Book Review | HBR Guide to – Finance Basics for Managers

I am not so good in finance even after doing my MBA (which was in HR). It’s definitely not the easiest subject to understand however is the most important one. I will skip mentioning the arguments for its importance in our day to day life, be it investments or handling your current role at work. The bottom line is, we need to know, understand & use this domain. Fact – the term ‘bottom-line’ is itself taken from finance, a ‘part’ of P&L statement!

I accidently stumbled across this book in my college’s library in the ‘Philosophy’ section, strangely. I have always been an avid reader of HBR, so much that I find 60% of HBR articles pure & unadulterated BS. So, my initial reaction to this book was a feeling similar to puking. But my horrible experience with other books on such subject, and the small size of this one, made me pick it up.

As a person who is not interested in finance, I can tell you, this book is awesome! I don’t think there is any other text out there which has simplified the basics and important concepts of the subject as beautifully and elegantly as this one. The book has a 10-question quiz at the beginning, to keep a track of your knowledge before and after. My score: before 3/10, after 9/10.

The book takes you smoothly through all three types of financial statements (balance sheet, income statement and cash flow statement), explaining what comes where and why. With examples, which are very simple to understand and calculate. It explains various financial ratios like ROI, Working capital and many more which we regularly hear during our day to day dealings. It makes you understand that why a profitable business can go bust if cash flow is screwed. The clarity and simplicity is amazing.

This is a book which can ignite your deep interest in the subject, no matter how low your current level of knowledge may be. This book can act as your foundation for financial knowledge (of some sorts). I am done with this and have started reading another & little more detailed book on ‘Business Finance’.