Accounting

Financial Intelligence: A Manager's Guide to Knowing What the Numbers Really Mean

Companies expect managers to use financial data to allocate resources and run their departments. But many managers can’t read a balance sheet, wouldn’t recognize a liquidity ratio, and don’t know how to calculate return on investment. Worse, they don’t have any idea where the numbers come from or how reliable they really are.

In Financial Intelligence, Karen Berman and Joe Knight teach the basics of finance—but with a twist. Financial reporting, they argue, is as much art as science. Since nobody can quantify everything, accountants always rely on estimates, assumptions, and judgment calls. Savvy managers need to know how those sources of possible bias can affect the financials—and they need to know that sometimes the numbers can be challenged.

While providing the foundation for a deep understanding of the financial side of business, the book also arms managers with practical strategies for improving their companies’ performance—strategies such as “managing the balance sheet” that are well understood by financial professionals but rarely shared with their nonfinancial colleagues.

Accessible, jargon-free, and filled with entertaining stories of real companies, Financial Intelligence will help nonfinancial managers be smarter and more confident in their everyday work.

Time-Driven Activity-Based Costing: A Simpler and More Powerful Path to Higher Profits

In the classroom, activity-based costing (ABC) looks like a great way to manage a company's limited resources. But executives who have tried to implement ABC in their organizations on any significant scale have often abandoned the attempt in the face of rising costs and employee irritation. Time-Driven Activity-Based Costing is the solution to the problems associated with large-scale ABC implementation. In this book, Kaplan and Anderson offer a revised model where managers can estimate the resource demands imposed by each transaction, product, or customer, rather than rely on time-consuming and costly employee surveys.

In their new model, Kaplan and Anderson focus on the two parameters managers need to estimate: how much it costs per time unit to supply resources to the business activities (the total overhead expenditure of a department divided by the total number of minutes of employee time available) and how much time it takes to carry out one unit of each kind of activity (as estimated or observed by the manager). Rather than endlessly updating and maintaining ABC data, this book with allow managers to spend their time addressing the deficiencies the model reveals: inefficient processes, unprofitable products and customers, and excess capacity.

Kaplan and Anderson lead the discussion of Time-Driven ABC in the first seven chapters, followed by individual cases studies of actual implementations by Acorn consultants in diverse settings.

Cost & Effect: Using Integrated Cost Systems to Drive Profitability and Performance

Two of the most innovative thinkers in the field present a work that represents the single best resource for understanding and implementing activity-based cost management. Kaplan and Cooper reveal that most companies don't know how to measure accurately, influence, or understand the fundamental cost drivers in their businesses. They then provide a detailed and comprehensive blueprint that will enable managers to make better decisions and to promote organizational learning and improvement.

Cost and Effect takes the management, finance, and accounting fields to an entirely new level, as the authors demonstrate how the principles of activity-based costing and other advanced cost management techniques, such as target and kaizen costing, can drive business performance. Using lively examples from a variety of leading companies worldwide--including Siemens, Hewlett-Packard, AT&T, the Swedish wire manufacturer Kanthal, Kirin Beer, and Procter & Gamble--they show how to create integrated, knowledge-based systems that provide meaningful information on current and past performance.

The innovation systems described in Cost and Effect will help you:
* Determine where improvements in quality, efficiency, and productivity will have the highest payoffs.
* Assist front-line employees in their learning and improvement activities.
* Make better product mix and capital investment decisions.
* Negotiate more effectively on price, product features, quality, delivery, and service to promote win-win relationships with your customers.
* Choose low-cost suppliers who are truly low cost, not just low price.
* Design products and services that meet customers' expectations-and that can be produced and delivered at a profit.
* Integrate your activity-based cost system into reporting and budgeting processes to reveal the sources of excess capacity.

Everyone involved in running a business-from general managers and strategic planners to financial executives, IT professionals, and operations managers-must read this book to learn how innovative cost and performance measurement systems can enhance their organizational profitability and performance.

