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How Finance Works: The HBR Guide to Thinking Smart About the Numbers
Based on a popular class taught by a Harvard Business School professor.If you're not a numbers person, then finance can be intimidating and easy to ignore. But if you want to advance in your career, you'll need to make smart financial decisions and develop the confidence to clearly communicate those decisions to others.
In How Finance Works, Mihir Desai--a professor at Harvard Business School and author of The Wisdom of Finance--guides you into the complex but endlessly fascinating world of finance, demystifying it in the process.
Through entertaining case studies, interactive exercises, full-color visuals, and a conversational style that belies the topic, Professor Desai tackles a broad range of topics that will give you the knowledge and skills you need to finally understand how finance works. These
How different financial levers can affect a company's performanceThe different ways in which companies fund their operations and investmentsWhy finance is more concerned with cash flow than profitsHow value is created, measured, and maximizedThe importance of capital markets in helping companies grow
Whether you're a student or a manager, an aspiring CFO or an entrepreneur, How Finance Works is the colorful and interactive guide you need to help you start thinking more deeply about the numbers.
In How Finance Works, Mihir Desai--a professor at Harvard Business School and author of The Wisdom of Finance--guides you into the complex but endlessly fascinating world of finance, demystifying it in the process.
Through entertaining case studies, interactive exercises, full-color visuals, and a conversational style that belies the topic, Professor Desai tackles a broad range of topics that will give you the knowledge and skills you need to finally understand how finance works. These
How different financial levers can affect a company's performanceThe different ways in which companies fund their operations and investmentsWhy finance is more concerned with cash flow than profitsHow value is created, measured, and maximizedThe importance of capital markets in helping companies grow
Whether you're a student or a manager, an aspiring CFO or an entrepreneur, How Finance Works is the colorful and interactive guide you need to help you start thinking more deeply about the numbers.
366 pages, Kindle Edition
Published April 2, 2019
845 people are currently reading
3101 people want to read
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Displaying 1 - 30 of 75 reviews
April 30, 2019
My only complaint is that I wish I had this book earlier in my career. Accessible yet comprehensive.
April 13, 2020
This book that is one of the best to demystify finance and its importance for managers, making it practical and helping decision making, rather than the abstract approach of accounting.
February 14, 2019
Awesome book on the subject by Mihir Desai is what this book is. I have been trying to educate myself for quite sometime about Stock Market and Investing. I have read few books on the subject matter and while most books that I have read addresses at least one to two chapters on decoding a financial statements, I have never found the coverage satisfactorily. They just list definitions and equations but in this book that is entirely dedicated to understanding the subject matter of finance, the author takes a didactic approach and walks you through the concepts in a very tutored environment. The definitions are clear and easy to understand and periodically there are vignettes to make you reflect on whatever is being discussed. If you are looking for a book to familiarize yourself with financial concepts and lingo or learning how to evaluate a company before investing in it or are starting a job or already in a job that requires you to communicate with financial personnel this book is for you. I would recommend this book to anyone who is looking for a book that is easy to read and comprehensible enough even for someone with no commerce or business background.
P.S: This book has been provided to me by Harvard Business Review Press via Netgalley in return of my unbiased opinion about this book.
P.S: This book has been provided to me by Harvard Business Review Press via Netgalley in return of my unbiased opinion about this book.
December 15, 2024
A must-read for anyone early in their investing journey, an excellent introduction to financial concepts. This book breaks down complex topics into clear, accessible insights, making it an invaluable resource for building a solid intuition and foundation in finance. Highly recommended for beginners looking to enhance their understanding and make smarter decisions with numbers.
April 3, 2021
Three years ago I took a course in Finance under Prof Gatum Kaul, through University of Michigan and EdX. It introduced me to the basic principles of finance, like the time value of money and terms like “present value”, “annuity”, “perpetuity” and many others. The approach was practical; we were given day-to-day problems like financing a house or education. And we did a lot of computations. While these tools are valuable, I was not able to fully understand these concepts. I know how to compute them and I know their practical use, but I didn’t seem to fully grasp it. It was like having the tools but not knowing when to use them. I wanted more but I couldn’t find time to participate in the four-course Coursera specialization by the same professor.
