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Entrepreneurial Finance: Finance for Small Business / Edition 3

Entrepreneurial Finance: Finance for Small Business / Edition 3


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Targeting readers who wish to learn more about the financial aspects of entrepreneurship, this book provides financial statements for every type of business, not just corporations; and includes balance sheets that show a negative equity position, as many businesses do get into financial difficulty or declare bankruptcy. Updated to include the latest tax laws and current interest rates, Entrepreneurial Finance includes an extensive chapter on personal finance and covers every type of retirement program available to the small-business owner. Written in the first person that speaks directly to the small business owner, this book provides practical problems, reflects current Federal Reserve policy, and gives specific uses for each of the six formulas presented regarding the time value of money. It outlines the basic economic factors affecting finance, discusses the advantages and disadvantages of various forms of business ownership, and discusses working capital and inventory management. For business owners and managers of sole proprietorships, partnerships, limited liability companies, or small nonpublic corporations.

Product Details

ISBN-13: 9780131842052
Publisher: Pearson
Publication date: 07/07/2003
Edition description: Older Edition
Pages: 370
Product dimensions: 7.78(w) x 10.18(h) x 0.63(d)

Table of Contents

1. Financial and Economic Concepts.
2. Financial Management and Planning.
3. Financial Statements.
4. Analysis of Financial Statements.
5. Profit, Profitability, and Break-Even Analysis.
6. Forecasting and Pro Forma Financial Statements.
7. Working Capital Management.
8. Time Value of Money.
9. Capital Budgeting.
10. Personal Finance.
Appendix A: Working with Spreadsheets.
Appendix B: Time-Value-of-Money Tables.
Appendix C: Answers to Even-Numbered Exercises and Problems.
Appendix D: Case Study.


Welcome to our third edition. The authors realize that the applicability of the basic business concepts of this text will benefit more individuals than just the initially targeted small business owner.

We have written this textbook for the over 99 percent of business owners and managers in the United States who manage sole proprietorships, partnerships, limited liability companies, or small nonpublic corporations. We are targeting those individuals who wish to learn more about the financial aspects of business entrepreneurship. We make complex theory easy to understand and discuss vital issues with a direct and clear delivery of material. We apply many of the techniques that are found in traditional corporate finance texts to businesses at an understandable level.

Most people who desire to start a business come from technical and engineering backgrounds. Their formal education is in technology rather than business. This book is written primarily as a textbook for the education institution that caters to the concerns of individuals wishing to enhance their abilities in those areas of business that lead to successful entrepreneurship. This text can also be used as a text by universities and technical colleges offering programs in finance and entrepreneurship. Of the over twenty-eight million businesses in the United States, approximately 72 percent are sole proprietorships, 8 percent are partnerships, 9 percent are C corporations and 11 percent are Subchapter S corporations; fewer than 1 percent are publicly traded corporations.- However, almost all financial textbooks are written for the large corporation and do not address the needs of over 99 percent of allbusiness. Additionally, the majority of these business establishments has less than twenty employees.' For these businesses the owner is pretty much the chief financial officer, the chief executive officer, and the chief operating officer. Such a business owner needs a working knowledge of finance because he or she has no staff support on a full-time basis to assist in planning.

Our textbook differs from the typical financial textbook in the following areas. Traditional financial texts are written for college juniors, seniors, or graduate students with the assumption that the student has had several courses in accounting. They also assume that this student will be working for a major corporation. This is not usually the case. Our textbook provides the critical financial information required for the majority of students entering the business world today. The resources used in writing a business plan often omit many of the financial aspects that the owner may need to determine the financial health of an existing or future business. Because many students who enter into business come from a technical background rather than having a prior formal business education, we begin our text by outlining the basic economic factors affecting finance. We then discuss the advantages and disadvantages of various forms of business ownership. The text provides examples of financial statements for each type of business ownership. We devote more time than do most financial texts to discussing working capital and inventory management, because even though the sales may increase, that business may fail because of poor working capital and inventory management techniques.

Most business managers have been trained to judge the profitability of a project in terms of payback and break-even analysis. We have taken corporate capital budgeting techniques and adapted them by showing the weighted average cost of capital as it exists for most business owners. We also demonstrate the importance of the time value of money as a tool in both business planning and personal financial planning, and we simplify the use of this tool. We provide the reader with specific examples where each of the six time value of money formulas is actually used by individuals and businesses.

All individuals regardless of whether or not they work for the traditional publicly traded corporation will have to make decisions about their retirement plans. Traditional financial textbooks do not cover personal financial planning. Because of this we have included a chapter on personal financial planning. This chapter includes an in-depth discussion of risk management as well as those investment vehicles that enable the entrepreneur to plan for personal financial goals. We believe that it is imperative for business managers not only to run their business successfully on a day-today basis, but to have those skills that will enable them to plan for their personal and family's future.

Philip J. Adelman
Alan M. Marks

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