| As a CFO myself, I notice there are a few concepts it is important for successful managers to understand to help discussions regarding performance and investment. 1) Time value of money - internal rate of return (IRR) and net present value (NPV). Both are easily learned on the web in 30 minutes. 2) Broad accounting concepts. Others have recommended learning double entry accounting on this thread. I do not think that necessary - too much in the weeds. You need to understand what is revenue, when it is created (different industries and companies have different rules), what are operating expenses, what is EBITDA (earnings before interest, taxes, depreciation, amortization) and why it is a good approximation of cash flow, and why capitalizing some expenses matters. In my experience, the FP&A (financial planning & analysis) team is often the best people to discuss this with as they are responsible for reporting these metrics to management in a manner consistent with how the executive team runs the company. 3) Option theory - more decisions are being discussed as options. Developing a new product idea is an option to ultimately produce and sell the product. The initial investment to blueprint the product, get regulatory approvals, etc can all be thought as the cost of the option. Importantly, you can always walk away from the option if you determine the payoff is too risky (unlikely to be realized) or too low. While there are more finance concepts to know, they tend to build off the ones above (e.g. reading financial statements builds off the accounting ideas). A final note, if you are looking for formal online courses on these topics, the University of Pennsylvania Wharton School has a great series of their fundamental courses for MBA students online that were free last time I looked. |