The Manager's Guide to Financial Statement Analysis

The Manager's Guide to Financial Statement Analysis

The Manager's Guide to Financial Statement Analysis

The Manager's Guide to Financial Statement Analysis


Praise for The Manager's Guide to Financial Statement Analysis

"The Manager's Guide to Financial Statement Analysis opens the door for both financial and nonfinancial managers to develop a framework for understanding a company's true financial performance. The Manager's Guide goes the extra step by providing the reader with the skills necessary to communicate the impact of a firm's financial measures in a nontraditional, easy-to-understand manner. It is this combination of understanding and effective communication that allows the manager to then improve a firm through the use of financial information."-Christopher D. Flick, Investment Manager, The Vanguard Group

"The Manager's Guide to Financial Statement Analysis has helped me in both my personal (investing) and professional (management) lives. The authors unravel the complexities of financial statements so that the information they contain can be easily digested and exploited. There is no more hiding a company's strategy behind a set of financial statements. I keep this book close at hand!"-Steven I. Glusman, Chief Engineer, Comanche Helicopter Program, Boeing Rotorcraft Program Management Center

"A valuable framework for communicating firm results and aligning managers around common goals. The methodology links the information contained in a company's financial statements with its external market performance in a format that is easily understandable by the different functional managers of any company."-Scott Teeter, The LTC Group


In today's marketplace, digital technology is having a profound effect on the way that people think about and conduct business. Information tech- nology is changing job descriptions and expectations in all occupations and professions. Information technology and the Internet make it possible for people to access an overwhelming amount of information “on-demand” and at little or no cost. At many firms, traditional scorekeeping and report- ing activities are now embedded in technology. Financial managers are now expected to play a greater role in achieving business objectives. These changes in the business environment demand new skill sets and mindsets to succeed in the competitive marketplace.

Despite changes in information technology, reliance on financial infor- mation to evaluate business performance remains timeless. Managers need to know how to read financial statements and use that information in the formulation and implementation of business strategy. Managers also need to know how the expectations of creditors and shareholders influence busi- ness strategy. Once managers understand how to make sense out of the fi- nancial statements and market information about their firm, they will be able to function more effectively as members of their management teams. In writing this book, we have emphasized the need for managers to be able to communicate with one another in order to accomplish their shared objectives. It is one thing to be able to develop a personal understanding of how to read financial statements. It is quite another thing to be able to com- municate that understanding to other members of the management team. In each chapter, we provide concrete examples of how to explain what you have learned to co-workers who have similar interests in understanding more about business.

In the Introduction, we provide a framework for helping managers under- stand the business through financial information. We consider a firm in terms of a business strategy, management control, and shareholder accountability . . .

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