Page 7 - Finance for Non-Financial Managers

SicilianoFM.qxd 4/1/2003 2:01 PM Page vi
Contents
vi
Ownership Comes in Various Forms
49
Using This Report Effectively
Manager’s Checklist for Chapter 3 46
49
4. The Income Statement: The Flow of Progress 51
They Say Timing Is Everything—And They’re Right! 51
Sales: The Grease for the Engine 54
Cost of Sales: What It Takes to Earn the Sale 55
Gross Profit: The First Measure of Profitability 56
Operating Expenses: Running the Business 57
Operating Income: The Basic Business Bottom Line 60
EBITDA—He Bit Who? 61
Other Income and Expenses—Not Just Odds and Ends 61
Income Before Taxes, Income Taxes, and Net Income 62
Earnings per Share, Before and After Dilution—What? 63
Using This Report Effectively 65
Manager’s Checklist for Chapter 4 66
5. A Profit vs. Cash Flow: What’s the Difference—
and Who Cares? 67
The Cash Flow Cycle 68
Cash Basis vs. Accrual Basis 74
Net Profit vs. Net Cash Flow in Your Financial Reports 76
Manager’s Checklist for Chapter 5 81
6. The Cash Flow Statement: Tracking the King 83
Beginning Where the Income Statement Ends 85
Cash from Operations—Running the Business 87
Cash for Investing—Building the Business 93
Cash from Financing—Capitalizing the Business 95
Using This Report Effectively 97
Manager’s Checklist for Chapter 6 98
7. Critical Performance Factors: Finding the
“Hidden” Information 99
What Are CPFs? Do They Mix with Water? 100
Measures of Financial Condition and Net Worth 101
Measures of Profitability 105
Measures of Financial Leverage 108
Measures of Productivity 112
Trend Reporting: Using History to Predict the Future 115
Manager’s Checklist for Chapter 7 119