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Type of bind: Hardcover
Dewey Decimal Number: 658.1511
EAN num: 9781591397649
ISBN number: 1591397642
Label: Harvard Business School Press
Manufacturer: Harvard Business School Press
Quantity: 1
Page Count: 288
Printing Date: January 12, 2006
Publishing house: Harvard Business School Press
Sale Popularity Level: 1492
Studio: Harvard Business School Press
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Product Description:
Companies expect managers to use financial data to allocate resources and run their departments. But many managers can't read a balance sheet, wouldn't recognize a liquidity ratio, and don't know how to calculate return on investment. Worse, they don't have any idea where the numbers come from or how reliable they really are. In 'Financial Intelligence', Karen Berman and Joe Knight teach the basics of finance - but with a twist. Financial reporting, they argue, is as much art as science. Since nobody can quantify everything, accountants always rely on estimates, assumptions, and judgment calls. Savvy managers need to know how those sources of possible bias can affect the financials - and they need to know that sometimes the numbers can be challenged.While providing the foundation for a deep understanding of the financial side of business, the book also arms managers with practical strategies for improving their companies' performance - strategies such as 'managing the balance sheet' that are well understood by financial professionals but rarely shared with their nonfinancial colleagues. Accessible, jargon-free, and filled with entertaining stories of real companies, 'Financial Intelligence' will help nonfinancial managers be smarter and more confident in their everyday work.
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Rated by buyers 
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I bought this book in order to better understand financial statements and financial ratios for investing, even though the authors wrote it more for managers and not investors. Other books I have purchased for this purpose usually fell into one of three categories: the book defined only the very basics and took such a simple approach with regards to interpreting statements it was a waste of time, the book was for professionals and so far advanced that it didn't bother to have a helpful introduction, or the book started slowly and did a good job at the beginning but then went into overdrive with few explanations after a good introduction and I ended up getting lost.
"Financial Intelligence" is by far the best book from start to finish on interpreting financial statements, what they mean, and how they apply to business that I have read. In the very first part of the book, the authors take the reader slowly through each type of statement (income, balance sheet, and cash flow), what the different categories mean on each sheet, and give examples of what these numbers actually mean. Sunbeam, Enron, and Worlcom are used throughout the book as examples where numbers can be fudged or hints of abuse could have been detected ahead of time. The authors continue this dissection further by showing the different financial ratios derived from the statements, what they mean, and how they can be used as indicators of how a business is doing. The last part of the book then deals with how a business actually functions and its realtion to the statments; it shows how a company can show a profit but still go broke, how cash flows are "king", and what working capital is and the cycle it goes through. Again, very good examples are given durng each topic so that the reader can get a good handle on the subject. The only section that seemed out of place was how managers can discount cash flows to try and determine the return on projects; this subject would have been better in a true corporate finance book.
Overall, this is by far the best, simplest book I have read on financial statements and how to interpret them. The things that sets it apart from the others is the straightforward, easy writing style and the great examples given to demonstrate each accounting concept. The best thing is not only did I finally understand the statements and how they are interconnected, but I gained a better understanding of what makes a good company with respect to generating cash and managing inventories. This is a great book for beginners; if you do have trouble with it, try working the Schaum books on financial statements very first and then come back.
Rated by buyers -
I got this book for a leadership course and was surprised that I learned a lot about my own finances, stocks, etc. A quick and easy way to learn about finance. I would recommend for anyone that has to look at financial statements for any reason.
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I would highly recommend this book to anyone who desires to understand financial concepts. If you are considering opening or starting a business this should be a must read for you.
Rated by buyers 
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I like the book, but it is very basic. If that is what you are looking for, then it does its job. I was looking for a little more meat, but overall a good book. Also, the real-life examples are excellent.
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The concepts are presented clearly. I have a solid background in accounting and finance and this was a welcome refresher. I learned some new things in the process as well.
There are several chapters that I think need further elaboration. These are the ones that deal with cash flows and the Statement of Cash Flows. The latter is the last of the four financial statements (after the Income Statement, the Statement of Retained Earnings, and the Balance Sheet, in that order).
The Statement of Cash Flows has always been the most difficult one to prepare and, yet, in one sense, it is probably the most important one. Managers have leeway to fudge their numbers with the very first three statements but they can't with the Statement of Cash Flows. Analysts recognize this and make significant conclusions from their interpretation of this statement.
Warren Buffett, arguably history's most astute investor, begins with this statement and emphasizes it so much that he coined his own term to describe it: "Owner Earnings." According to the book, "Owner earnings is a measure of the company's ability to generate cash over a period of time. ... is an important measure because it allows for the continuing capital expenditure that will be necessary to maintain a healthy business."
Read it if you want a layman's level of comprehending financial statements. Its more important than you might think!
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