Then I came across this book by Prof Mihir Desai. The approach was entirely different—still practical, but without all the computations. It made me appreciate all the concepts that I learned from Prof Kaul, and many more. While Prof Kaul applied the concepts to personal finances, Prof Desai’s book is suited for those who want to invest in companies and stocks (is this what you call Corporate Finance?). As a newbie in stock market investing, I’ve only been doing technical analysis (study stock price trends through charts), but I’ve heard that fundamental analysis and value investing are better for those who want to invest long-term. So I tried to read different books, but I couldn’t get through them due to my lack of understanding of basic finance and investing. In just six chapters, you will be introduced to financial statements, different ratios (P/E, P/B, etc.) and what they mean, and the art and science of valuation. At the end of each chapter, there are helpful case studies to make you grasp the concepts more. Combined with the computational tools of Prof Kaul’s class, this will definitely get you started in your financial endeavors, whatever they may be.
I now understand why Prof Kaul thinks Finance is fascinating subject. It is indeed true, but as a scientist, I am still struggling with the “art” of valuation. Projecting future earnings, considering different scenarios and the dealing with problem of asymmetric information are still alien to me. But I guess that’s what makes it fascinating. The fact that it’s unpredictable. The challenge for me would be to accept that it’s an “art” and try it for myself. The knowledge I got from Prof Kaul and Prof Desai are still the fundamentals. This is still the beginning and I hope to learn more. We’ll see in the next few years if I was able to convert all this knowledge to value.
Then I came across this book by Prof Mihir Desai. The approach was entirely different—still practical, but without all the computations. It made me appreciate all the concepts that I learned from Prof Kaul, and many more. While Prof Kaul applied the concepts to personal finances, Prof Desai’s book is suited for those who want to invest in companies and stocks (is this what you call Corporate Finance?). As a newbie in stock market investing, I’ve only been doing technical analysis (study stock price trends through charts), but I’ve heard that fundamental analysis and value investing are better for those who want to invest long-term. So I tried to read different books, but I couldn’t get through them due to my lack of understanding of basic finance and investing. In just six chapters, you will be introduced to financial statements, different ratios (P/E, P/B, etc.) and what they mean, and the art and science of valuation. At the end of each chapter, there are helpful case studies to make you grasp the concepts more. Combined with the computational tools of Prof Kaul’s class, this will definitely get you started in your financial endeavors, whatever they may be.
I now understand why Prof Kaul thinks Finance is fascinating subject. It is indeed true, but as a scientist, I am still struggling with the “art” of valuation. Projecting future earnings, considering different scenarios and the dealing with problem of asymmetric information are still alien to me. But I guess that’s what makes it fascinating. The fact that it’s unpredictable. The challenge for me would be to accept that it’s an “art” and try it for myself. The knowledge I got from Prof Kaul and Prof Desai are still the fundamentals. This is still the beginning and I hope to learn more. We’ll see in the next few years if I was able to convert all this knowledge to value.
November 25, 2021
Excellent primer to finance, I’ll probably go back and reread some chapters (3,4,5?) in the future.
August 24, 2019
This is a really excellent and challenging book for someone without a background in finance. I really like that it approaches the topic from the big picture perspective, that it is chock full of interactive sections and opportunities for learning and practice by the reader; and that it portrays the major fundamentals of finance in terms of the main conflicts between positions (ex/ stock buyback vs. dividends vs. investing in positive NPV projects, which should I do as CEO?)
I recommend this to anyone wanting to understand the major financial concepts and jargon, especially those without financial backgrounds.
I recommend this to anyone wanting to understand the major financial concepts and jargon, especially those without financial backgrounds.
October 13, 2020
یکی از بهترین کتاب ها برای کسانی که یا در سطوح مقدماتی هستند و یا هیچ از فایننس نمی داند، البته این کتاب حتی برای کسانی که در فایننس سر رشته دارند نیز می تواند الهام بخش باشد و درک جدیدی به خوانند بدهد.
کتاب دارای 6 فصل است و می توان گفت که مرجعی از تمام پایه های مهم فایننس می باشد. بعد از خواندن این کتاب مکانیزم های .
