Table of Contents

Preface: What This Book Is About xi Part 1 The Art of Finance (and Why It Matters)
1 What Is Financial Intelligence? 3
2 A Primer on the Art of Finance 11 Part 1 Toolbox: Financing your business; Building a financial staff 19 Part 2 The (Many) Peculiarities of the Income Statement
3 Profit Is an Estimate 25
4 Cracking the Code of the Income Statement 30
5 Revenue: The Issue Is Recognition 38
6 Costs and Expenses: No Hard-and-Fast Rules 43
7 The Many Forms of Profit 54 Part 2 Toolbox: Understanding variance; Calculating percent of and percent change 60 Part 3 The Balance Sheet Reveals the Most
8 Understanding Balance Sheet Basics 65
9 Assets: More Estimates and Assumptions (Except for Cash) 71
10 On the Other Side: Liabilities and Equity 81
11 Why the Balance Sheet Balances 86
12 The Income Statement Affects the Balance Sheet 89 Part 3 Toolbox: Employees as assets; Expense vs. capital expenditure 94 Part 4 Cash is King
13 Cash Is a Reality Check 99
14 Profit [not equal] Cash (and You Need Both) 103
15 The Language of Cash Flow 110
16 How Cash Connects with Everything Else 114
17 Why Cash Matters 122 Part 4 Toolbox: Cash accounting; Free cash flow 125 Part 5 Ratios: Learning what the Numbers are Really Telling You
18 The Power of Ratios 129
19 Profitability Ratios: The Higher the Better (Mostly) 135
20 Leverage Ratios: The Balancing Act 141
21 Liquidity Ratios: Can We Pay Our Bills? 145
22 Efficiency Ratios: Making the Most of Your Assets 148 Part 5 Toolbox: Which ratios are most important?; The power of percent of sales; Sustainable growth rate 154 Part 6 How toCalculate (and Really Understand) Return on Investment
23 The Building Blocks of ROI 161
24 Figuring ROI: The Nitty-Gritty 168 Part 6 Toolbox: A step-by-step guide to analyzing capital expenditures 178 Part 7 Applied Financial Intelligence: Working Capital Management
25 The Magic of Managing the Balance Sheet 183
26 Your Balance Sheet Levers 186
27 Homing In on Cash Conversion 191 Part 7 Toolbox: Working with your banker; Accounts receivable aging 195 Part 8 Creating a Financially Intelligent Company
28 Financial Literacy, Transparency, and Your Business's Performance 199
29 Financial Literacy Strategies 205
30 Putting Financial Intelligence to Work: Growing Your Business 211 Part 8 Toolbox: Open-book management; Understanding Sarbanes-Oxley 218 Appendix A Sample Financials 221 Appendix B Exercises to Build Your Financial Intelligence-Income Statement; Balance Sheet; Cash Flow Statement; Ratios 225 Appendix C Under Armour and eBay Financial Statements 255 Notes 263 Acknowledgments 265 Index 269 About the Authors 285