Financial management is the framework from which financial decisions are made. Within this framework are transaction processes (such as supply chain, payroll, accounts payable, procurement, accounts receivable and credit collections) and financial and management. This text provides those with limited financial experience with an overview of the most common and practical aspects of financial management and decision-making processes. To assist the reader, a CD-ROM providing Excel spreadsheets will accompany the book. These spreadsheets will reinforce what the reader has read by showing how to build and run successful models in finance and general management.
Table of Contents
Preface. Acknowledgments. PART ONE: FINANCIAL MANAGEMENT. 1. Time Value of Money. Real Business Returns. Net Present Value of Investment. Internal Rate of Return on Investment. Net Present Value and Business Decisions. Cost of Capital and Exchange Rates. Outsourcing or In-House Production Alternative. Cost Breakdown Analysis in Manufacturing. Factory Cost Groups. Sensitivity Analysis and Hidden Reserves. Summary. 2. Annual Commercial Budget. Long-term Business Planning. Annual Cycle. Budget Guidelines. Basic Model and Product Groups. Profit Margin Analysis. Group Accounts. Group Performance Analysis. Consolidated Group Analysis. Monthly Pacing. Income Statement. Paced Income Statement. Balance Sheet. Company Assets. Liabilities and Equity. Business Performance Measure. Summary. 3. Annual Manufacturing Budget. Decisions on Producing Inside or Outsourcing. Factory Costing Model. Cost Matrix. Cost Allocations to Production Centers. Tangible Fixed Assets and Depreciation. Category Cost Allocation. Per-Unit Costs. Overhead Absorption. Ex-Factory Transfer Prices. Category Allocation Analysis. Commercial Department Reaction. Cost Allocations and Customer Position. Transfer Price Sensitivity. Asymptotic Behavior of Transfer Prices. Transfer Price Derivatives. Cost Allocations and Partial Derivatives. Pricing of New Products. Summary. 4. Basics of Financial Reporting. Consolidated Income Statement. Monthly Reporting Model. Simple Reporting Spreadsheet. Historical Data Archive. Income Statement and Balance Sheet. Reporting by Lines of Business. Shared Data Schedule. Process of Balancing. Line of Business Reports. Reporting in Two Formats. Effective Tax Rate Drivers. Modified Reporting Model. Adjustments in Translated Data. Income Statement Analysis. Summary. 5. Everyday Financial Management. Credit Control Model. Sales Patterns and Financial Losses. Credit and Customer Incentives. Piecewise Constant Exchange Rate Regime. Logarithmic Exchange Rate Regime. Exponential Exchange Rate Regime. Combined Exchange Rate Regime. Example of an Actual Exchange Rate Regime. Simple Cash Monitoring Model. Practical Cash Control Model. Fixed Assets in Two Formats. Nominal and Effective Tax Rates. Summary. PART TWO: BUSINESS OPTIMIZATION. Price Elasticity of Demand. Price Elasticity Functions. Optimization Model. Data Links in the Model. Optimization Worksheet. Finding the Maximum. Minimax Problem. Final Remarks. Summary. 7. Business Efficiency Planning. Forecasting of Demand. Forecasting Horizon. Forecasting Model. Forecasts and Data Filtering. Customer Management. Supply Chain Management. Working Capital Management. Management Selection in Emerging Markets. Summary. Index.
DMITRI FAGUET is the former commercial director and director of finance of S.C. Johnson & Son, Inc. in Kiev, Ukraine, where he was responsible for implementing crisis management plans as well as financial analysis and scenario planning for commercial and manufacturing lines of business in the company. For many years, he was an assistant professor of mathematics and research scientist at the world-famous Akademgorodok, the scientific center in Siberia, Russia. Dr. Faguet holds an MBA degree from Cornell University. He currently resides in the London area.