کلی مالی شرکتی، بازارهای مالی و ارزشیابی را به بهترین شکل درک خواهید کرد
همانطور که خود کتاب هم در آخر اشاره می کند خواندن این کتاب پایان راه نیست بلکه آغازی است برای یادگیری فایننس.
کتاب دارای 6 فصل است و می توان گفت که مرجعی از تمام پایه های مهم فایننس می باشد. بعد از خواندن این کتاب مکانیزم های .
کلی مالی شرکتی، بازارهای مالی و ارزشیابی را به بهترین شکل درک خواهید کرد
همانطور که خود کتاب هم در آخر اشاره می کند خواندن این کتاب پایان راه نیست بلکه آغازی است برای یادگیری فایننس.
June 22, 2020
Best book I have read on technical knowledge. I have always been daunted by financial terms for the most adult part of my life and the best part this book has done is debunked those myths that I had been harboring. One of those books, which you never want to see it end, in which you want author to keep taking you to deeper part of the water as that strong relatioship is developed.
I run a startup and I am an MBA and it is a book/teacher that has build something fundamental that a startup and an MBA program couldnt do with just 6 basic chapters of financial world.
Thank you Professor Mihir for such a wonderful gem. I feel like I owe you for this and I am really looking forward to what you want to write in your next projects!
I run a startup and I am an MBA and it is a book/teacher that has build something fundamental that a startup and an MBA program couldnt do with just 6 basic chapters of financial world.
Thank you Professor Mihir for such a wonderful gem. I feel like I owe you for this and I am really looking forward to what you want to write in your next projects!
February 9, 2022
One of the most amazing books I have ever read, because of the following reasons.
1. The book is a practical approach to finance. You learn by going through various exercises.
2. The book takes into account real-life scenarios, case studies and commentary from CXOs of the world on various topics
3. As a complete beginner, I never thought I could learn so many things by going through just one book in finance.
Everyone should read this book, irrespective of the domain they work in.
1. The book is a practical approach to finance. You learn by going through various exercises.
2. The book takes into account real-life scenarios, case studies and commentary from CXOs of the world on various topics
3. As a complete beginner, I never thought I could learn so many things by going through just one book in finance.
Everyone should read this book, irrespective of the domain they work in.
December 24, 2025
Really loved how concepts with explained - excellent examples. I got lost at some of the later sections, but then was pulled back in.
I particularly found it helpful to understand the difference in how Accountants view the data and how Financiers view the data. No wonder no one can agree on anything.
I particularly found it helpful to understand the difference in how Accountants view the data and how Financiers view the data. No wonder no one can agree on anything.
October 3, 2022
Without much of a finance background, this was very easy to consume and learn from.
September 1, 2025
Informative Introduction - For readers looking to better understand the financial foundations of business, “How Finance Works” by Mihir Desai is a highly accessible and structured guide. Following his earlier work, “The Wisdom of Finance,” which connected finance to life through stories and philosophy (and seems to relate to books such as Nafisi’s “Reading Lolita in Tehran” ---see my reviews), this title takes a more practical, tool-based approach—explaining key financial concepts without overwhelming the reader.
Desai opens with a clear statement of intent: to equip readers with the "most central intuitions of finance" and build "confidence and curiosity" when approaching financial issues (p. 9). The book delivers on that promise through seven well-organized chapters covering financial analysis, cash flows, capital markets, valuation, and capital allocation.
One of the book’s strongest features is its visual tools—particularly the DuPont Framework (p. 54), which breaks down return on equity into actionable components. Charts like the financial ecosystem map (p. 116) help demystify how capital flows from savers through markets to companies, clarifying the role of intermediaries.
Desai underscores that finance is less about accounting arithmetic and more about understanding cash, risk, and the future. As he argues, "finance professionals consider net profit flawed" and instead rely on free cash flow as a more accurate signal of economic performance (p. 68). The statement of cash flows, in his view, may be the most revealing of all financial statements (p. 73).
Yet, this book is not without limits. Its examples are drawn entirely from the for-profit corporate world. Public sector leaders, educators, or those in non-profits may need to extrapolate concepts for their own use. Still, ideas like the principal-agent problem (pp. 134–35), stakeholder credibility (p. 139), and value creation through innovation (p. 162) have clear parallels across sectors.
