Insights

In the world of business, many decisions can ripple through the financial fabric of an organisation.

Consider a retail store deciding to extend its opening hours. This move could potentially increase sales by attracting more customers during late hours, yet it also means higher operating costs, such as wages for staff and utility expenses.

Similarly, a software company contemplating offering its new app for free, banking on future revenue from in-app purchases and advertisements, faces the risk of not generating enough engagement to cover initial development costs.

Each of these decisions involves weighing potential revenue growth against the upfront and ongoing costs, illustrating the delicate balance businesses must navigate. Successfully evaluating and making these decisions requires an understanding of finance. Those with the ability to make good decisions are said to have sound financial acumen.

But what is financial acumen?

Financial acumen is the ability to understand and apply financial principles and data to make informed decisions, influence outcomes, and drive improvements in the financial health of a business or organisation.

It encompasses a broad set of skills, including reading and interpreting financial reports, budgeting, forecasting, and recognising the broader economic implications of business decisions.