Finance Research
THE BALANCE SHEET POCKETBOOK
By Anne Hawkins and Clive Turner
Drawings by Phil Hailstone “A uniquely accessible guide - if you only read one book on finance, read this!” Peter Colley, Director of Finance and Membership Services, RAC Motoring Services Ltd “The authors’ wealth of practical experience and understanding of the line manager’s perspective is fully reflected in this clear and readable book.” Ray Jennings, Human Resources Director, Dowty Aerospace
CONTENTS
INTRODUCTION 1 THE BALANCE SHEET Use of Funds (Fixed Assets, Working Capital), Source of Funds, the balancing act, published format PROFIT AND LOSS ACCOUNT Profit is not cash, operating profit, financing costs, published format 35 APPENDIX ONE Jargon explained APPENDIX TWO Calculating depreciation 45
2
THE BUSINESS FINANCIAL MODEL Sources of Funds, Uses of Funds, making profit, summary CLASSIFICATION OF EXPENDITURE Why classify? Capital or Revenue? control FINANCIAL REPORTS Introduction
5 69
93 101
NB
41
This symbol refers the reader back to a previous section where the item or term has already been explained
INTRODUCTION
1
INTRODUCTION
Fix
CONFUSED?
Wo r k i n g Cap ital loyed Re
s
es erv
ed
Ass
ets
Ea
r
g nin
s
Credit lE apita C mp
ors tion Debto
Deprecia rs 2
Many people are discouraged in their attempts to understand financial statements by the jargon accountants use ... and a fear of numbers!
INTRODUCTION
DON’T BE PUT OFF!
Use the Structured process: Step One: Step Two: Step Three: Develop a ‘common sense’ model of business finance Understand the impact of capital and revenue expenditure on this Business Financial Model Extract from this Model the - Balance Sheet - Profit and Loss Account
3
INTRODUCTION
COMMON MISCONCEPTIONS
Listed below are some of the more common misconceptions we, the authors, encounter in our training sessions. See if any of them seem familiar ... x x
‘The
By Anne Hawkins and Clive Turner
Drawings by Phil Hailstone “A uniquely accessible guide - if you only read one book on finance, read this!” Peter Colley, Director of Finance and Membership Services, RAC Motoring Services Ltd “The authors’ wealth of practical experience and understanding of the line manager’s perspective is fully reflected in this clear and readable book.” Ray Jennings, Human Resources Director, Dowty Aerospace
CONTENTS
INTRODUCTION 1 THE BALANCE SHEET Use of Funds (Fixed Assets, Working Capital), Source of Funds, the balancing act, published format PROFIT AND LOSS ACCOUNT Profit is not cash, operating profit, financing costs, published format 35 APPENDIX ONE Jargon explained APPENDIX TWO Calculating depreciation 45
2
THE BUSINESS FINANCIAL MODEL Sources of Funds, Uses of Funds, making profit, summary CLASSIFICATION OF EXPENDITURE Why classify? Capital or Revenue? control FINANCIAL REPORTS Introduction
5 69
93 101
NB
41
This symbol refers the reader back to a previous section where the item or term has already been explained
INTRODUCTION
1
INTRODUCTION
Fix
CONFUSED?
Wo r k i n g Cap ital loyed Re
s
es erv
ed
Ass
ets
Ea
r
g nin
s
Credit lE apita C mp
ors tion Debto
Deprecia rs 2
Many people are discouraged in their attempts to understand financial statements by the jargon accountants use ... and a fear of numbers!
INTRODUCTION
DON’T BE PUT OFF!
Use the Structured process: Step One: Step Two: Step Three: Develop a ‘common sense’ model of business finance Understand the impact of capital and revenue expenditure on this Business Financial Model Extract from this Model the - Balance Sheet - Profit and Loss Account
3
INTRODUCTION
COMMON MISCONCEPTIONS
Listed below are some of the more common misconceptions we, the authors, encounter in our training sessions. See if any of them seem familiar ... x x
‘The