This is a textbook on construction financial management written in simple English for undergraduate students who study construction related programmes. It is also suitable for postgraduate students (as a bridging course) who know construction technology well but are less familiar with financial management. Readers, after studying this book, will have a very good understanding on income statement, balance sheet, NPV (net present value), IRR (internal rate of return), and so on. They will be able to analyze the financial statements of a company and perform the financial analysis of a project proposal. Other related topics such as break-even analysis, S-Curve and working capital financing of a project are also discussed in this book.

1. Financial Statements – Income Statement and Balance Sheet
   1. Introduction
   2. Income Statement
   3. Balance Sheet
   4. Working Capital and Current Ratio
   5. Under Billing and Over Billing
   6. Worked Examples
2. Financial Statement Analysis of a Construction Company
   1. Analysis of Financial Statements by Financial Ratios
   2. Five Categories of Financial Ratios
   3. A Case Study
3. Compound Interest, Net Present Value (NPV), Equivalent Annual Cost and Loan Redemption
   1. Nominal Interest Rate and Real Interest Rate
   2. Compound Interest Calculations
   3. Benefit-Cost Ratio
   4. Salvage Value and Equivalent Annual Cost
   5. Redeeming a Loan
   6. Principal Amortization and Interest Payment of a Loan
4. Internal Rate of Return (IRR) and the Differences between IRR and NPV
   1. Net Cash Flow (NCF)
   2. DCF Method and IRR
   3. IRR versus NPV
   4. IRR as Financial Indicator and NPV as Economic Indicator
5. Effect of Inflation
   1. Introduction
   2. Real IRR and Its Calculation in a World with Inflation
   3. When Is Inflation Adjustment Considered Or Not Considered?
   4. Concluding Remarks
6. Cost-Volume-Profit Analysis
   1. Introduction
   2. Variable Costs, Fixed Costs and Break-even Point
   3. Graphical Presentation – Break-even Chart
   4. Mathematical Presentation
   5. Contribution
   6. The Make-or-Buy Decision
   7. Equipment Selection Decision
   8. Engineering Scheme Choice Decision
   9. Concluding Remarks
7. Financial Analysis of a Project
   1. Introduction
   2. Basic Method of Financial Analysis
   3. A Case Study on Financial Analysis
8. S-Curve and Working Capital Financing of a Construction Project
   1. Introduction
   2. S-Curve
   3. Cumulative Interim Payment Graph
   4. The Two Graphs combined
   5. A Worked Example
9. Appendix
10. Endnotes