Review of Financial Intelligence for Entrepreneurs: What You Really Need to Know about the Numbers by Karen Berman and Joe Knight, with John Case

Abstract

Berman, Karen and Knight, Joe, with John Case. Financial Intelligence for Entrepreneurs: What You Really Need to Know about the Numbers, (Boston MA: Harvard Business Press, 2008). 285 pp. ISBN 978-1-4221-1915-0. From “The art of finance (and why it matters)” (Part One) through “Creating a financially intelligent company” (Part Eight), Financial Intelligence for Entrepreneurs is an engaging explanation and appreciation of financial statements and financial ratios. Short, easily digested chapters; just-in-time boxes to introduce terminology; easy, direct, in-text calculations from bare-bones, hypothetical financial statements to illustrate concepts; a 44-page appendix of crafted exercises on the income statement, balance sheet, cash-flow statement, and financial ratios from two public companies for deeper understanding; a detailed 19-page index for quick, after-you’ve-read-it navigation – all make for an efficient learning opportunity for readers who want a painless way to know about the numbers used in the world of business. Two quantitative literacy principles emerge as themes. The first is the “art of finance” (social construction): that is, the numbers are not totally objective; to varying extents, they reflect decisions, assumptions, and estimates in the accounting. The second is that ratios provide a window into the story that financial statements are able to tell. Written for entrepreneurs and company owners, the book ends with OBM (open-book management)—a management philosophy based on financial literacy. The vision of this book is businesses in which all employees are financially literate and managers and owners are financially intelligent.