The New CFO Financial Leadership Manual, Second Edition

The New CFO Financial Leadership Manual, Second Edition

by Steven M. Bragg
Released February 2007
Publisher(s): Wiley
ISBN: 9780470082003

Read it now on the O’Reilly learning platform with a 10-day free trial.

O’Reilly members get unlimited access to books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.

Start your free trial

Book description

Filled with pragmatic insights, proactive strategies, and best practices, The New CFO Financial Leadership Manual, Second Edition is destined to become your essential desktop companion. This thorough guidebook is essential reading for the CFO requiring an overview of strategies, measurement and control systems, financial analysis tools, funding sources, and management improvement tips.

Table of contents

  1. Copyright
    1. Dedication
  2. Preface
  3. Acknowledgments
  4. About the Author
  5. 1. Overview
    1. 1. CFO’s Place in the Corporation
      1. First Days in the Position
      2. Specific CFO Responsibilities
      3. Overview of the Change Management Process
      4. Differences between the Controller and CFO Positions
      5. Relationship of the Controller to the CFO
      6. Summary
    2. 2. Financial Strategy
      1. Cash
        1. Reducing Foreign Currency Exposure
        2. Decision to Change a Banking Relationship
      2. Investments
        1. Maximizing Return on Assets
        2. Bond Refunding Decision
      3. Working Capital
        1. Working Capital Reduction Methodology
          1. Accounts Receivable
          2. Inventory
          3. Accounts Payable
      4. Inventory: Inventory Reduction Decision
      5. Fixed Assets: Lease versus Buy Decision
      6. Payables
        1. Early Payment Discount Decision
        2. Payment Factory Decision
        3. Spend Management Decision
      7. Debt
        1. Decision to Acquire More Debt
        2. Refinancing Decision
        3. Convertible Security Issuance Decision
        4. Disclosure Reporting Decision
      8. Equity
        1. Debt versus Equity Funding Decision
        2. Type of Equity Offering Decision
        3. Dividend Issuance Decision
          1. Products: Product Elimination Decision
      9. Fixed Expenses: Step Costing Decision
      10. Payroll Expenses: Temporary Labor versus Permanent Staffing Decision
      11. Entities: Divestiture Decision
        1. Systems: When to Use Throughput Costing
      12. High-Volume, Low-Price Sale Decision Using Throughput Costing
      13. Capital Budgeting Decision Using Throughput Costing
      14. Make versus Buy Decision Using Throughput Costing
      15. Summary
    3. 3. Tax Strategy
      1. Accumulated Earnings Tax
      2. Cash Method of Accounting
      3. Inventory Valuation
      4. Mergers and Acquisitions
      5. Net Operating Loss Carryforwards
      6. Nexus
      7. Project Costing
      8. S Corporation
      9. Sales and Use Taxes
      10. Transfer Pricing
      11. Unemployment Taxes
      12. Summary
    4. 4. Information Technology Strategy
      1. Reasons for Devising an Information Technology Strategy
      2. Developing the Information Technology Strategy
      3. Technical Strategies
      4. Specific Applications
      5. Summary
  6. 2. Accounting
    1. 5. Performance Measurement Systems
      1. Creating a Performance Measurement System
      2. Asset Utilization Measurements
        1. Sales to Working Capital Ratio
        2. Days of Working Capital
        3. Sales per Person
        4. Sales Backlog Ratio
        5. Breakeven Point
        6. Margin of Safety
      3. Operating Performance Measurements
        1. Core Growth Rate
        2. Gross Profit Percentage
        3. Operating Profit Percentage
        4. Net Profit Percentage
      4. Cash-Flow Measurements
        1. Cash Flow from Operations
        2. Cash-Flow Return on Assets
        3. Cash to Working Capital Ratio
      5. Liquidity Measurements
        1. Average Receivable Collection Period
        2. Collection Effectiveness Index
        3. Inventory Turnover
        4. Accounts Payable Days
        5. Quick Ratio
      6. Solvency Measurements
        1. Times Interest Earned
        2. Debt Coverage Ratio
