?
    2. Assets
      1. Cash
      2. Accounts Receivable
      3. Inventory
      4. Prepaid Expenses
      5. Property and Equipment
      6. Intangible Assets
      7. Other Assets
      8. The Current Concept
    3. Liabilities
      1. Borrowing from the Bank (or Uncle Harry)
      2. Financing by Suppliers (Accounts Payable)
      3. Accrued Expenses
      4. Deferred Income
      5. Income Taxes Payable and Deferred
    4. Working Capital
    5. Notes to the Financial Statements
    6. Equity—The “Balance” Part
    7. Summary
      1. Review Questions
      2. Case Study Question
  13. 8. Ownership and Equity
    1. Makea Killing in Equity?
    2. Building Equity
    3. Statement of Change in Owner’s Equity
    4. Equity in a Partnership
    5. Limited Liability Company (LLC)
    6. Corporate Equity
      1. Why Have Corporations?
      2. The Board of Directors
      3. Starting a Corporation and Issuing Shares of Stock
      4. The Equity Section of the Corporate Balance Sheet
      5. Using Stock and Stock Options as a Medium of Exchange
      6. Dilution of a Stockholder’s Interest
      7. Variations in Common Stock
    7. Valuation of Common Stock
      1. Publicly Traded Stock
      2. Privately Held Stock
      3. Book Value of Common Stock
    8. Types of Corporations
    9. Summary
      1. Review Questions
      2. Case Study Question
  14. 9. Budgeting/Planning
    1. What Is Budgeting?
    2. Keeping Score
    3. The Starting Point
    4. The Spouse House Company Plan
      1. Long-Range Plan
      2. Short-Range Plan
    5. Resulting Sales Budget
    6. Cost of Goods Sold Budget
    7. Expense Budget
      1. Selling Expense Budget
      2. Warehouse Expense Budget
      3. General and Administrative Expense Budget
    8. Budget Summary
    9. Zero-Based Budgeting
    10. Summary
      1. Review Questions
      2. Case Study Question
  15. 10. Budget Reporting and More Budgets
    1. Warning
    2. Budget Reports
    3. Reports, Reports, and More Reports
    4. Flexible Budgets
    5. Cash Budget
      1. Revising the Cash Budget
    6. Other Budgets
    7. Let the Accountants Worry with the Budget?
    8. Obligation of Budgeted Amounts
      1. Transaction Steps
    9. Summary
      1. Review Questions
      2. Case Study Question
  16. 11. Manufacturing and Construction
    1. Cost of a Manufactured Spouse House
    2. Costs/Expenses—Which Went Where?
    3. Inventories and Fluctuating Costs
    4. Unit Costs
    5. Standard Costs
    6. Variations in Standard Costs and Budgets
      1. Segregation of Variable and Fixed Factory Overhead Costs
      2. Allocation of Over head by Labor Hours
      3. Controllable and Uncontrollable Costs
      4. Other Methods and Systems
    7. Process Costs/Job Costs
      1. Process Costs
      2. Job Costs
    8. Work-in-Process Inventory
    9. The Contracting Business
      1. Completed-Contract Method of Computing Income
      2. Percentage-of-Completion Method of Computing Income
      3. Government Contracts
    10. Summary
      1. Review Questions
      2. Case Study Question
  17. 12. Analysis of an Enterprise
    1. The Income Statement
    2. The Balance Sheet
    3. Retained Earnings Statement
    4. Ratios
      1. Current Ratio
      2. Quick Ratio
      3. Inventory Turnover
      4. Accounts Receivable Turnover
      5. Days of Receivables
      6. Interest Coverage
      7. Debt-to-Equity Ratio
      8. Return on Assets
      9. Return on Equity
      10. Profit Margin
      11. Earnings per Share
      12. Price-to-Earnings Ratio
    5. Cash Flow Statement
    6. Notestothe Financial Statements
    7. Alternative Ratios and Other Financial Tools Popularized in the 1990s
      1. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
      2. Price-to-Future-Earnings Ratio
      3. Pro Forma Financial Statements
    8. Can You Trust the Financial Statements?
    9. Summary
      1. Review Questions
      2. Case Study Question
  18. Special Topic: What Do Auditors Do—Or Should They Do?
    1. “Auditor”or“Accountant?”
    2. Types of Auditors
      1. Independent Auditors
      2. Internal Auditors
    3. How Auditors Audit
      1. Sampling
      2. Third-Party Confirmations
      3. Examination of Internal Control
      4. Financial Ratios
      5. Professional Judgment
      6. Unintentional Errors
      7. Intentional Errors (Fraud)
    4. The Results of an Audit
      1. Auditors’ Opinion Reports That Are Less Than Pure
    5. When Audits Fail to Find Faults
      1. Auditors Have Conflicts of Interest
      2. Failure of Management’s Role in the Audit Process
    6. The Emerging Solution: More Government Control!
      1. Changes to the SEC
      2. Changes Required of Publicly Held Corporations
      3. Changes to CPA Firms That Audit Publicly Held Corporations
    7. Less Hanky-Panky in the Boardroom?
  19. Appendix A Flexible Budget Computations
  20. Appendix B Sources of Industry Averages
  21. Appendix C Sources of Information on Publicly Held Corporations
  22. Appendix D Dates Pertinent to Dividends on Publicly Held Stock
  23. Appendix E Classes of Common Stock and Preferred Stock
  24. Appendix F Goodwill
  25. Appendix G Nonprofit Organizations
  26. Answer Key to Review Questions and Case Studies
  27. Glossary
  28. Index
  29. Foot Notes
    1. ch01-6
    2. ch01-10
    3. ch01-12
    4. ch02-20
    5. ch02-20a
    6. ch02-22
    7. ch02-24
    8. ch02-25
    9. ch02-27
    10. ch02-27a
    11. ch02-31
    12. ch03-42
    13. ch03-50
    14. ch04-58
    15. ch04-60
    16. ch04-67
    17. ch05-87
    18. ch06-101
    19. ch06-102
    20. ch06-109
    21. ch06-110
    22. ch07-132
    23. ch08-147
    24. ch08-151
    25. ch08-153
    26. ch08-155
    27. ch08-160
    28. ch08-161
    29. ch09-168
    30. ch09-177
    31. ch09-179
    32. ch09-180
    33. ch10-193
    34. ch10-196
    35. ch10-201
    36. ch10-202
    37. ch11-210
    38. ch11-218
    39. ch11-224
    40. ch11-226
    41. ch12-237
    42. ch12-239
    43. ch12-243
    44. ch12-250
    45. ch12-251
    46. ch12-252
    47. appendix_e-288
    48. appendix_f-291