Reason for increasing your financial intelligence - Deepstash

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Reason for increasing your financial intelligence

Understanding how the numbers are used and what are assumptions puts you in control of the decisions.

  • Goodwill: The difference between the net assets acquired and the amount of money the acquiring company pays form them.
  • Balance sheet: The balance sheets show the assets, liabilities, and owners’ equity.
  • Cash shown on a balance sheet is money in the bank and things like stocks and bonds that can be turned into cash.

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Financially intelligent managers understand the four distinct skill sets:

It consists of three main categories:

The art of accounting is taking a limited set of data to get an accurate description of how well a company is doing.

Accountants use accruals and allocations to attempt an accurate picture of the business for a month.

A balance sheet shows what a business owns at a particular time. A balance sheet always balances. Assets = liabilities + owners’ equity.

Profit is not cash. A healthy business needs both profit and cash.

A good manager is aware of how both cash and profits affect a balance sheet. A balance sheet shows if a company is financially healthy.

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This book teaches the fundamentals of owner compensation, profit targets, labour productivity, cash flow, and data reporting. Clear explanations and helpful illustrations throughout make it a must-read guide for small business owners looking to achieve higher profits.

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