Introduction

Why this book is different to other finance books

No prior knowledge is required

The book is purposefully designed to be quick and easy to use with no previous knowledge required to comprehend the concepts. We ‘tell you what you need to know’ to ‘get up to speed’ quickly in core finance concepts.

A key feature of this book is that you do not have read it from cover to cover to make sense of finance. Each chapter covers a specific area. This enables you to dip in and dip out of chapters. Furthermore, we have taken otherwise complex topics and broken them down into key concepts that are explained in concise, easy-to-read sections.

Practitioners not academics

While not an academic book, this is also not a ‘simplistic’ book. It is a practical book because it has been written by practitioners. Included throughout this book are the authors’ first-hand personal experiences gained from working with organisations, across many industries and sectors, rather than replicating knowledge from academia.

In addition, both authors have spent countless hours instructing, teaching and training thousands of professionals from disciplines including marketing, sales, production, engineering, IT, administration, HR, legal as well as accountancy.

Focused on business application

The overwhelming majority of available finance books immerse the reader in the ‘detail’. They are better suited to those who work or aspire to work in finance.

The Finance Book is written for non-finance people. It is aimed at those who work or aspire to work in business.

This book will help professionals in business or those thinking about a career in business including board directors, business managers, MBA students, graduates and undergraduates. It will also help any reader who wishes to understand key concepts in finance.

Your book, your journey

To make the book easy to read, we have used a consistent format across chapters. Within each chapter there are multiple cross references (and links) to other relevant chapters as they occur. This will enable you to review chapters and make connections relevant to you. Allow your curiosity to determine your path through the book.

Clear structure

Each chapter follows a consistent format to make the book easy to read.

In a nutshell	In a few simple sentences, this section explains the meaning of key concepts used in finance.
Need to know	Designed for busy people who want to ‘cut to the chase’ and eliminate extraneous detail. The bare essentials of the chapter are covered under this section, including, where relevant: ■Why is this important ■When is this important ■‘Grey areas’ ■In practice.
Nice to know	For readers who wish to know more or are interested in some of the complexities.
Optional detail	Pertinent concepts and illustrations, which may provide additional insight.
Reflect and embed your understanding	Value-adding questions which enable a reader to reflect on each chapter, challenge their understanding and apply their learning to the workplace. Designed to develop confidence, enhance understanding and stimulate curiosity.
Where to spot in company accounts	For those interested in the complexities and further detail. Company accounts are a helpful resource when trying to understand finance. This section helps readers to understand how and where concepts are reflected within a company’s accounts.
Watch out for in practice	Points to be on the lookout for in practice.

Practical application

This book provides an opportunity to consolidate your knowledge of finance concepts learned in the book and to see how they apply in practice. Future developments in finance are also considered through the lens of limitations in published financial statements of today.

Terminology

This book uses terminology in everyday use (such as ‘stock’ and ‘fixed assets’) to make the book readily accessible to non-finance professionals. Alternative terminology (e.g. ‘inventory’ and ‘non-current assets’ used in international accounting/ financial reporting standards (IFRS)) is introduced to show equivalence in practice (see Chapter 19 Accounting and financial reporting standards). For financial reporting treatment and disclosures we have used IFRS. This is consistent with Greggs plc, the example company used throughout this book.

The terms ‘company’, ‘business’, ‘entity’ and ‘organisation’ are used interchangeably. There is no distinction in meaning intended by the authors in the use of these terms.

Contents

The individual chapters are grouped in eight parts. A brief description of each part is included below:

• 1Finance fundamentals
  • ■Why businesses use accruals accounting, a fundamental concept underpinning accounting, instead of cash accounting.
  • ■The finance department, key personnel and its systems.
• 2Primary financial statements
  • ■The main three financial statements: the profit and loss account (P&L); the balance sheet; and the cash flow statement.
• 3Key elements of financial statements
  • ■A number of key elements which make up financial statements are covered.
• 4Financial and regulatory environment
  • ■The rules, regulations, responsibilities and best practice of running a company.
• 5Assessing financial health
  • ■Key performance measures and indicators to asses a company’s financial health.
• 6Sources of business finance
  • ■The two main sources of business finance: equity and debt, plus alternative sources.
• 7Financial management
  • ■The best practice financial management techniques employed by businesses.
• 8Practical application
  • ■An opportunity to confirm your understanding of the whole book and apply your understanding to Greggs plc.
  • ■A discussion of the reliability, relevance and trustworthiness of financial statements.
  • ■A copy of Greggs plc 2020 financial statements for easy reference.