For readers interested in broadening these insights, Rana Foroohar’s “Makers and Takers” offers a critical look at how the financial sector has outgrown its productive roots, while Geoffrey Moore’s “Living on the Fault Line” addresses how companies can sustain value by aligning financial metrics with long-term innovation. In addition, Edward Freeman’s “Stakeholder Theory” also provides a useful lens for thinking about financial decisions beyond shareholder returns—applicable both in business and nonprofit strategy. (see my reviews of these books).
Overall, “How Finance Works” is an engaging and informative introduction that avoids heavy jargon and focuses on intuition. While its formulas for valuation and cash flow analysis require some effort to master, the core ideas are clearly explained. For those new to finance—or for professionals seeking to better engage with financial teams—Desai’s book is a helpful resource.
Desai opens with a clear statement of intent: to equip readers with the "most central intuitions of finance" and build "confidence and curiosity" when approaching financial issues (p. 9). The book delivers on that promise through seven well-organized chapters covering financial analysis, cash flows, capital markets, valuation, and capital allocation.
One of the book’s strongest features is its visual tools—particularly the DuPont Framework (p. 54), which breaks down return on equity into actionable components. Charts like the financial ecosystem map (p. 116) help demystify how capital flows from savers through markets to companies, clarifying the role of intermediaries.
Desai underscores that finance is less about accounting arithmetic and more about understanding cash, risk, and the future. As he argues, "finance professionals consider net profit flawed" and instead rely on free cash flow as a more accurate signal of economic performance (p. 68). The statement of cash flows, in his view, may be the most revealing of all financial statements (p. 73).
Yet, this book is not without limits. Its examples are drawn entirely from the for-profit corporate world. Public sector leaders, educators, or those in non-profits may need to extrapolate concepts for their own use. Still, ideas like the principal-agent problem (pp. 134–35), stakeholder credibility (p. 139), and value creation through innovation (p. 162) have clear parallels across sectors.
For readers interested in broadening these insights, Rana Foroohar’s “Makers and Takers” offers a critical look at how the financial sector has outgrown its productive roots, while Geoffrey Moore’s “Living on the Fault Line” addresses how companies can sustain value by aligning financial metrics with long-term innovation. In addition, Edward Freeman’s “Stakeholder Theory” also provides a useful lens for thinking about financial decisions beyond shareholder returns—applicable both in business and nonprofit strategy. (see my reviews of these books).
Overall, “How Finance Works” is an engaging and informative introduction that avoids heavy jargon and focuses on intuition. While its formulas for valuation and cash flow analysis require some effort to master, the core ideas are clearly explained. For those new to finance—or for professionals seeking to better engage with financial teams—Desai’s book is a helpful resource.
