Why do non-financial people need to know the fundamentals of finance in order to perform well in the modern business world?
It is important to be financially aware in this day and age. Firstly, you need to know what is required to satisfy the people who actually finance your job – the investors in your company, and secondly, you need to understand and argue your business case with the financial people within your organisation. The investor in any company is looking at two indicators – one, that it is a secure and healthy place to put capital, and two, that the performance of the company will give a return that reflects the perceived risks the investor is taking. The only time investors will want to intervene and make changes to your company is when they feel insecure about these two things – so you’ve got to make sure that you are aware of these financial requirements. Furthermore, financial people who are not experts in your field are the allocators of capital and if you feel you have a justification for securing capital then you need the tools to argue that position for yourself and your business unit.
