Good reference for better understanding business finances

[rockman7892]

I have been working as an engineer for a large corporation for several years and over the past year or so have developed an interest in better understanding the finances of the business. Like many large company our company is split in multiple business units with each business unit having their own profit/loss financials that combine to make up the overall finances of the company.

I'm mostly interested in getting a better understanding the finances of a given business unit starting a granular level in understanding the various factors such as profit margin, net profit, return on sales, year over year analysis etc.....and better understanding the quarterly financial reports that are issued for each business unit. I'm also interested in seeing how the financials of these individual business units roll upwards to make up the overall financials of a company.

In addition to the financial aspect I'm also interested in better understanding the overall health of a business in understanding tings such as sales growth, orders entered, sales forecasting etc....

Based on what I described does anyone have any good recommendations for a book or other reference material to gain a better understanding of these concepts?

 

[IRstuff]

It sounds like your profit/loss statement information could be found in any college level accounting course. Aside from tax issues, it's relatively basic math. Most stockbrokers also have brochures on how to read balance sheets.

https://www.business.qld.gov.au/run...cial-statements-forecasts/profit-loss-reports

https://www.entrepreneur.com/article/244207

https://www.investopedia.com/ask/answers/122314/how-do-you-read-pl-statement.asp

http://www.dummies.com/business/accounting/understanding-profit-and-loss-reports/

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

https://www.youtube.com/watch?v=BKorP55Aqvg

faq731-376 forum1529 Entire Forum list

http://www.eng-tips.com/forumlist.cfm

 

[tygerdawg]

Years ago I did a series of "after hours" courses for working professionals. I recall it was a program organized via American Management Association AMA. It was four courses, each six weeks in duration, once per week. Topics I chose were Accounting & Finance for Non-Financial Managers I & II, Marketing, and...and...ummm...maybe something along the lines of the Purchasing & Contracts function. My company paid for it. I received a certificate that I completed (big deal). I had good instructors for all courses, and I put the time in. It taught me a lot of accounting and financial analysis skills that I still use to this day.

TygerDawg
Blue Technik LLC
Virtuoso Robotics Engineering

http://www.bluetechnik.com

 

[Terratek]

My first thought is to tell you to ask your manager a bunch of questions. But, since you work in a big corp, your boss may not have many answers about business related stuff. An accounting class might help, but probably not on its own. Understanding the essence of good business is sort of a pre-requisite to being able to interpret reports as good or bad. I've had really good guidance from my mentors and the MBA classes I am taking reinforce and supplement much of that. I got into real estate investing for a while and after learning how to evaluate RE deals (not too hard to figure out on your own), I started becoming more interested in business. I find that most of the principals in RE investing translate to regular business. In general it's pretty simple. Verify that you are making more than you are spending. Evaluate whether or not you could make higher profits doing something else (and change to that other thing if applicable). Time value of money (interest expense) is important if you are financing and for general long term analysis. Rinse and repeat until you die.

 

[77JQX]

I recommend you look up and understand the DuPont Formula. It ties ROI (which is what you want to maximize) with profit margin, asset turnover, and leverage. From there, benchmark your company vs industry averages for these things, and you can see how you stack up, competitively.