Entrepreneurs need to be financially literate. The most common cause of business failure is poor financial control stemming from a fundamental lack of knowledge. Practical Financial Management is for anyone who finds business finance confusing. Now in its eights 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 explains the tools of financial analysis, providing the solutions you need to control your business successfully. It also includes: • explanations of important terms • preparation of a basic bookkeeping system • developing a costing system to maximize profits • writing up business plan • finding out how competitors are actually performing • information loans for small businesses • guidance on how to analysis, and interpret business accounts As well as essential information on planning and budgeting, this new edition includes even more examples of business success to help you get your new venture off the ground and expand your business.

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