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Preface
Everything should be as simple as possible. But no simpler. - Albert Einstein
This book is predicated on the above statement. Many managers and executives have a very poor understanding of financial concepts. For many, finance is a "dark science", the domain and priesthood of accountants. And yet, without an understanding of the basic principles how can one make good financial decisions or create value for stakeholders? Finance and accounting are difficult subjects that use a jargon of acronyms and complex mathematics. Nevertheless, we are convinced that it is possible to present a clear and concise understanding of the principles of financial management and value creation. Our objective is to keep things "black or white". We want everything to be as simple as possible; and no simpler. We recognise that in so doing we are on occasion ignoring possibly important detail. We have deliberately sacrificed complexity for the sake of clarity, and for this we apologise to the accounting profession. However, just as experienced trauma and ambulance professionals are better at the scene of an accident than surgeons and physicians, so we see our role in this course! We seek to address simple but important questions and to provide the necessary understanding and tools to save and create economic value in businesses. For example: Are you making profits but perhaps heading for bankruptcy? Or are you showing a loss en route to massive long-term value? What is your cash flow telling you? If you are being misled by profit and cash flow are you sure that you know who is driving what and to where? Should you be paying dividends? If you grow faster will you increase or destroy the value of your company? In your own business you must know which performance areas create both growth and long-term value. These are the "growth and value drivers" of the business. The art of financial management lies not in tracking isolated measures of performance, which many of us do, but in being able to identify these key growth and value drivers and understand how a change in any one of them can affect one or all of the others. It's all about focus. The information on these important concepts is most often found in complex and highly technical financial textbooks written for financial experts, not entrepreneurs and managers. This Course gives you the tools to drive your business without the need to pore over complex texts or sign up for courses in advanced finance. The models we provide have been used by thousands of entrepreneurs, decision-makers and analysts, many of whom have no formal financial training but who, perhaps like you, need to know exactly what is going on in their businesses and what to do to make them fly. What if there was one number you could look at in a business which would tell you how well it was being managed and whether or not it was becoming more valuable? There is such a measure. It is called market value added and is currently the best way of measuring corporate success because it cuts to the core of what makes a business valuable in a way that no traditional measures do. We not only show how market value is measured and interpreted; we also show how the market value of a company can be increased through management of its growth and value drivers. 
Foreword
In my career as a business academic and consultant, I have prowled the boardrooms and operating offices of many companies. Overall, I have been disappointed with the lack of insight and understanding that the leaders and managers of these firms had in turning their visions into reality. They often lacked the creativity and drive to really make their businesses perform to their full potential. They did not understand "what drives what". So why another course on planning? The answer is quite simple. Firstly, this is not a "course" – it is really an "operating manual" or a "workbook" that explains concepts and linkages that are so necessary for managers to understand the true complexity of a business. Secondly, it demonstrates and illustrates the language of accounting, finance and the new language of value creation. Building and running a successful business, despite conventional wisdom, is a difficult, complicated and often frightening task. It is difficult because it requires the ability to generate and test difficult strategies and options; complicated because it takes time and effort to understand the relationships and linkages between so many variables; and frightening because it requires new insights on an almost daily basis. The fact that what "worked" as recently as yesterday may not work today means more risk, and that is scary. I am convinced that most managers do not really understand finance and cash flow or what creates corporate value. This Course does the job superbly: it is not a "cookbook" of "success recipes". It is built around the simple yet powerful models that integrate accounting, finance and economics in a simple yet powerful way. Every manager will find Corporate Finance for Non-Financial Managers a valuable map to navigate through the rocky reefs of corporate finance, cash flow and value creation and will enjoy the trip enormously. Bon voyage! Prof. G.S. (Andy) Andrews BCom, MBA, PhD
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