July 10, 2022
বিএসসি করার সময় ২ ক্রেডিটের একাউন্টিং কোর্স করে ব্যালান্স শিট আর ইনকাম স্টেটমেন্ট তৈরি করা শিখেছিলাম। প্রথম দিনেই স্যার ক্লাসে এসে আমাদের একজনের থেকে ১০০০ টাকা ধার নিয়ে কাল্পনিক ব্যবসা শুরু করেলেন। ঐ ব্যবসার গল্প বলতে বলতে প্রথম দিন ডেবিট, ক্রেডিট বোঝালেন। পরের দিন ব্যালান্স শিট, পরের দিন ইনকাম স্টেটমেন্ট- এইভাবে ধাপে ধাপে একাউন্টিং বোঝাতে থাকলেন আমাদের। খুব সহজে বুঝলাম (তবে পরে কেন যেন ক্যাশ ফ্লো স্টেটমেন্ট পুরাপুরি বুঝে উঠি নাই সেসময়) এবং একাউন্টিং/ফিন্যান্সে এ আগ্রহ তৈরি হল।
এমবিএতে প্রথম সেমিস্টারে ফিন্যান্সিয়াল একাউন্টিং করাতে আসল এক ফাঁকিবাজ স্যার, যিনি কারণে অকারণে EBIT, COGS, BETA, CAPM বলে টলে আবজাব বুঝাইত, পড়াইতে পারত না কিছুই। উনি সম্ভবত ধরে নিত আমরা সবাই ফিন্যান্স পড়ে আসছি বিবিএ করার সময়। এখন আর নতুন করে বোঝার কিছু নাই। অথচ এমবিএতে প্রায় অর্ধেক স্টুডেন্টই আসে ইঞ্জিনিয়ারিং ব্যাকগ্রাউন্ড থেকে। তারপরও ঐ সেমিস্টার পার করতে সমস্যা হয় নাই, কারণ আমার পুঁজি ছিল বিএসসির সময় করা ঐ দুই ক্রেডিটের একাউন্টিং কোর্স। পরের সেমিস্টারগুলাও পার করেছিলাম বিএসসির দুই ক্রেডিটের জ্ঞান দিয়ে। কারণ ঐ রকম আগ্রহ জাগানিয়া ক্লাস কেউই করাইতে পারে নাই। ফলে ফিন্যান্সে আগ্রহ থাকলেও সঠিক রিসোর্সের অভাবে এক মাস আগ পর্যন্ত ফিন্যান্সে ভাসা ভাসা জ্ঞান নিয়েই চলে আসছি।
এই বইটা হঠাৎ চোখে পড়ে গেসে কীভাবে কীভাবে যেন ইন্টারনেট ঘাঁটতে গিয়ে। গত এক মাস ধরে আরাম করে পড়সি। এখন ফিন্যান্স আগের চেয়ে অনেক ভাল বুঝি। অন্তত বুঝতে পারি EBITDA কিংবা EBIT এর হিসাব কেন গুরুত্বপূর্ণ, কেন Cash Flow Statement ইদানিং অনেক জরুরি হয়ে গেসে- সেগুলা বুঝলাম। ফিন্যান্সে যে অসংখ্য রেশিও ব্যবহার করে, সেগুলা কেন করে, সেটা আগে কখনোই ক্লাসরুমে শিখি নাই। স্যাররা শেখায় নাই, নাকি আমি একাই ফাঁকিবাজি করে শিখি নাই, এইটা মনে নাই। এই বইটা পড়ে সেগুলা ক্লিয়ার হলাম। একেকটা কোম্পানির রেশিও বিশ্লেষণ করেই যে কোম্পানির ভেতরের গল্প বোঝা যায়, সেটাও শিখলাম। যারাই ফিন্যান্সে নিজেদের ভিত্তি একটু শক্ত করতে চায়, তাদের জন্য হাইলি রেকমেন্ডেড বই।
এমবিএতে প্রথম সেমিস্টারে ফিন্যান্সিয়াল একাউন্টিং করাতে আসল এক ফাঁকিবাজ স্যার, যিনি কারণে অকারণে EBIT, COGS, BETA, CAPM বলে টলে আবজাব বুঝাইত, পড়াইতে পারত না কিছুই। উনি সম্ভবত ধরে নিত আমরা সবাই ফিন্যান্স পড়ে আসছি বিবিএ করার সময়। এখন আর নতুন করে বোঝার কিছু নাই। অথচ এমবিএতে প্রায় অর্ধেক স্টুডেন্টই আসে ইঞ্জিনিয়ারিং ব্যাকগ্রাউন্ড থেকে। তারপরও ঐ সেমিস্টার পার করতে সমস্যা হয় নাই, কারণ আমার পুঁজি ছিল বিএসসির সময় করা ঐ দুই ক্রেডিটের একাউন্টিং কোর্স। পরের সেমিস্টারগুলাও পার করেছিলাম বিএসসির দুই ক্রেডিটের জ্ঞান দিয়ে। কারণ ঐ রকম আগ্রহ জাগানিয়া ক্লাস কেউই করাইতে পারে নাই। ফলে ফিন্যান্সে আগ্রহ থাকলেও সঠিক রিসোর্সের অভাবে এক মাস আগ পর্যন্ত ফিন্যান্সে ভাসা ভাসা জ্ঞান নিয়েই চলে আসছি।
এই বইটা হঠাৎ চোখে পড়ে গেসে কীভাবে কীভাবে যেন ইন্টারনেট ঘাঁটতে গিয়ে। গত এক মাস ধরে আরাম করে পড়সি। এখন ফিন্যান্স আগের চেয়ে অনেক ভাল বুঝি। অন্তত বুঝতে পারি EBITDA কিংবা EBIT এর হিসাব কেন গুরুত্বপূর্ণ, কেন Cash Flow Statement ইদানিং অনেক জরুরি হয়ে গেসে- সেগুলা বুঝলাম। ফিন্যান্সে যে অসংখ্য রেশিও ব্যবহার করে, সেগুলা কেন করে, সেটা আগে কখনোই ক্লাসরুমে শিখি নাই। স্যাররা শেখায় নাই, নাকি আমি একাই ফাঁকিবাজি করে শিখি নাই, এইটা মনে নাই। এই বইটা পড়ে সেগুলা ক্লিয়ার হলাম। একেকটা কোম্পানির রেশিও বিশ্লেষণ করেই যে কোম্পানির ভেতরের গল্প বোঝা যায়, সেটাও শিখলাম। যারাই ফিন্যান্সে নিজেদের ভিত্তি একটু শক্ত করতে চায়, তাদের জন্য হাইলি রেকমেন্ডেড বই।
April 22, 2020
