January 2006

Many people find that, as their careers progress, they become more and more exposed to financial information. This might mean that they need to develop their skills so that they can analyse and interpret the financial results of various organisations.

Unfortunately for some the prospect of making sense of financial information is daunting because they wrongly believe that there is some great mystique to the world of finance. Accountants do not possess some natural skill which means that only they can master Profit and Loss Statements, Balance Sheets and Cash Flow Statements. To understand the information presented in these reports you need to understand the concepts that underpin them. Essentially you need to clearly understand what accountants mean when they talk about assets and liabilities and when they talk about income and expenses. Once these are properly understood you have the basis to understanding a Balance Sheet and a Profit and Loss Statement.

The purpose of a Balance Sheet is to state the value of the organisation at a particular point in time as represented by the assets and liabilities it has at that moment in time; an asset being something that the organisation owns whilst a liability is an amount of money owed by the organisation to a third party. The purpose of a Profit and Loss Statement is to report whether for a particular period of time the organisation has made a profit as a consequence of its income exceeding its expenses for that period, or indeed a loss due to its expenses exceeding its income. Income is generated by the sale of goods or services whilst expenses are costs that are incurred during the particular period of time. The important thing about accounting for income is that you do not have to have received the money and similarly you do not have to have made a payment to account for an expense. It is the purpose of a Cash Flow Statement to explain what amounts of money have been received and spent during a particular period of time.

The ability to analyse and interpret financial information is an important attribute of a truly successful person. People who are involved in purchasing need to have the confidence that the suppliers that they most depend upon are financially secure whilst people involved in sales need to be sure that they are not taking any unnecessary risks of not being paid when they agree to supply a customer on credit. Not forgetting that all people need to know how their actions affect the financial performance of their organisation and what they can do to improve it.

Do all your people understand finance?

Understanding Finance

To help people master their understanding of finance we present a training session which is widely accepted as one of the best because it quickly removes the fear that some people have regarding finance, it takes what some people perceive to be complex accounting terms and puts them into a context that enables non-financial people to readily understand them. The session is also entertaining, it is not a dry lecture, it is a highly interactive training session presented by a dynamic accountant. The high impact presentation makes fascinating use of video clips and is delivered in three hours. Rest assured people learn a tremendous amount in a very short period of time, and what is more you will get outstanding value for money - all this for 45+VAT. More details...

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