      7. Return on Investment Measurements
        1. Return on Assets Employed
        2. Return on Equity Percentage
        3. Economic Value Added
        4. Dividend Payout Ratio
      8. Market Performance Measurements
        1. Sales to Stock Price Ratio
        2. Price/Earnings Ratio
      9. Quality of Earnings Ratio
      10. Summary
    2. 6. Control Systems
      1. Need for Control Systems
      2. Types of Fraud
      3. Key Controls
      4. When to Eliminate Controls
      5. Summary
    3. 7. Audit Function
      1. Composition of the Audit Committee
      2. Role of the Audit Committee
        1. Tasks Related to Company Management
        2. Tasks Related to External Auditors
        3. Tasks Related to Internal Audits
        4. Tasks Related to Financial Systems
      3. Purpose of the External Auditors
      4. Dealing with External Auditors
      5. Impact of the Sarbanes-Oxley Act on the Audit Function
        1. Issues for the External Auditor
        2. Issues for the Public Company
        3. Issues for the Private Company
      6. Role of the Internal Audit Function
      7. Managing the Internal Audit Function
        1. Planning Controls
        2. Performance Controls
        3. Follow-Up Controls
      8. Summary
    4. 8. Reports to the Securities and Exchange Commission
      1. Overview
      2. Securities Act of 1933
      3. Securities Exchange Act of 1934
      4. Regulation S-X
      5. Regulation S-K
      6. Regulation S-B
      7. Regulation FD
      8. SEC Forms
      9. EDGAR Filing System
      10. Summary
  7. 3. Financial Analysis
    1. 9. Cost of Capital
      1. Components
      2. Calculating the Cost of Debt
      3. Calculating the Cost of Equity
      4. Calculating the Weighted Cost of Capital
      5. Incremental Cost of Capital
      6. Using the Cost of Capital in Special Situations
      7. Modifying the Cost of Capital to Enhance Shareholder Value
      8. Strategize Cost of Capital Reductions
      9. Summary
    2. 10. Capital Budgeting
      1. Hurdle Rate
      2. Payback Period
      3. Net Present Value
      4. Internal Rate of Return
      5. Problems with the Capital Budget Approval Process
      6. Cash Flow Modeling Issues
      7. Funding Decisions for Research and Development Projects
      8. Capital Investment Proposal Form
      9. Post-Completion Project Analysis
      10. Summary
    3. 11. Other Financial Analysis Topics
      1. Risk Analysis
      2. Capacity Utilization
      3. Breakeven Analysis
      4. Business Cycle Forecasting
      5. Summary
  8. 4. Funding
    1. 12. Cash Management
      1. Cash Forecasting Model
      2. Measuring Cash Forecast Accuracy
      3. Cash Forecasting Automation
      4. Cash Management Controls
      5. Cash Management Systems
      6. Foreign Exchange with the Continuous Link Settlement System
      7. Natural Hedging Techniques
      8. Summary
    2. 13. Investing Excess Funds
      1. Investment Criteria
      2. Investment Restrictions
      3. Investment Options
      4. Summary
    3. 14. Obtaining Debt Financing
      1. Management of Financing Issues
      2. Bank Relations
      3. Credit Rating Agencies
      4. Accounts Payable Payment Delay
      5. Accounts Receivable Collection Acceleration
      6. Credit Cards
      7. Direct Access Notes
      8. Employee Trade-Offs
      9. Factoring
      10. Field Warehouse Financing
      11. Floor Planning
      12. Inventory Reduction
      13. Lease
      14. Line of Credit
      15. Loans
        1. Asset Based
        2. Bond
        3. Bridge
        4. Debt-Equity Hybrid
        5. Economic Development Authority
        6. Long-Term
        7. Mezzanine Financing
        8. Purchase Order Financing
        9. Small Business Administration
        10. Short-Term
      16. Preferred Stock
      17. Sale and Leaseback
      18. Summary
    4. 15. Obtaining Equity Financing
      1. Types of Stock
      2. Private Placement of Stock
      3. Layout of the Offering Memorandum
      4. Establishing a Valuation for the Offering Memorandum
      5. Swapping Stock for Expenses
      6. Swapping Stock for Cash
      7. Stock Warrants
      8. Stock Subscriptions
      9. Private Investment in Public Equity
