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Table of Contents

    • Preface
    • 1How Businesses Make Money
      • 1.1Key Business Strategies
      • 1.2Where’s Your Focus?
      • 1.3Using Financial Statements
      • 1.4Chapter Summary
      • 1.5Exercises
    • 2Three Sample Companies

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      • 2.1Manufacturing Company: Boutique Handbags

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      • 2.2Professional Service Firm: Uptown Chiropractic

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      • 2.3Retail Store: Bonnie’s Beachwear

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      • 2.4Chapter Summary

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      • 2.5Exercises

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    • 3Cash Flow Statements: The Basics

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      • 3.1What Is Cash?

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      • 3.2Understanding the Cash Flow Statement

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      • 3.3Cash Flow at Bonnie’s Beachwear

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      • 3.4Organize Your Cash Flow by Activity

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      • 3.5Chapter Summary

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      • 3.6Exercises

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    • 4Profit and Loss Statement Basics

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      • 4.1Profit Is an Estimate

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      • 4.2Understanding the Profit and Loss Statement

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      • 4.3Examining the Profit and Loss Statement

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      • 4.4Bonnie’s Beachwear Profit and Loss Statement

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      • 4.5Chapter Summary

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      • 4.6Exercises

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    • 5Difference between Cash and Profit

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      • 5.1Asset and Financing Activity

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      • 5.2Timing

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      • 5.3Profit without Cash

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      • 5.4Cash without Profit

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      • 5.5Chapter Summary

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      • 5.6Exercises

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    • 6Balance Sheet Basics

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      • 6.1Understanding the Balance Sheet

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      • 6.2Examining the Balance Sheet

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      • 6.3Bonnie’s Beachwear Balance Sheet

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      • 6.4Chapter Summary

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      • 6.5Exercises

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    • 7How the Balance Sheet Varies by Business Type

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      • 7.1Retail Business

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      • 7.2Manufacturing Business

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      • 7.3Service Business

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      • 7.4Chapter Summary

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      • 7.5Exercises

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    • 8How Financial Statements Tie Together

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      • 8.1Operating Activities

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      • 8.2Financing Activities

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      • 8.3Asset Activities

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      • 8.4Chapter Summary

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      • 8.5Exercises

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    • 9Understanding the Indirect Cash Flow Statement

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      • 9.1Operating Cash Flow

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      • 9.2Examining the Indirect Operating Cash Flows at Bonnie’s Beachwear

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      • 9.3Examining Indirect Asset Activity and Financing Activity Cash Flow at Bonnie’s Beachwear

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      • 9.4Putting It All Together

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      • 9.5Chapter Summary

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      • 9.6Exercises

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    • 10Evaluating Profitability

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      • 10.1Gross Margin

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      • 10.2Operating Margin

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      • 10.3Net Margin

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      • 10.4Analyzing Your Margins

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      • 10.5Return on Assets

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      • 10.6Return on Equity

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      • 10.7Chapter Summary

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      • 10.8Exercises

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    • 11Working Capital and Operational Efficiency

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      • 11.1Working Capital

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      • 11.2Efficiency Ratios

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      • 11.3Efficiency at Boutique Handbags

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      • 11.4Analyzing Your Efficiency

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      • 11.5Managing Collection and Payment Periods

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      • 11.6Is Boutique Handbags Efficient?

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      • 11.7Chapter Summary

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      • 11.8Exercises

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    • 12Can You Pay Your Bills?

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      • 12.1Liquidity Ratios

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      • 12.2Liquidity at Bonnie’s Beachwear

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      • 12.3Understanding Liquidity Ratios

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      • 12.4Chapter Summary

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      • 12.5Exercises

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    • 13Can You Pay the Bank?

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      • 13.1Leverage Ratios

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      • 13.2Leverage at Uptown Chiropractic

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      • 13.3Industry Leverage Ratios

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      • 13.4Chapter Summary

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      • 13.5Exercises

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    • 14Measuring Percentage Change

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      • 14.1Understanding Percentage Change

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      • 14.2Percentage Change at Bonnie’s Beachwear

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      • 14.3Comparing Alternatives Using Percentage Change

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      • 14.4Chapter Summary

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      • 14.5Exercises

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    • 15Using Finance Tools to Manage Your Business

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      • 15.1Focus on Your Strategy

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      • 15.2Focus On Your Cash

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      • 15.3Use Your Tools

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      • 15.4Chapter Summary

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      • 15.5Exercises

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    • 16What to Consider When Starting Your Business

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      • 16.1Use Your Expertise

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      • 16.2Identify Products and Services

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      • 16.3Customers

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      • 16.4Prices and Margins

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      • 16.5Cash

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      • 16.6Working Capital Needs

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      • 16.7Return

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      • 16.8Chapter Summary

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      • 16.9Exercises

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    • 17Legal and Your Business

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      • 17.1Legal Structure

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      • 17.2Licenses and Permits

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      • 17.3Protecting Intellectual Capital

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      • 17.4Contracts

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      • 17.5Chapter Summary

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      • 17.6Exercises

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    • 18Accounting and Your Business

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      • 18.1Fiscal Year

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      • 18.2Cash and Accrual Accounting

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      • 18.3Accounting Software and Systems

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      • 18.4Chapter Summary

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      • 18.5Exercises

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    • 19Taxes and Your Business

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      • 19.1Income Taxes

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      • 19.2Payroll Taxes

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      • 19.3Sales Taxes

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      • 19.4Chapter Summary

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      • 19.5Exercises

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    • 20Starting Your Business

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      • 20.1Setting Up the Business

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      • 20.2Building Sales Volume

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      • 20.3Positive Cash Flow

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      • 20.4How Much Money Does a Business Need?