Writing for Business: Expert Solutions to Everyday Challenges (Pocket Mentor)

Effective business writing rests on a foundation of basic principles. Master them, and you'll know how to handle the many different writing tasks that come your way. This book will help you organize and edit your message for maximum impact.

Investing and Managing Trusts Under the New Prudent Investor Rule: A Guide for Trustees, Investment Advisors, and Lawyers

In the next few years, the world's senior generation will pass on some ten trillion dollars--more than the value of all the companies listed on today's stock exchange--to their heirs. Much of this unprecedented transfer of wealth will take the form of trusts. But the old Prudent Man Rule that trustees have followed for generations has been scrapped, and the new Prudent Investor Rule, which now applies in most states, drastically changes the way trusts must be operated. Trustees cannot hope to learn "on the job": today's investment principles and portfolio management techniques are too demanding. With Investing and Managing Trusts under the New Prudent Investor Rule, Train and Melfe show trustees how to manage trusts according to this important new Rule.

Many current and future trustees are unfamiliar with the far-reaching provisions of the new Prudent Investor Rule, which should soon govern trust investing in all fifty states. Investing and Managing Trusts under the New Prudent Investor Rule explains the investment and administrative obligations--as well as the new liberties--imposed by this stringent Rule.

John Train, an authority on building wealth, brings his deep knowledge and dry wit to this thorough guide, in collaboration with Thomas Melfe, eminent New York trusts and estates attorney. Train and Melfe also highlight the various forms of trusts and the major suitable and unsuitable types of investments, so that family trustees, as well as readers in the investment and trust business, law, and financial planning can understand the key strategic and managerial considerations.

This practical, straightforward guide--the first comprehensive discussion of the new Prudent Investor Rule for private trustees-comes complete with useful sample forms, management guidelines, checklists, and a glossary. It is an essential reference for all professional and family trustees as well as their legal and financial advisors.

Relevance Lost: The Rise and Fall of Management Accounting

Relevance Lost is an overview of the evolution of management accounting in American business, from textile mills in the 1880s and the giant railroad, steel, and retail corporations, to today's environment of global competition and computer-automated manufacturers. The book shows that modern corporations must work toward designing new management accounting systems that will assist managers more fully in their long-term planning. Winner of the American Accounting Association's Deloitte Haskins & Sells/Wildman Award Medal. Also available in hardcover; ISBN 0875841384, $32.00.

The Money of Invention: How Venture Capital Creates New Wealth

When the economy was booming and dot-coms were flying high, venture capitalists were admired as impresarios of innovation. Then the market tanked, start-ups fizzled, and those same deal-makers were rebuked as predators out for a quick score. So which portrayal is accurate? Where is this much-hyped industry heading? And what will it mean for the future of innovation in the global economy?

In this definitive book, industry experts Paul Gompers and Josh Lerner provide the first cool-headed explanation of the venture capital industry and the role it plays in our economy. They underscore that, regardless of the economic conditions, innovation is incredibly difficult to finance, take to market, and translate into value. While venture capital has evolved to address these problems-the industry has fueled innovation, economic growth, and wealth creation for decades-features of the venture industry have left it vulnerable to boom-and-bust cycles. In the near future, say the authors, the industry must transform dramatically, with important implications for industry players and the entrepreneurs and organizations they serve.

Drawing from compelling research and industry "war stories," Gompers and Lerner present a series of practical frameworks for understanding the relationships among venture capital, innovation, and entrepreneurial success. They demystify how the venture capital world operates, and outline the opportunities and obstacles faced by all players in this evolving arena. They explore:

· The problems entrepreneurs encounter in securing financing, and how the venture capital model can help innovators to resolve them

· How venture capitalists can effectively pursue promising opportunities while building a sustainable franchise

· How corporations, nonprofits, and government institutions can harness the power-and avoid the pitfalls-of the venture capital model when applying it in their own sectors

Whether the industry is enjoying an incredible growth spurt or weathering an economic slowdown, readers will find this book an immensely practical guide to leveraging the venture capital model to turn innovation into value.

