Financial Intelligence Articles
A Refresher on Internal Rate of Return (IRR), Harvard Business Review
IRR is the rate at which the project breaks even, commonly used in conjunction with new present value (NPV). With IRR you calculate the actual return provided by the project’s cash flows, then compare that rate of return with your company’s hurdle rate.
A Refresher on Current Ratio, Harvard Business Review
How to calculate if your company has enough cash. The current ratio measures a firm’s ability to pay off its short-term liabilities with its current assets.
How to Work Confidently with Numbers People, Harvard Business Review
Your goal, after all, is to be the kind of manager who not only understands formulas and analytic methods, but also knows how to “interpret [results] to make better decisions and improve efficiency” says Joe Knight.
A Refresher on Debt-to-Equity Ratio, Harvard Business Review
“Bankers, in particular, love the debt-to-equity ratio and use it in conjunction with other measures, like profitability and cash flow, to decide whether to lend you money,” explains Joe Knight.
A Refresher on Net Present Value, Harvard Business Review
“Most people know that money you have in hand now is more valuable than money you collect later on. That’s because you can use it to make more money by running a business, or buying something now and selling it later for more, or simply putting it in the bank and earning interest.”
Are Your People Financially Literate?, Harvard Business Review
“Senior executives routinely share and discuss financial data with marketing directors, operations chiefs, and other direct reports. But how much do those managers really understand about finance? We recently investigated this question, and the news is not good.”
Decoding The Numbers, T&D magazine [PDF]
“Patricia Sparacio, managing director of the New York Institute of Finance, is sitting in her office on a Monday evening, waiting for her students to arrive. When her class of several hundred students is ready to start, she logs in and greets the group. Her closest student hails from Manhattan. Others are logged in from Egypt, China, and Europe. Sparacio teaches a virtual course in business and industry analysis. Although she is working with a big group, there is adequate capacity. If the virtual classroom is very large, Sparacio uses a moderator to manage questions and answers for her.
From New York to California, trainers, consultants, and finance companies are using old and new methods to teach people about finance concepts, products, and services.
Students range from the greenest administrators to the savviest managers and executives. Courses can last for a few hours or for weeks, depending on the students’ level of understanding and what they need to learn.
The most effective way to train professionals on complicated financial principles is to rely on the same methods used to train participants on any other topic—by simulating a real environment with real numbers and real decision-making opportunities.”
Bright Idea: Make Business Literacy and Financial Transparency Part of Your Company, and Watch Your Profits Soar by Karen Berman, Ph.D & Joseph Knight, MBA [PDF]
Today’s business environment requires that everyone in the company must contribute to organizational success. Image the power and energy your organization would have if your leaders, managers and employees acted like businesspeople.
Business Literacy Institute Online Article:
Bernard Madoff: More Trouble on Wall Street
On December 12, 2008, Bernard L. Madoff was arrested on a single count of securities fraud, carrying a possible sentence of up to 20 years in prison and a maximum fine of $5 million. But what happens now? And what were the factors that led to such an egregious lapse in oversight?
Business Literacy Institute Online Article:
What happened to bring us to the brink of nationwide crisis? In this article, we will discuss the financial principles that make banks fail, what Freddie and Fannie have to do with it all, and some of the historical events that were signposts along the way.
Business Literacy Institute Online Article:
What Are the Options for U.S. Automakers?
The U.S. auto crisis is big, messy, and confusing. Looking at some of the financial decisions that were made over the last 30 years can give us a clearer picture of what has happened for the “Big 3” and how the U.S. government is looking to help.
Language arts: New book aims to teach HR conversational finance, by Joseph Knight, July 2008, EmployeeBenefitAdviser
How to Raise Your Firm’s Financial IQ, by Dr. Karen Berman and Joseph Knight with John Case, January 2006, Harvard Business School’s “Working Knowledge” newsletter [PDF]
Dollars and Sense, Training magazine
A Winning Combination, Small Business Success magazine
Financial Intelligence Unlocks Career Growth, by Karen Berman and Joe Knight, T&D magazine, January 2007
“Yes, You Do Need to Know about Sarbanes-Oxley,” by Karen Berman and Joe Knight “Sarbanes-Oxley addresses codes of ethics, financial reporting, and procedures and processes. But it is also about becoming financially transparent, an approach to leading and managing that is one of the best ways you can personally prevent financial fraud in your organization.” (originally posted by the American Management Association)
Fear of Financials, by Aliza Pilar Sherman [PDF]
“At Business Literacy Institute, they have found that the fear of finance comes in part from not having the opportunity to learn about it. Once exposed to the numbers and how they work, anyone can become a powerful part of a business’ success.” (from SmallBusinessResources.com)
“The Financially Intelligent Organization: Knowing the Numbers Is a Part of Everyone’s Job, ” by Karen Berman and Joe Knight “We’ve done away with silos, created cross-functional teams, learned to collaborate, and gotten to know our internal customers. But something is still missing. It takes something more to create an organization in which everyone feels involved and committed, where they understand what they are a part of, what the organization is trying to achieve, and how they affect the results…” (originally posted by the American Management Association)
“Working Smart,” by Holly Dolezalek [PDF] “Karen Berman has studied this issue in a little more depth, and the results she found told her that there were benefits in sharing more information with employees.” (from www.trainingmag.com)
“Making Financial Training Stick “After the Business Literacy Institute in Calabasas, Calif., implemented business literacy training for a major pharmaceutical company, Money Maps depicting the financial results of various departments were developed and posted for all to see. Manufacturing employees, for example, were able to reference the Money Maps to determine the financial implications of the manufacturing process, including their own contributions and the impact that their mistakes and successes had on those in front of and behind them in the manufacturing line…” (from the Training Director’s Forum)
“Bright Idea. Make Business Literacy and Financial Transparency Part of Your Company and Watch Your Profits Soar,” by Dr. Karen Berman and Joseph Knight, May 2004, Small Business Administration Magazine
“Business Literacy Training: Getting to the Ah-Ha Through Maps,” by Dr. Karen Berman [PDF], January/February 2003, Employee Ownership Report
“Business Literacy: Training With Bottom Line Results,” by Dr. Karen Berman, 2001 The Wisdom of ASTD-LA
Business Literacy Training Options, Pitfalls and Results,” by Dr. Karen Berman, November/December 2001 Employee Ownership Report
“Business Talk 101,” by Ross Tiernan [PDF], May 2001, Swissair Gazette
“Company Ledger an Open Book,” by Cyndia Zwahlén [PDF], December 20, 2000, Los Angeles Times
“Building Trust: Actions Speak Louder Than Words,” by Dr. Karen Berman [PDF], November 2000, ASTD-LA InterChange
“Painless Financial Literacy for Your Team (and You),” by John Case, December 1998, Harvard Management Update
“The Building Blocks of Business Literacy,” by Karen Berman, September 1998 [PDF] “Many companies encourage employee participation in the business through suggestion systems, self-managed work teams, and other empowerment programs. However, to participate effectively, employees need preparation such as team building, problem solving, and communication-skills training.” (Training and Development)
“Information and the Effectiveness of Employee Participation in Organizations” (1997), abstract of dissertation by Dr. Karen Berman
