Financial Intelligence for HR Professionals: What You Really Need to Know about the Numbers Book

Preface: What Is Financial Intelligence?     xi
The Art of Finance (and Why it Matters to HR)
You Can't Always Trust the Numbers     3
Spotting Assumptions, Estimates, and Biases     10
Why Increase Your Financial Intelligence?     17
Part One Toolbox: Getting what you want; Knowing the players; Human due diligence     29
The (Many) Peculiarities of the Income Statement
Profit Is an Estimate     35
Cracking the Code of the Income Statement     41
Revenue: The Issue Is Recognition     49
Costs and Expenses: No Hard-and-Fast Rules     55
The Many Forms of Profit     67
Part Two Toolbox: Variance; Percent calculations; Line of sight     73
The Balance Sheet Reveals the Most
Understanding Balance Sheet Basics     79
Assets: More Estimates and Assumptions (Except for Cash)     85
On the Other Side: Liabilities and Equity     95
Why the Balance Sheet Balances     100
The Income Statement Affects the Balance Sheet     103
Part Three Toolbox: Employees as assets; Expenses vs. capital expenditures     108
Cash Is King
Cash Is a Reality Check     113
Profit [not equal] Cash (and You Need Both)     117
The Language of Cash Flow     124
How Cash Connects with Everything Else     128
Why Cash Matters     136
Part Four Toolbox: Free cash flow; Compensation and bonus plans     140
Ratios: Learning What the Numbers Are Really Telling You
The Power of Ratios     145
Profitability Ratios: The Higher the Better (Mostly)     151
Leverage Ratios: The Balancing Act     157
Liquidity Ratios: Can We Pay Our Bills?     161
Efficiency Ratios: Making the Most of Your Assets     164
Part Five Toolbox: Key business ratios; Key HR ratios; Understanding percent of sales; Ratio relationships     171
How to Calculate (and Really Understand) Return on Investment
The Building Blocks of ROI     177
Figuring ROI: The Nitty-Gritty     184
Part Six Toolbox: Step-by-step analysis of capital expenditures; Deciding about outsourcing     195
Applied Financial Intelligence: Working Capital Management
The Magic of Managing the Balance Sheet     201
Your Balance Sheet Levers     204
Homing In on Cash Conversion     210
Part Seven Toolbox: Understanding accounts receivable aging     214
Creating a Financially Intelligent HR Department (and Organization)
Financial Literacy, Transparency, and Corporate Performance     217
Financial Literacy Strategies      223
Part Eight Toolbox: The basics of Sarbanes-Oxley; HR and Sarbanes-Oxley     230
Sample Financials     233
Exercises to Build Your Financial Intelligence-Income Statement; Balance Sheet; Cash Flow Statement; Ratios     237
Kimberly-Clark and FedEx Financial Statements     265
Notes     273
Acknowledgments     275
Index     279
About the Authors     293