I enjoyed this read, and thought the author did a great job taking something dry and challenging, such as finance, and turned it into an interactive experience full of fascinating case studies. A few chapters are a little challenging, if you're not wanting to memorize formulas (only a couple parts of the book), but most of the book is really philosophical in nature. Eg. Why does finance exist?
I thought the first chapter was genius. I learned so much from the game of identify which company belonged to which finance statements. Really solid teaching method.
Book rating criteria; to help objectify my ratings.
1. Will I read it again?
Potentially (half-star). If I ever make it to the director/sr. director title, I'll probably read this again to polish terms.
2. Would I recommend this to others?
Yes, anyone who wants to polish terms for career purposes, or better understand how their investments work, this is a great read.
3. Am I smarter, better or wiser as a result of this book?
Yes, absolutely.
4. Was I entertained while reading this/it kept my attention?
Mostly (half-star). There were a handful of sections that were dryer and not exactly what I was hoping to get out of the book.
5. This book was just the right length?
Yes, I think it's just right.
I thought the first chapter was genius. I learned so much from the game of identify which company belonged to which finance statements. Really solid teaching method.
Book rating criteria; to help objectify my ratings.
1. Will I read it again?
Potentially (half-star). If I ever make it to the director/sr. director title, I'll probably read this again to polish terms.
2. Would I recommend this to others?
Yes, anyone who wants to polish terms for career purposes, or better understand how their investments work, this is a great read.
3. Am I smarter, better or wiser as a result of this book?
Yes, absolutely.
4. Was I entertained while reading this/it kept my attention?
Mostly (half-star). There were a handful of sections that were dryer and not exactly what I was hoping to get out of the book.
5. This book was just the right length?
Yes, I think it's just right.
August 20, 2020
This is a great book. I am a biomedocal scientist and I got interested into this book by looking at the shockingly high 4.6 overall stars. I got pretty impressed in the first few chapters understanding why so many readers rates it with 5 stars. But I'm giving to it only 4. Probably it's just me, but the second half of the book was so heavy, and technical that it completely defeated the whole purpose of the book. I guess the whole goal of this book is making finance digestible for the masses. Well I got completely lost, and after spending more than a month, literally studying it (because that's what you will do by reading this book. It is not a light read. You will actually have to study it to understand it), I still didn't get a good 50% of what the author was trying to explain. I appreciate the attempt, probably it's the field , or it's just me. I would have given it 5 stars if I got at least 80% of what this book was talking about.
November 8, 2020
An easy to read, extraordinary book which shys away from boring long essays. An eye opener on how to see the world differently from finance point of view. To quote an example - a discount is the interest that the seller is paying the buyer for the advance payment of money, as the advance payment is considered as a loan to seller extended by the buyer.
