Pocket Guide to Business Finance

Paul Burns, Peter Morris

• Publisher: Routledge
• Year: 2013
• Topic: Business
• eBook ISBN:
  9781136008177
• Subtopic: Accounting
• Index: Business

****This is a pocket-sized version of the A4 pictorial guide***Whatever the shape or size of a business, they all have one thing in common - they hope to make money. A major factor in determining success is the ability of management to control its finances. Business Finance painlessly demystifies the process of accounting and the understanding of business finance. Follow the adventures of a small-time entrepreneur and his finance director as she helps him turn his business from a potential casualty of the 'Death Valley Curve' into an efficient, profit-making success story. Balance sheets, profit and loss statements, cash flow, working capital, depreciation, cash flow forecasting, budgeting, and gearing are all explained making this the book to guide readers safely through the jargon jungle of financial management.

1 How Money Works in Business

DOI: 10.4324/9780080938479-1

1 Summary

1	The balance sheet is a “snapshot” of the business's finance at a point of time. It tells you: where the money in a business comes from; where the money is invested in the business.
2	Companies invest money in two kinds of assets: fixed assets: things they mean to keep; working capital: things they mean to sell. They also spend money on administrative overheads (admin costs), which are not assets.
3	Companies obtain money from shareholders, who provide share capital lenders; bankers and others, who provide loan capital.
4	Shareholders are paid dividends and own the company. If the company grows, they prosper. If it declines, they lose their money.
5	Lenders are paid interest and expect the loan to be repaid, whatever happens to the company.
6	Creditors are people to whom the business owes money. Debtors are people who owe the company money. They are part of working capital.
7	Successful companies sell goods for more than it costs to produce them, so the working capital cycle should always make money. But takes time to turn it all into cash.

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• Foreword
• 1 How Money Works in Business
• 2 Profit and Loss and Balance Sheet
• 3 Controlling Cash Flow
• 4 Forecasting Performance
• 5 Interpreting Financial Information
• 6 Planning for Succuess
• 7 Getting away from it all
• 8 A Glossary of Accounting Terms
• 9 Answer page