Business Acumen

Only by earning money does one know its value.

If you want your people to realize the imperativeness of running the organization on profitable lines, you must at the first instance make them aware of the value of money.

Empower your team member with business acumen so they also know the value of savings and earnings for your organization. 

Business acumen is an almost intuitive and applicable understanding of how your company makes money. It includes a thorough understanding of what drives profitability and cash flow, a market focused approach to the business, and an overall big picture understanding of the business and its interrelationships.

Some important Terms of Finance Management:

Profit & Loss Account : A financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time - usually a fiscal quarter or year.

Balance Sheet : A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders

Cash Flow Statement : A financial statement that shows the amount of cash generated and used by a company in a given period, calculated by adding non-cash charges (such as depreciation) to net income after taxes.

Gross Profit Ratio: The proportion of money left over from revenues after accounting for the cost of goods sold.
Formula: (Sales – Cost of Sales) / Sales

Net Profit Ratio: A ratio of profitability calculated as net profits divided by sales. It measures how much out of every Rupee of sales a company actually keeps in earnings.
Formula: Profit After Tax/ Sales

Operating Profit: The amount of profit earned from a firm's normal core business operations.
Formula: Operating Revenue – Operating Expenses
Operating Profit Ratio: Operating Profit / Sales 

EBITDA: An indicator of a company's financial performance which is calculated as follows:
Revenue – Expenses (excluding tax, interest, depreciation & amortization)

EPS: The portion of a company's profit allocated to each outstanding Share.
Formula: Profit After Tax/ No. of Shares

Trends and Peer Group Analysis: Year on Year Growth Trends and comparison with peer group companies in same industry, helps in understanding the profitability trend & financial health.

Working Capital Management
Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses.

Ratio analysis will lead management to identify areas of focus such as inventory management, accounts receivable, payable management and cash management.