Paul A. Gompers is a Professor of Business Administration and a Director of Research at Harvard Business School. Josh Lerner is a Professor of Business Administration at Harvard Business School. Both authors live in the Boston area.

Expectations Investing: Reading Stock Prices for Better Returns

About 75 percent of active investors consistently deliver returns below those of passive index funds. Why? In part, it's because proven methods for valuing assets are too complex to apply-causing investors to rely on commonly used benchmarks such as current earnings and price-earnings multiples that simply don't reflect how the market prices stocks.
Now, leading valuation experts Alfred Rappaport and Michael J. Mauboussin argue that the secret to beating the market stands in plain sight. Embedded in the stock price-the most accessible piece of information in the investment arena-lies all investors need to know about how the market expects a company to perform. By correctly decoding that information, say the authors, investors are on the way to anticipating changes in a company's competitive position that the current stock price doesn't reflect-and making informed buy, hold, or sell decisions before the rest of the crowd. This proven approach, expectations investing, holds the potential to change the rules and improve the odds of the stock selection game forever.
The beauty of expectations investing is that it harnesses the power of the market's own tried-and-true pricing model-discounted cash flow-without requiring difficult and often dubious long-term forecasting. Highly practical, the book provides a strategic framework and corresponding tools for using price-implied expectations (PIE) to:

· Interpret current prices and anticipate revisions in expectations.
· Monitor signals from managerial actions such as mergers and acquisitions and share buybacks and estimate their impact on shareholder value.
· Devise, adjust, and communicate management strategy in light of shareholder expectations.

In addition, a unique expectations infrastructure helps track value creation from the initial triggers that shape performance to the resulting impact on sales, operating profit margins, and investment efficiency.
Universally applicable to public companies across the economic landscape, Expectations Investing will enable professional investors, analysts, and executives to translate heightened uncertainty into lucrative opportunity.

Alfred Rappaport is the Leonard Spacek Professor Emeritus at Northwestern's Kellogg School and is Shareholder Value Adviser to L.E.K. Consulting. He originated the Shareholder Scoreboard for the Wall Street Journal. He can be contacted at al.rappaport@expectationsinvesting.com. Michael J. Mauboussin is a Managing Director and Chief U.S. Investment Strategist at Credit Suisse First Boston. He is also an Adjunct Professor at Columbia Business School. He can be contacted at michael.mauboussin@expectationsinvesting.com.

Visit the book's dedicated Web site at: www.expectationsinvesting.com

Derivatives: A Comprehensive Resource for Options, Futures, Interest Rate Swaps, and Mortgage Securities (Financial Management Association Survey and Synthesis Series)

Arditti describes and explains four major classes of derivative instruments: options, futures, interest rate swaps, and mortgage derivatives. He discusses each market's structure and the applications and pricing of each instrument, focusing on the valuation methods that are most commonly used by professional market participants. Each segment begins with a description of the institutional arrangements that have come to characterize the markets in which the instruments trade. Arditti examines basic derivatives in each class with respect to their risk transference properties, risk management applications, and pricing. He then traces the evolution of these markets in terms of new instruments introduced, the factors inspiring their development, and the alterations in pricing technology required by more complex derivatives. Arditti includes numerical examples to clarify the procedures. The Financial Management Association Survey and Synthesis Series.

Measures for Manufacturing Excellence (Harvard Business School Series on Accounting and Control)

Just-in-time manufacturing and distribution processes, computer-aided design, and flexible manufacturing systems are now commonplace in the modern workplace, but antiquated accounting systems are unable to monitor accurately their operations, making them a liability to today's managers. In twelve essays, leading academics describe how companies are using operation and accounting measures to win the battle for manufacturing excellence. Issues discussed include measuring organizational improvement, facilitating organizational learning, motivating product design improvements, and evaluating production planning.