Key Management Ratios: The 100+ Ratios Every Manager Needs To Know(Financial Times Series)

Description

With over 33,000 copies sold, Key Management Ratios is a market “classic”. This new edition is re-packaged with a new jacket design to revitalise the Key Management brand and new two-colour internals make it more readable and visually appealing.   Key Management Ratiosis an antidote to any fear of finance. Drawing data from 200 companies worldwide, the book brings clarity and simplicity to its explanation of every measure and shows how they all link together to drive your business.   From cash flow and profit to ROI and ROTA, its unique approach remains as classic as ever, bringing a simple and visual understanding to a complex subject.   Cover Key management ratios Contents Foreword Acknowlegements Key for symbols Part One Foundations Background Why do you need this book? The form and logic Method The philosophy Excitement Data that make sense Financial statements Introduction The balance sheet Balance sheet structure – fixed assets Balance sheet structure – liabilities Summary Balance sheet terms Introduction The terms used Profit and loss account Introduction Working data Part Two Operating performance Measures of performance Relationships between the balance sheet and profit and loss account The ratios ‘return on total assets’ and ‘return on equity’ Balance sheet layouts Operating performance Return on investment (ROI) Return on equity (ROE) Return on total assets (ROTA) Standards of operating performance Performance drivers Operating performance Operating profit model Part Three Corporate liquidity Cash flow cycle Corporate liquidity The cash cycle Measures of liquidity – long and short analysis Liquidity Short-term liquidity measures Current ratio Quick ratio Working capital to sales ratio Working capital days Financial strength Interest cover ‘Debt to equity’ ratio (D/E) Leverage Summary Cash flow The cash flow statement Sources and uses of funds – method Opening and closing cash reconciliation Long and short analysis Financial reporting standards Part Four Determinants of corporate value Corporate valuation Introduction Share values Financial leverage and corporate valuation Introduction Financial leverage V chart Market to book ratio Growth Growth Analysis Growth equilibrium Application to acquisitions Part Five Management decision-making Cost, volume and price relationships Introduction Costing illustration Contribution Break-even (B/E) Contribution to sales percentage (CPS) Summary Investment ratios Introduction Project appraisal – the problem Project appraisal – steps to a solution (1) Project appraisal – steps to a solution (2) Project appraisal – present value (PV) Project appraisal – internal rate of return (IRR) Project appraisal – summary Shareholder value added (SVA) Introduction Description Approach to valuation (1) Approach to valuation (2) Value for the equity shareholders Discount factor Terminal (continuing) value Complete model Acquisition analysis Introduction Financial profile of Alpha Inc. Financial profile of Beta Inc. Acquisition – first offer Acquisition impact on EPS Shareholder effects – generalized Summary of effects on shareholders Revised offer Relative versus absolute values SVA models – Alpha Inc. and Beta Inc. Addendum Integrity of accounting statements Introduction Where we focus attention Operating revenue enhancement Methods of revenue enhancement – fictitious sales Revenue enhancement – clues for detection Operating cost The balance sheet The cash flow statement Appendix 1: Special items Appendix 2: Companies used in the sample Appendix 3: Full set of ratio charts from sample companies Appendix 4: Discounting and compounding tables Glossary Index