There are many ways businesses use statistics as part of their financial planning. The main goal of financial management is to increase profit, and financial managers calculate the ability of every expense to serve the company’s greater good.
For example, paying the rent is an expense; however, it may allow a company to have the space it needs to operate more efficiently, thereby increasing productivity and improving the bottom line. Expanding to a second location may be costly, but it may double or triple the income potential for a company. The company may see a return on the investment as soon as it opens the doors of the new location.
There are several areas within financial management. When you teach students about business finance, it’s a good idea to give them a brief overview of the things they might encounter should they continue their education and someday work for a large corporation.
Capital budgeting is an area of financial management that relates to determining which projects are worthy of investment. This may include picking which products to offer based on data, such as supply and demand.
Capital structure determines how much an organization will spend and how it will spend it. Is a product worth long-term debt to develop? Will the expense pay off once the product hits the market? Depending on the company, this may include stock and bond valuation.
In working capital management, a person oversees the management of the assets available for use. Cash is the most liquid asset, and is often the focus of this effort. An individual may oversee the daily budget or deal with abstract assets, such as inventory or property.
For students to move into financial management roles in the private sector, they’ll need to spend hours learning these concepts. However, your job may be to give them an overview rather than an in-depth study on business finance.