The Surprising Ways Managerial Finance Can Help You Make Better Business Decisions - Targeted and Tactful (2024)

When it comes to making informed business decisions, there are a lot of factors to be considered. As a business professional, you need to be able to weigh the costs and benefits of different options, assess risks, and anticipate potential outcomes. That’s where managerial finance comes in. If you’re considering expanding on your skillset in this area, you’ve come to the right place.

While many people think of finance as simply dealing with numbers and money, managerial finance is much more than that. It’s about understanding how finance and accounting principles can be used to inform business decisions and drive success.

Benefits of Learning About Finance and Accounting Principles

While it’s true that managerial finance is a critical area of study for finance professionals, the benefits of having this knowledge extends far beyond this field. Even if you’re not in finance directly, enhancing this skillset will help you become better equipped to make educated financial decisions. Understanding concepts like interest rates, risk, and return can help you make decisions about your personal finances and investments. For example, if you’re considering taking out a loan or investing in the stock market, understanding these areas can help you make an informed decision.

Making an informed decision means that you greatly increase your chances of earning revenue. Knowing how to properly analyze financial risk is an incredibly important skill to have. It is one that basic accounting principals can help with. You’ll be able to think more critically about investment decisions. From there you will be able to evaluate the potential costs and benefits of the different options.

Having a solid understanding of finance concepts can also greatly advance your career in a number of fields. Employers are always looking for employees who can contribute to financial discussions and help drive business success. Understanding accounting principles also demonstrates that you are a critical thinker. You will be able to highlight that you are able to make impartial, informative, and unbiased choices. These skills are highly desirable traits in the workforce.

What you can Learn from Managerial Financing

Regardless of if you are in a financial profession, have a degree in finance, or have any desire to obtain higher education related to this field, taking a basic course or expanding your knowledge in this field can greatly drive your success. Knowing how to make an educated business decision relates to every possible profession there is. It is also a highly transferrable skill that will build trust between you and your employer. The ability to be trusted while you work independently opens doors. Promotions, higher salary negotiations, and better performance reviews will all be on the table.

There are a few key takeaways from gaining education like this. One of the main ones being that it teaches you how to analyze financial statements. Financial statements are a crucial tool for understanding a company’s financial health. In a managerial finance course, you’ll learn how to analyze balance sheets, income statements, and cash flow statements. You will be able to get a better understanding of a company’s financial position. If any of these terms look scary, check out my posts on putting together an income statement and how to calculate net income. You will see how straightforward these financial documents really are and the benefits behind them.

I cannot reiterate this enough, knowing how to calculate risk accurately is one of the most sought after skillsets someone can have. Every business decision comes with some level of risk. A basic managerial finance course, like Financial Managerial Accounting, can teach you how to calculate and assess risk. You’ll learn about concepts like beta, standard deviation, and the capital asset pricing model (CAPM), which can help you evaluate risk and return.

Understanding the Time and Value of Money

Being knowledgeable enough to assess investment opportunities is both professional and personal advantage. Whether you’re considering investing in something small like a new product or something larger like acquiring another company, a managerial finance course can help you evaluate the potential return on investment. You’ll learn about concepts such as net present value and internal rate of return. All of which can help you assess whether an investment opportunity is worth pursuing.

The time value of money is a fundamental concept. It can have a big impact on all business related decisions. A managerial finance course will also teach you how to factor in the actual time value of money. You will be able to understand and then apply this working concept. Money is worth more today than it will be in the future. This is simply because money today can be invested and earn interest. Money in the future on the other hand will not have as much time to earn interest. For example, it can help you decide whether to take out a loan or invest your money. It can also help you evaluate investment opportunities. By taking into account the time value of money, you can make more informed decisions and ultimately achieve your or your business’ financial goals more effectively.

Interested in Learning More

If you are interested in learning more about financial principals, there are a lot of informative posts on the various topics under our Finance page. These posts provide a very basic overview on calculating things like net income and knowing the differences between certain financial statements.

For a more in depth learning opportunity I highly suggest looking into taking an online course. A lot of the courses that are available now in this subject area can be taken separately from a degree program. There are some that can also provide you with transferrable credits or that you can apply towards a certification. I always suggest continuing education courses that aren’t too demanding, because the reality is that as a working profession we only have so much time.

One of the great ones that I have found is a CPA course that is roughly 21 hours long. It is also reasonably affordable compared to these same types of courses offered through a university. The course doesn’t get too in depth, but it does cover enough content that you will be comfortable applying what you learn in your business and professional life. One of the things I like most about it, is that it is a business simulation course. Students practice reviewing statements and budgets through a true-to-life approach opposed to a traditional textbook model. If you’d like to take a look at the course details, feel free to click here.

If an e-learning course doesn’t work within your budget or time commitments, there are also a lot of great reading materials on this subject area. The Joy of Accounting: A Game-Changing Approach That Makes Accounting Easy demonstrates a graphical approach to the subject. This book has some pretty impressive reviews from top universities, banks, law firms, and business schools. New to the financial world, don’t worry. A Nonfinancial Managers: A Guide to Finance and Accounting Principals is the perfect starting point. This book covers all of the basic financial statements and includes a lot of examples. You will be able to understand and visually see the differences.

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