Mihir Desai has indeed given us a thorough picture of the financial world, albeit devoid of a lot of mumbo-jumbo. This book, despite a long, stretched out first chapter, manages to keeps one engaged using a gamified writeup. Desai asks essential, captivating questions at the beginning of each chapter and proceeds to explain the same using convincing, yet simple arguments. Three leaders in the financial industry, keep sheding light on topics and these are aptly placed as cards amidst the relevant chapter. Not only these read world insights, each chapter has the last section named as "Ideas in action" - containing real world examples. These include, to name a few - Dell becoming a private company and its battle in courts to settle the shareholders with fair price, short selling of Bekaert by Scopia, Heineken's approach to setting up plants in Mexico vs acquisitions in Ethiopia, Apple's struggle with shareholders who were demanding dividends from the ever growing cash pile. Along with these real world examples, ample theory is also discussed to appreciate the fundamentals. Along with the above mentioned example of discount, there are few concepts like sunk cost, net present value, which will linger in reader's mind for a long time after closing the book. The elegance with which Desai writes the book shows in in-depth knowledge on these topics, and hence he succeeds in effectively communicating to the readers.
This book has made me understand the reason for the sophisticated financial world. For me, the key take away is the quantum of knowledge I am not aware of. I was fortunate to have read this amidst the 2020 lockdown when the market frenzy was its peak. Given my enlightment about my financial ignorance, I will maintain my distance from the stock market. As its folly to fight against the mammoth market forces. And this book revealed the true magnitude of these market forces. I forever will revisit this book to refresh my memory of my ignorance and try my best to upskill my financial knowledge.
Mihir Desai has indeed given us a thorough picture of the financial world, albeit devoid of a lot of mumbo-jumbo. This book, despite a long, stretched out first chapter, manages to keeps one engaged using a gamified writeup. Desai asks essential, captivating questions at the beginning of each chapter and proceeds to explain the same using convincing, yet simple arguments. Three leaders in the financial industry, keep sheding light on topics and these are aptly placed as cards amidst the relevant chapter. Not only these read world insights, each chapter has the last section named as "Ideas in action" - containing real world examples. These include, to name a few - Dell becoming a private company and its battle in courts to settle the shareholders with fair price, short selling of Bekaert by Scopia, Heineken's approach to setting up plants in Mexico vs acquisitions in Ethiopia, Apple's struggle with shareholders who were demanding dividends from the ever growing cash pile. Along with these real world examples, ample theory is also discussed to appreciate the fundamentals. Along with the above mentioned example of discount, there are few concepts like sunk cost, net present value, which will linger in reader's mind for a long time after closing the book. The elegance with which Desai writes the book shows in in-depth knowledge on these topics, and hence he succeeds in effectively communicating to the readers.
This book has made me understand the reason for the sophisticated financial world. For me, the key take away is the quantum of knowledge I am not aware of. I was fortunate to have read this amidst the 2020 lockdown when the market frenzy was its peak. Given my enlightment about my financial ignorance, I will maintain my distance from the stock market. As its folly to fight against the mammoth market forces. And this book revealed the true magnitude of these market forces. I forever will revisit this book to refresh my memory of my ignorance and try my best to upskill my financial knowledge.
April 5, 2020
Really enjoyed reading this book as it was great introduction to core finance topics presented in easy-to-digest format. The use of relevant and recent real-life use cases and the ad-hoc commentary from experts in the field provided diverse point-of-views on the various topics. Definitely encouraged to continue refining my finance knowledge after completing this book.
My only gripe was that a few of the examples used to demonstrate concepts were not clear. For example, table 4-2 laid out sourced of value creation, but I was unable to follow how they achieved the value for market value (nor could my brother who studied finance).
My only gripe was that a few of the examples used to demonstrate concepts were not clear. For example, table 4-2 laid out sourced of value creation, but I was unable to follow how they achieved the value for market value (nor could my brother who studied finance).
April 14, 2024
This is an informative book about finance and capital market and their relationship. Author talks about capital market and its complexity and its complexity reasons and how finance is related to it. Author explains everything simple and straightforward and step by step. So, I suggest you learn every step correctly and after that move to next chapter.
The book also could help you to build your intuition abound a variety of financial and business-related situation and make better decision about them.
The book also could help you to build your intuition abound a variety of financial and business-related situation and make better decision about them.
December 30, 2024
In this book, Desai does a good job of making corporate financial concepts understandable. In addition, he uses examples to make the concepts relatable. There are some useful charts and diagrams throughout, as well as some end of chapter questions.
