Summary:
Even if you don’t need to know a lot about finance to do your day-to-day job, the more conversant you are on the subject, the better off you’ll be.
Even if you don’t need to know a lot about finance to do your day-to-day job, the more conversant you are on the subject, the better off you’ll be.
If you’re not a numbers person, finance is daunting. But having a grasp of terms like “EBITDA” and “net present value” is important no matter where you sit on the organizational chart. How can you boost your financial acumen? How do you decide which concepts are most important to understand to your work and your understanding of the business?
Even if you don’t need to know a lot about finance to do your day-to-day job, the more conversant you are on the subject, the better off you’ll be. Here are some strategies to improve your financial intelligence.
There may not be any magic to finance, but there is a fair amount of jargon. Fortunately, there are many ways to learn.
Overcome your fears: Stop avoiding finance because you’re afraid of numbers. It’s not that complicated.
Learn the lingo: There may not be any magic to finance, but there is a fair amount of jargon. Fortunately, there are many ways to learn. Try a community college class, internal company training or even a Google search.
Tackle the balance sheet: Immerse yourself in your organization’s income statements. Take an interest in the balance sheet and then do the due diligence to understand it.
Focus on key metrics: There are four ratios common in every company: profitability, leverage, liquidity and operational efficiency. Paying closer attention to your company’s balance sheet is helpful in getting a handle on these metrics.
Play with numbers: Try experimenting and playing with the numbers on your balance sheets by going through a series of “what if?” scenarios. What if prices were lower? What if revenue was higher?
Find a financial mentor: Connect with a senior financial or operations manager who can teach you and answer your questions one-on-one. This person can help explain concepts and serve as a sounding board for any financial decisions you must make.
Make it personal: Every time you are paid, your organization makes less profit. Think about what you can do to help the company remain profitable or be more so.
This article originally was published by Harvard Business Review on April 3, 2017.
Topics
Financial Management
Related
Medicare Reimbursement Rate Trends in Hospice and Palliative Care Medicine from 2013 to 2022Physician Leaders’ Role in the Finances of StrategySeven Things to Know Before Hiring a Financial Planner