Cover
Business, Management and Finance;
Accounting; Banking, Finance and Accountancy; Financial Management
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Page i
Mastering
Financial management
Page ii
Palgrave Master Series
Palgrave Master Series
Series Standing Order ISBN 0333693434
(outside North America only)
You can receive future titles in this series as they are published by placing a standing order.
Please contact your booksetter or, in case of difficulty, write to us at the address below with
your name and address, the title of the series and the ISBN quoted above.
Customer Services Department, Macmillan Distribution Ltd
Houndmills, Basingstoke, Hampshire RG21 6XS, England
Page iii
Mastering
Financial management
John Whiteley, FCA
Business Series Editor
Richard Pettinger
Page iv
John Whiteley 2004
All rights reserved. No reproduction, copy or transmission of this
publication may be made without written permission.
No paragraph of this publication may be reproduced, copied or transmitted
save with written permission or in accordance with the provisions of the
Copyright, Designs and Patents Act 1988, or under the terms of any licence
permitting limited copying issued by the Copyright Licensing Agency, 90
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Any person who does any unauthorised act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
The author has asserted his right to be identified as
the author of this work in accordance with the Copyright, Designs and
Patents Act 1988
Published by
PALGRAVE MACMILLAN
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PALGRAVE MACMILLAN is the global academic imprint of the Palgrave
Macmillan division of St. Martin's Press, LLC and of Palgrave Macmillan Ltd.
Macmillan is a registered trademark in the United States, United Kingdom
and other countries. Palgrave is a registered trademark in the European
Union and other countries.
ISBN 1403913366
This book is printed on paper suitable for recycling and made from fully
managed and sustained forest sources.
A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Whiteley, John, 1943 June 27
Mastering financial management / John Whiteley.
p. cm. (Palgrave master series)
Includes bibliographical references and index.
ISBN 1-4039-1336-6 (paper)
1. Business enterprisesFinance. 2. CorporationsFinance. I. Title: Financial
management. II. Title. III. Series.
HG4026.W485 2003
658.15dc22
2003055875
Printed and bound in Great Britain by
Creative Print & Design (Wales), Ebbw Vale
Page v
Contents
Preface viii 1 Introduction Taking control 1The art and craft of financial management 1 2 Understanding accounts Introduction 4What is behind the figures? 4Comparisons 9Statistical analysis and key ratios 10Performance measures for non-profit organisations 22Summary 25Assignment 26 3 Financial reporting Introduction 30Reporting external and internal 30Break-even analysis 33Effective presentation of figures 36Assignment 40 4 The budgeting process Introduction 42The budgeting cycle 42Making plans 42Measuring performance 44Monitoring performance 45Investigating variances 45Amending plans 46Time scale 47SWOT analysis 49The bottom line 50Targets 50Assignments 51 5 Controlling working capital Introduction 59What is working capital? 59
Page vi
Why does working capital need to be controlled? 62Stock control 63Work in progress control 67Creditors 68Credit control 69Three golden rules 83Cash management 83Assignment 85 6 Financial input into management decisions Introduction 89Selling and pricing 89Cost accounting 90Risk management 94Insuring against risks 101Fraud prevention 102Tax compliance and planning 107Rewarding employees 107Treasury management 107Internal and financial controls 112Audit external and internal 118 7 Measures of success Introduction 121The investment approach 121Total shareholder value 122Four key measures of success 124Organic growth 125Other corporate values 125Measurement of future success 125Assignments 139 8 Phases of business life Introduction 145Start up 145Growth 146Acquisitions, mergers and demergers 147Crisis management 159Assignment 162 9 Managing bank relations Introduction 166What does the bank have to offer? 166How the bank manager approaches the customer 167Writing winning business plans 170Cash flow forecasting 174
Page vii
10 Loan capital, overdrafts and working capital finance Introduction 182Gearing and capital structure 182Term matching 184Raising long-term loan capital 184Raising short-term finance 188Finance leases and hire purchase 191Grants 192 11 Equity capital Introduction 193Share capital 193Capital markets 194Issuing shares 196Classes of shares and retaining control 198Repaying capital to shareholders 198Venture capital 199Dividend policy 201 Appendix 1 Useful websites 205 Appendix 2 Investment terms 211 Answers 218 Glossary 234 Further reading 236 Index 237
Companion website contents
( www.palgrave.com/masterseries/whiteley )
Rewarding employees and share scheme incentives
Reporting requirements of the Companies Act 1985
Accounting Standards
Types of business insurance
Tax compliance and planning
Individual and partnership self assessment
Corporation Tax self assessment
PAYE a summary
VAT danger areas
Stamp Duty a summary
Bankruptcy and liquidation principles, and small claims in the County Court
Credit card trading
Self diagnosis credit control health check
Incentives for venture capital
Page viii
Preface
The financial director or manager is a key player in the management of any business or other organisation. Finance is one of the major resources which have to be managed well to ensure the success of the organisation.
In this book, I have brought together the main elements of financial management. I have dealt with the practical aspects as well as the academic ones. The book should therefore be of use to students, to those managing their own smaller businesses, and to those already in positions of some responsibility in financial management of larger organisations. I have drawn on over 25 years' experience as a practising Chartered Accountant.
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