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      • 20.5Chapter Summary

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      • 20.6Exercises

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    • 21When Growth Makes Sense

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      • 21.1Growth to Meet Customer Demand

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      • 21.2Growth to Remain Operationally Efficient

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      • 21.3Growth to Remain Competitive

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      • 21.4Growth Due to Industry Changes

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      • 21.5Growth Requires Money

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      • 21.6Growth Requires Organizational Capacity

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      • 21.7Chapter Summary

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      • 21.8Exercises

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    • 22Planning and Budgeting Growth

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      • 22.1Understanding Projections

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      • 22.2First-Year Operations

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      • 22.3Growing Uptown Chiropractic

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      • 22.4How Fast Should You Grow?

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      • 22.5Chapter Summary

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      • 22.6Exercises

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    • 23Evaluating Growth

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      • 23.1Have Profits Increased?

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      • 23.2Have Margins Increased?

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      • 23.3Have Returns Increased?

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      • 23.4Chapter Summary

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      • 23.5Exercises

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    • 24Sales Projection Analysis

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      • 24.1Speaking Economics

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      • 24.2Break-even Volume

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      • 24.3Break-even Amount

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      • 24.4Can You Sell That Many?

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      • 24.5Chapter Summary

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      • 24.6Exercises

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    • 25Cost–Benefit Analysis

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      • 25.1Analyzing Investments and Capital Expenditures

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      • 25.2Return on Investment

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      • 25.3Payback Period

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      • 25.4Break-even on Investment

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      • 25.5Examining Investment Opportunities at Johnny’s Garage

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      • 25.6Limitations of Cost Benefit Analysis

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      • 25.7Chapter Summary

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      • 25.8Exercises

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    • 26Time Value of Money

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      • 26.1Understanding the Time Value of Money

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      • 26.2Future Value

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      • 26.3Present Value

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      • 26.4Net Present Value

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      • 26.5Determining Interest Rates and Discount Rates

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      • 26.6Internal Rate of Return

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      • 26.7Examining the Time Value of Money at Johnny’s Garage

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      • 26.8Chapter Summary

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      • 26.9Exercises

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    • 27Doing Business Internationally

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      • 27.1Exporting

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      • 27.2Importing

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      • 27.3Understanding International Payments

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      • 27.4Understanding Exchange Rates

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      • 27.5Hedging Exchange Rates

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      • 27.6Big Macs and Purchasing Power Parity

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      • 27.7Chapter Summary

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      • 27.8Exercises

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    • 28Finding Money to Start and Operate Your Business

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      • 28.1Your Money

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      • 28.2Family and Friends

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      • 28.3Small-Business Lenders

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      • 28.4Outside Investors and Venture Capitalists

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      • 28.5Crowdfunding

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      • 28.6Chapter Summary

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      • 28.7Exercises

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    • APlanning Your Business

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      • A.1The Purpose of Your Business

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      • A.2The Products and Services You Plan to Sell

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      • A.3Your Strategies

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      • A.4Your Suppliers

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      • A.5Your Margins

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      • A.6Your Cash Collection Cycle

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    • BMaking Your Business Legal

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      • B.1Planning Your Legal Structure

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    • CPlanning Your Accounting and Taxes

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      • C.1Accounting Structure

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      • C.2Tax Structure

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      • C.3Federal and State Income Taxes

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    • DStartup Expenses

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      • D.1Asset Purchases

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      • D.2Initial Inventory and Raw Materials Expenses

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      • D.3Other Startup Expenses

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    • ESales and Cost of Goods Sold Forecast

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      • E.1Product Name

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      • E.2Average Price per Sale

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      • E.3Cost of Goods Sold per Sale

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      • E.4Inventory and Raw Material Purchases

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      • E.5Payment for Purchases

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      • E.6Unit Sales

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      • E.7Payment for Sales

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    • FMonthly Expenses

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      • F.1Operating Expenses

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      • F.2Financing Activities

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    • GCash Needs Forecast

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      • G.1Sources of Startup Cash

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      • G.2Projected Cash Flows

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      • G.3Additional Cash Needs

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    • HSensitivity Analysis

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      • H.1Revenue

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      • H.2Cost of Goods Sold

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      • H.3Unit Sales

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      • H.4Operating Expenses

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      • H.5Congratulations!

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    • IBusiness Forecasting Model

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