Financial Intelligence

I just finished reading "Financial Intelligence" by Karen Berman, Joe Knight & John Case.

The book is good for people those who do not have accouting background or knowledge and wants to know about accounting basics and fundamentals.

It basically helps to understand the Income Statement,Balance Sheet, Cashflow Statement. There are so many numbers in these statements such as Gross Profit, Asset Values,Liabilities,etc. The book explains, -profit is an estimate, how the assumptions, estimates and judgements can affect these numbers.

It also talks about few important ratios such as Profitability Ratios,Leverage Ratios,Liquitity Ratios and Efficiency Ratios.

I came to know the importance of the cashflow. How the profitable company can go out of business if they do not have proper cashflow strategy. For a healthier business, cashflow is more important than profitability.


Last but not least, it gives some details about ROI (Return On Investment).

In conclusion, this book is useful for non-accouting people to understand the bacic principles of accouting. I would recommend this to 1) anyone who is running a business or planning to start one 2) corporate employees who has financial approval privilges.