Preface; Acknowledgments; PART 1 EVALUATING THE COST OF BANK LOANS, BUSINESS LOANS, TRADE CREDIT, AND OTHER FINANCING: 1) Understanding Simple Interest; 2) Read (Effective) Interest Rate; 3) The Cost of Credit: Annual Percentage Rate; 4) Calculating Due Dates; 5) Promissory Notes and Bank Discounts; 6) Trade Credit; 7) Receivables and Inventory Financing; 8) Estimating the Cost of Debt and Equity Financing; PART 2 BUDGETING AND PROFIT PLANNING: 9) Establishing a Budgeting System for Profit Planning; 10) What is the Cost Structure?; 11) Using Budgeting to Control Cash; 12) Forecasting Cash Collections; 13) “What-If” Analysis; 14) Budget Accuracy Ratios; PART 3 BUSINESS FORECASTING METHODS: 15) Projecting Financing Needs; 16) Naïve Forecasting Models; 17) Moving Averages; 18) Exponential Smoothing; 19) Regression Analysis; 20) Regression Statistics; 21) Simple Regression; 22) Trend Equation; 23) Decomposition of Time Series; 24) Measuring Accuracy of Forecasts; 25) Costs of Prediction Errors; 26) Chi Square Test; PART 4 MANAGING CASH AND RECEIVABLES: 27) Cash Flow Statement; 28) Using Float; 29) Using a Lockbox to Get Money Sooner; 30) Bank Reconciliation; 31) Putting Excess Cash to Work; 32) What is the Equivalent Tax Yield? 33) Determining the Optimal Cash; 34) Cash Ratio; 35) Cash Flow from Operations; 36) Cash Forecasting; 37) Accounts Receivable Rations; 38) Managing Accounts Receivable; PART 5 CONTROLLING INVENTORY: 39) Inventory Rations; 40) How Much to Order (Economic Order Quantity) and When to Order (Reorder Point); 41) Calculating Quantity Discounts (EOQ with Quantity Discounts); 42) Determining Production Run Size; 43) Allowing for Safety Stock; 44) Calculating Inventory Dollar Burden; 45) Using the ABC System for Inventory Control; PART 6 BUYING ANDSELLING PRODUCTS AND SERVICES: 46) Sales Rations; 47) How Good is the Merchandise?; 48) Factoring In Trade Discounts; 49) Calculating Cash Discounts; 50) Single Equivalent Discount and Chain Discount; 51) Markup Calculations; 52) Cost as a Basis; 53) Commission Computation; 54) Cost-Volume-Profit Analysis; 55) Contribution Margin Analysis; 56) How Does Product Demand React to a Price Change? PART 7 PUTTING MONEY TO WORK: 57) Figuring the Risk-Return Trade-Off; 58) Opportunity Cost; 59) How Many Years Does It Take to Get Your Money Back (Payback Period)? 60) How Do You Calculate Future Values? How Money Grows? 61) Determining Annual Deposits (Sinking Funds); 62) Determining the Number of Periods Required; 63) Rules of 69 and 72; 64) Computing Interest Rate; 65) How to Calculate After-Tax Cash Flows; 66) What is Present Value? How Much is Money Worth Now? 67) Calculating Loan Payments; 68) Ranking Proposals and Projects; 69) Determining Internal Rate of Return (Time-Adjusted Rate of Return); 70) Capitalization Rate; 71) Gross Income Multiplier; 72) Net Income Multiplier; PART 8 SCHEDULING, PLANNING, AND EFFICIENCY MEASURES: 73) How Are Your Assets Operating? 74) Repairs and Maintenance Ratios; 75) Maintenance and Repair Index; 76) Utilization of Space; 77) Efficiency Measurements; 78) Direct Costs-to-Sales Ratios; PART 9 PREPARING FINANCIAL STATEMENTS AND CHARTS: 79) Balance Sheets Basics; 80) Profit and Loss Statement; 81) Ratios, Proportions and Percentages; 82) Charts and Graphs; PART 10 HOW HEALTHY IS THE BUSINESS? 83) Comparing Acounts over th Years (Horizontal Analysis); 84) Comparing Accounts Within the Current Year; 85) How to Use Index Numbers; 86) Growth Rate; 87) Current Ratio; 88) Quick (Acid Test) Ratio; 89) Operating Cycle; 90) Are Your Defensive Assets Sufficient? 91) Working Capital; 92) Liquidity Index; 93) Assessing Asset Utilization (Turnover); 94) Fixed-Asset Ratios; 95) Noncurrent Assets to Noncurrent Liabilities; 96) Accounts Payable Ratios; 97) Current Liability Ratios; 98) How Much Debt Do You Have, and Can You Pay It? 99) What Obligations are Passing? 100) Ratios of Off-Balance-Sheet Assets and Liabilities; 101) Earning Growth; 102) Profit Margin; 103) Sales to Current Assets; 104) Sales to Current Debt; 105) Analysis of Expenses; 106) Can You Cover Interest Payments? 107) Operating Leverage; 108) Fixed-Charge Coverage; 109) Is Your Funds Flow Adequate? 110) Discretionary Cost Ratios; 11) “Z-Score” Model: Forecasting Business Failure; PART 11 MEASURING BUSINESS PERFORMANCE: 112) Choosing Profitability Goals; 113) Simple (Accounting) Rate of Return; 114) Return on Total Assets; 115) Residual Income; 116) Flexible-Budget Variance; 117) Variance Between Actual Sales and Budgeted Sales; 118) Variance Between Actual Costs and Budgeted Costs; 119) Price Variance; 120) Quantity Variance; 121) Salesperson Variances; 122) Warehouse Cost Variance; 123) Incremental Cost and Incremental Revenue; PART 12 AVERAGES, EXPECTATIONS, AND VARIABILITY IN BUSINESS ACTIVITIES: 124) Averages (means): Simple and Weighted; 125) Median and Mode; 126) Expected Value and Standard Deviation; 127) Coefficient of Variation; 128) Normal Distribution; PART 13 ADEQUACY AND COST OF INSURANCE COVERAGE: 129) Determining How Much Insurance is Needed; 130) Factoring in Coinsurance and Copayment; 131) Evaluating Insurance Risk; 132) Estimating the Value of a Claim; PART 14 HIRING AND COMPENSATING EMPLOYEES: 133) Permutations and Combinations; 134) Sizing Up Human Resource Needs; 135) Calculating the Cost of a Fringe Benefits Program; 136) Determining Profit-Sharing Bonus; 137) Employee Efficiency; PART 15 BUYING OR SELLING A BUSINESS: 138) Determining How Much Your Business is Worth; 139) Valuing a Franchise; APPENDIX: Table 1: The Future Value of $1 (Compound Amount of $1) = T, (I, n); Table 2: The Future Value of an Annuity of $1 (Compound Amount of an Annuity of $1) = T2 (I, n); table 3: The Present Value of $1 = T3 (I, n); Table 4: The Present Value of an Annuity of $1 = T4 (I, n); Table 5: Monthly Installment Loan Payment; Table 6: Area in the Right Tail of Chi Square Distribution; Table 7: Normal Distribution table: Area Under the Normal Curve; Table 8: t-Distribution Table: Value of t; Glossary; Index.