finance for non-finance managers
Basic Finance for Non-Finance Managers
As a line manager, department head, entrepreneur or financier, you will at some point find yourself having to analyze a spreadsheet or have some form of financial recording to do as part of your job description. Spreadsheets, budgets, cash flow projections, business statistics, figures and the financial side of a business is not just meant for accountancy experts.
Many are baffled by balance sheets, or confused by the financial statements of a business entity. This article therefore takes us through the basic terminology and knowledge to enable us understand and interpret effectively financial statements.
For any thriving business, financial management is a crucial aspect. The goal of every organization is profit maximization, or stockholder wealth maximization. These goals will entirely depend on solid financial decisions. To make good decisions, management needs good information. And that information comes from the accounting system.
An accounting system generates various financial reports. On a click, the system generates the four main financial statements: The Profit & Loss statement, Balance Sheet, Cash flow Statement and the Statement of changes in Equity. Other important reports include Sales analysis, Customers and Suppliers analysis, Debtors and Creditors aging analysis. These reports contain important information about the organization's operating results and financial position. This information is important for effective management, and financial control. As a manager, or any other person with financial responsibility, you have to be able to interpret this information yourself.
The relationship between certain items of financial data can be used to identify areas where your firm excels and, more importantly, where there are opportunities for improvement. Using, understanding, and interpreting these statements will help you make much better business decisions.
The Basic Financial Statements
Financial
As a line manager, department head, entrepreneur or financier, you will at some point find yourself having to analyze a spreadsheet or have some form of financial recording to do as part of your job description. Spreadsheets, budgets, cash flow projections, business statistics, figures and the financial side of a business is not just meant for accountancy experts.
Many are baffled by balance sheets, or confused by the financial statements of a business entity. This article therefore takes us through the basic terminology and knowledge to enable us understand and interpret effectively financial statements.
For any thriving business, financial management is a crucial aspect. The goal of every organization is profit maximization, or stockholder wealth maximization. These goals will entirely depend on solid financial decisions. To make good decisions, management needs good information. And that information comes from the accounting system.
An accounting system generates various financial reports. On a click, the system generates the four main financial statements: The Profit & Loss statement, Balance Sheet, Cash flow Statement and the Statement of changes in Equity. Other important reports include Sales analysis, Customers and Suppliers analysis, Debtors and Creditors aging analysis. These reports contain important information about the organization's operating results and financial position. This information is important for effective management, and financial control. As a manager, or any other person with financial responsibility, you have to be able to interpret this information yourself.
The relationship between certain items of financial data can be used to identify areas where your firm excels and, more importantly, where there are opportunities for improvement. Using, understanding, and interpreting these statements will help you make much better business decisions.
The Basic Financial Statements
Financial