Managing by the Numbers: A Commonsense Guide to Understanding and Using Your Company's Financials

Managing by the Numbers: A Commonsense Guide to Understanding and Using Your Company's Financials

Managing by the Numbers: A Commonsense Guide to Understanding and Using Your Company's Financials

Managing by the Numbers: A Commonsense Guide to Understanding and Using Your Company's Financials

Synopsis

Everyone interested in building a stronger business needs to understand and use the information captured in financial statements. In Managing by the Numbers, business education and accounting experts Chuck Kremer and Ron Rizzuto team up with open-book management authority John Case to demystify the numbers. They present a practical, common-sense approach to reading financial statements and to managing the three bottom lines of business financial performance: net profit, operating cash flow, and return on assets. The book features numerous exercises and examples (with associated templates available on the Web), a powerful new management tool known as "The Financial Scoreboard", and an extensive glossary. Managing by the Numbers is an essential resource for entrepreneurs, business owners, managers, and anyone eager to improve their mastery of the financial side of running a business.

Excerpt


Why Your Company's Checkbook Doesn't Tell You Everything You Need to Know

WOULDN'T IT BE GREAT IF COMPANIES DIDN'T NEED accounting? Business owners would save money. They wouldn't have to listen to all that financial jargon (and feel dumb because they don't understand it). If you look at households, it's tempting to believe that accounting really is unnecessary. Households have money coming in and money going out, just like businesses. But most families don't need an accountant; they can tell how they're doing just by looking at their bank accounts, their outstanding loans, and a few other numbers. Can't a business be run out of a checkbook in much the same way?

Unfortunately, it can't. Well, it can--but that's a surefire path to trouble.

The fact is, we're not big believers in many conventional accounting practices. We think that most financial statements are too hard to understand. We think they don't tell you everything you need to know. In this book, ironically, we'll be emphasizing the importance of a direct cash-flow statement, which many accountants ignore--and which isn't so different from checkbook-style accounting.

But we don't want to throw out the baby with the bathwater. We believe that the underlying principles of accounting are sound. We think . . .

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