I teach corporate finance - both principles and advanced - and can teach some of these key concepts in a different way, given Desai's presentation. I have used the 'game' of Unidentified Industries (found in Chapter 1) for several years, to encourage students to dig deeper into financial statements and ratios.
I teach corporate finance - both principles and advanced - and can teach some of these key concepts in a different way, given Desai's presentation. I have used the 'game' of Unidentified Industries (found in Chapter 1) for several years, to encourage students to dig deeper into financial statements and ratios.
December 28, 2019
Well written and intended to teach. Not a textbook, but the written form of a Harvard course using numerous example tables and chapter quizzes. Full of formulas, but the idea is to teach you fundamental concepts not create a reference manual.
It wasn't what I expected, but I learned alot. My concept of the role of "Finance" in business seems to have shifted; I feel like I understand the nature of it much better now.
It wasn't what I expected, but I learned alot. My concept of the role of "Finance" in business seems to have shifted; I feel like I understand the nature of it much better now.
March 14, 2020
Very good book
This is really very informative and interesting book. The concept of finance is easily illustrated with very interesting examples and stories of known firms. The author explained the concepts to be understood by anyone. Reading this book and understanding financial analysis, value creation, company valuation and capital allocation will make easy to open WSJ or FS newspapers and read it with joy.
This is really very informative and interesting book. The concept of finance is easily illustrated with very interesting examples and stories of known firms. The author explained the concepts to be understood by anyone. Reading this book and understanding financial analysis, value creation, company valuation and capital allocation will make easy to open WSJ or FS newspapers and read it with joy.
May 7, 2020
A great introduction to the topic, very accessible for people with no financial background.
Quite clear and engaging writing.
Helps you understand all the financial babble that goes on and demystifies a lot of concepts that you hear but never really got around to understanding (such as capital structure or capital allocation).
I highly recommend both the book and the HBS podcast that Professor Desai is a part of, After Hours.
Quite clear and engaging writing.
Helps you understand all the financial babble that goes on and demystifies a lot of concepts that you hear but never really got around to understanding (such as capital structure or capital allocation).
I highly recommend both the book and the HBS podcast that Professor Desai is a part of, After Hours.
December 20, 2021
Any book that states it wants the reader to develop intuition about a topic is always exciting. This book delivers it really well on that promise. It demystifies “finance” and makes the reader connect well. It gives plenty of examples in making things easy to understand on topics like cash flow, valuation, various ratios. Highly recommend for people who wants to know what your finance team does or what keeps your CFO busy.
July 18, 2022
I gave up reading this book after the first chapter, however I restarted it after a few days and found it rewarding. I agree with another reviewer that said - the pictures in the book break the flow as you constantly keep turning back and forth to refer to the content. I will definitely have to read this and other sources to learn more. Overall a great refresher for those relearning financial concepts.
June 23, 2019
How Finance Works is an amazing book. Before I read the book I wanted to learn more about the finance world since I am a Business Administration major. This book taught me a different way at looking at corporations. The examples he gave helped me understand real problems companies face regularly, and the right way to react to those challenges.
August 21, 2020
I poked around in most chapters of this book, It is really a sort of condensed version of several textbook subjects rolled together. I quite liked the easy to follow format. Some of the examples and exercises require more than a beginner's understanding. Good summary refresher for those already in the know.
April 17, 2021
A well organized soup to nuts portfolio of the key lessons and concepts of finance. This should be on all finance majors first year study curriculum and is also an efficient way all to re-engage important topics when needed. Good for all ages and for those looking for highlights with descriptive details.
May 2, 2021
Thoroughly enjoyed reading Professor Desai’s book How Finance Works. It was simply unputdownable. He has succinctly covered the basic concepts of finance and the intuition that drives them. In this seminal work of his, he has been able to make, a recondite subject like finance accessible to the uninitiated. Would definitely recommend it to the finance folks and the others alike..!
December 31, 2021
Mihir Desai is a fascinating and engaging teacher of finance concepts. I'm still not sure I grasped all the concepts as well as I'd like, but I don't think that's a failure of the book so much as my learning style. Highly recommend for folks looking for a foundation of finance principals for non-finance people.
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