Cover image for Financial intelligence :  a manager's guide to knowing what the numbers really mean
Financial intelligence : a manager's guide to knowing what the numbers really mean
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Boston, MA : Harvard Business School Press, 2006


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30000010088065 HG4028.B2 B44 2006 Open Access Book Book

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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. Because 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 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 gives nonfinancial managers the financial knowledge and confidence for their everyday work. Karen Berman and Joe Knight are the owners of the Los Angeles-based Business Literacy Institute and have trained tens of thousands of managers at many leading organizations. Co-author John Case has written several popular books on management.

Author Notes

Karen Berman and Joseph Knight are the founders of the Los Angeles-based Business Literacy Institute. They train managers at organizations such as American Express, P&G, Pacific Life, GM and Tyco International. They have been interviewed in a wide range of print media including BusinessWeek, USA Today and the LA Times.

John Case has written several successful books including Open-Book Management (HarperBusiness, 1995) and The Open-Book Experience (Addison Wesley,1998). He is a contributing writer for Inc. magazine and has written for HBR and a variety of other business publications.

Reviews 1

Choice Review

Nonfinancial managers will appreciate this nontechnical, in-depth "guided tour through financial statements and financial concepts and analysis," which emphasizes what matters and why. The authors, founders of the Business Literacy Institute, explain that the essence of financial intelligence is to have everyone in a company understand how success is measured and how they as managers can impact performance by developing skill sets in the basics of financial measurement; the art (estimates, assumptions) and science (rules and their application) of measurement; the use of this information (analysis); and understanding that numbers are only one side of the story. Berman and Knight's goal is to prepare managers to speak the language of measurement, ask questions, and use financial information in their jobs. The volume consists of 33 clear chapters organized in eight parts (each part with a tool box). Chapters are supported with interesting company examples, and an appendix expands the reader's knowledge with a set of simple sample financial statements. New content in this revised edition (1st ed., CH, Jun'06, 43-5980) includes expanded material on GAAP, greater coverage of ROI, a new chapter on measuring the financial performance of companies, and more. Summing Up: Highly recommended. Business practitioners and general readers. D. C. Daly emeritus, Metropolitan State University