Finance and Accounting for Nonfinancial Managers

"Perhaps the greatest virtue of double-entry accounting is the requirement that accounting records always be "in balance," so that an arithmetic error is automatically exposed by a lack of balance."

"The method a firm uses to account for its investment in inventory is often of major concern to users of financial statements because, for most companies, inventory makes up a major portion of the firm's assets."

"Informed decision making is the overriding goal of financial statement analysis. The type of decision under consideration will be the major determinant of the focus of the analysis, but the decision-making objective is a constant."

"The objectives for both short-term and long-term planning are the same, and the techniques employed differ primarily in the degree of detail developed in the analysis."

"As its name implies, breakeven analysis requires the derivation of various relationships among revenue, fixed costs, and variable costs in order to determine the units of production or volume of sales dollars at which the term "breaks even.""

"There are a number of reasons for the importance of working capital management. One major reason stems from the relative urgency of working capital decisions."

"There are three primary criteria for selecting appropriate marketable securities to meet a firm's anticipated short-term cash needs. In order of priority, these criteria are safety, liquidity, and yield."

"A dollar received in the future is less valuable than a dollar in hand today because a dollar in hand today can be invested and grow to more than a dollar in the future."

"The outcome of almost all business decisions is surrounded by some degree of uncertainty, and capital budgeting decisions are no exception."

"A useful way to visualize the capital structure is to recast the traditional balance sheet format so that a firm is conceived of as having only two categories of assets?net working capital and fixed assets. "

"Preferred stock has been described as a hybrid form of security that combines some of the characteristics of bonds and some of the characteristics of common stock."

"It is necessary to focus on two areas of concern in applying the capitalization-of-income method. The first concern is determining the appropriate earnings to be capitalized; the second is determining the appropriate capitalization rate."