About the Book

Entrepreneurs need to be financially literate. The most common cause of business failure is poor financial control stemming from an ignorance of the basics of business finance.

Practical Financial Management is intended to help those who find business finance confusing. Now in its eighth edition, it continues to provide advice on proper financial planning and control, and reinforces essential points through the use of questions within each section. Beginning with an introduction to the key financial statements, it moves on to look at the tools of financial analysis - the keys to controlling a business successfully. The final part of the book deals with business planning and budgeting, a vital area of business finance as most new ventures cannot get off the ground without a business plan, and existing businesses cannot expand.

Now with more examples and explanations of key terms, as well as information on loans for small businesses and guidance on how to analyze business accounts, Practical Financial Management is an invaluable read for aspiring entrepreneurs and those already in business. This book could mean the difference between success and failure.

Table of Contents:
Part 1: Assembling financial data Keeping the books • The accounts you have to keep • Getting some help The cash flow statement • Why cash is king • The structure of the cash flow statement • Avoiding overtrading • Estimating start-up cash requirements • Cash flow spreadsheet tools • Statement of cash flows for the year The profit-and-loss account (income statement) • The difference between profit and cash • Structuring the profit-and-loss account • Dealing with debtors and creditors • Handling depreciation • Cost of goods sold • Profit and loss for a service business • Profit-and-loss spreadsheet tool The balance sheet • A personal experience • The public picture • The structure of the business balance sheet • The ground rules, concepts and conventions • Accounting for stock • Methods of depreciation • The capital register • Preparing a package of accounts • Balance sheet and other online tools Part 2: Understanding the figures Funding strategies, safety and performance • Debt vs equity • Using your own resources • Borrowing money • Local financing initiatives • Sell and leaseback assets • Getting an investor • Private capital preliminaries • Going public • AIM • PLUS • Free money Analysing business accounts • Analysing accounts • Maintaining a sound financial position • Achieving growth • Accounting ratios • Other ratios • Some problems in using ratios • Getting company accounts • Ratio analysis spreadsheets • Using the financial data to improve performance • Cost of capital • Cost of debt • Cost of equity Costs, volume, pricing and profit decisions • Adding up the costs • The components of cost • Break-even point • Margin of safety • Costing to meet profit objectives • Costing for special orders • Real-time internet pricing strategies • Costing for business start-up • Costing to identify unprofitable products and services • Getting help with break-even Improving performance • Pricing for profit • Reducing costs • Squeezing working capital • Manage inventories • Quantity (EOQ) • Reduce the tax take • Review working methods • The profit improvement programme Part 3: Figuring out the future Revenue budgets • Budgeting for a business • Timescale and detail • Objectives • Market appreciation • Forecasting sales • Resources appreciation • Key strategies and operating plans • Setting the budget • Budget guidelines • Monitoring performance • Flexing the budget • Seasonality and trends • Cash and capital budgets • Building a budget model Capital budgets • Average return on capital employed (ARCE) • Payback period • Discounted cash flow • Present value • The profitability index • Internal rate of return • Risk and sensitivity analysis • Dealing with inflation • Appraising investments • Some general factors in investment decisions • Online capital budgeting calculator Preparing a business plan • Why you need a business plan • Contents of the plan • Tips on communicating the plan Part 4: Dealing with regulatory authorities Computing taxes • Sole traders and partnerships • Company taxation • Which structure is best? • Minimizing taxes • Dealing with employment taxes • Value added tax (VAT) • Surviving a tax investigation • Help and advice with tax matters • Finding a low-tax country Alternative legal structures • Their impact on financial procedures • Sole trader • Partnership • Limited Company • Co-operative • Help and advice on business ownership matters Directors’ role and responsibilities • Directors’ duties • The Companies Act 2006 • Holding board meetings • Appointing a company secretary • Taking on auditors • Wrongful trading and other misdemeanours • Dealing with business failure • Non-executive directors • Index