      10. Committed Long-Term Capital Solutions
      11. Buying Back Shares
      12. Summary
    5. 16. Initial Public Offering
      1. Reasons to Go Public
      2. Reasons Not to Go Public
      3. Cost of an IPO
      4. Preparing for the IPO
      5. Finding an Underwriter
      6. Registering for and Completing the IPO
      7. Alternatives for Selling Securities
        1. Open IPO
        2. Reverse Merger
      8. SCOR
      9. Trading on an Exchange
      10. Over-the-Counter Stocks
      11. Restrictions on Stock in a Publicly Traded Company
      12. Summary
    6. 17. Taking a Company Private
      1. Going Private Transaction
      2. Rule 13E-3
      3. Filling Out Schedule 13E-3
      4. Intentional Delisting
      5. Summary
  9. 5. Management
    1. 18. Risk Management
      1. Risk Management Policies
      2. Risk Management Planning
      3. Manager of Risk Management
      4. Risk Management Procedures
      5. Types of Insurance Companies
      6. Evaluating the Health of an Insurance Carrier
      7. Catastrophe Bonds
      8. Claims Administration
      9. Insurance Files
      10. Annual Risk Management Report
      11. Key-Man Life Insurance for the CFO
      12. Summary
    2. 19. Outsourcing the Accounting and Finance Functions
      1. Advantages and Disadvantages of Outsourcing
      2. Contractual Issues
      3. Transition Issues
      4. Controlling Supplier Performance
      5. Measuring Outsourced Activities
        1. Cash Management
        2. Collections
        3. Financial Statements
        4. Internal Auditing
        5. Investments
        6. Payroll
        7. Pension
        8. Taxes
        9. Transactions
      6. Managing Suppliers
      7. Dropping Suppliers
      8. Summary
    3. 20. Operational Best Practices
      1. Best Practices
      2. Summary
    4. 21. Mergers and Acquisitions
      1. Evaluating Acquisition Targets
      2. Complexity Analysis
      3. Evaluate Acquisition Targets with Alliances
      4. Valuing the Acquiree
      5. Determining the Value of Synergies
      6. Form of Payment for the Acquisition
      7. Terms of the Acquisition Agreement
      8. When to Use an Investment Banker
      9. Accounting for the Acquisition
      10. Purchase Method
      11. Cost Method
      12. Equity Method
      13. Consolidation Method
      14. Intercompany Transactions
      15. Contingent Payments
      16. Push-Down Accounting
      17. Leveraged Buyouts
      18. Spin-Off Transactions
      19. Summary
    5. 22. Electronic Commerce
      1. Advantages of Electronic Commerce
      2. E-Commerce Business Model
      3. Restructuring the Organization for E-Commerce
      4. E-Commerce Architecture
      5. E-Commerce Security
      6. E-Commerce Insurance
      7. E-Commerce Legal Issues
      8. Summary
  10. 6. Other Topics
    1. 23. Employee Compensation
      1. Deferred Compensation
      2. Life Insurance
      3. Stock Appreciation Rights
      4. Stock Options
      5. Bonus Sliding Scale
      6. Cut Benefit Costs with a Captive Insurance Company
      7. Summary
    2. 24. Bankruptcy
      1. Applicable Bankruptcy Laws
      2. Players in the Bankruptcy Drama
      3. Creditor and Shareholder Payment Priorities
      4. Bankruptcy Sequence of Events
      5. Tax Liabilities in a Bankruptcy
      6. Special Bankruptcy Rules
      7. The Bankruptcy Act of 2005
      8. Alternatives to Bankruptcy
      9. Summary
  11. 7. Appendices
    1. A. New CFO Checklist
    2. B. Performance Measurement Checklist
    3. C. Due Diligence Checklist
      1. Industry Overview
      2. Corporate Overview
      3. Organization and General Corporate Issues
      4. Capitalization and Significant Subsidiaries
      5. Employees
      6. Revenue
      7. Assets
      8. Liabilities
      9. Financial Statements
      10. Internet
      11. Software Development
      12. Marketing
      13. Sales
      14. Research and Development
      15. Payroll
      16. Human Resources
      17. Treasury
      18. Culture
      19. Complexity
      20. Other

Product information

  • Title: The New CFO Financial Leadership Manual, Second Edition
  • Author(s): Steven M. Bragg
  • Release date: February 2007
  • Publisher(s): Wiley
  • ISBN: 9780470082003