Do you care about finance? You should


8/1/20232 min read

The principles of financial management course is usually a requirement for all business majors. One of the main complaints that I hear in my classes is that “I am not majoring in finance, but I have to take this class to graduate!” This popular sentiment implies that some students who are majoring in other areas of business look at this course as a waste of time and money!

However, you need to know that there is a logic behind offering finance classes to non-finance majors as there is logic for offering marketing classes to finance majors. Business divisions within a firm are not islands. Marketing, HR, IS, and Accounting should all be functioning together and be aware of the impact of their decisions to the other divisions of the firm and to the firm as a whole.

More importantly, A financial manager oversees the most strategic decisions in a firm. A CFO works closely with the CEO and other top managers in the firm.

Also, cash is a limited resource and finance keeps you on budget. And that is why a CFO is usually involved in most of the decisions (i.e. operations, marketing, HR, etc.) made in the firms because the reality is that all these functions within a firms has some financial implications that are important for the management and shareholders.

For example, if a Chief Marketing Officer (CMO) is contemplating of a marketing campaign, his first call is usually to the CFO. A marketing campaign is usually expensive. It requires conducting some preliminary research and advertising costs which should be justified by the cash flows that it is going to generate. A marketing executive, need to be able to evaluate the costs of this campaign as well as projecting the future cash flows that are going to be generated as a result of the campaign.

As another example, a Chief Operations Officer (COO) might be thinking about shifting the supply chain and building a new manufacturing facility in Asia. In this scenario, the project is going to have a significant capital commitment from the firm and potentially have a very long-term impact on its strategic position in the industry. In a major project like this, CFO is involved in every step. The COO should be able to justify the project by showing that in the long run, the project is going to generate value for the shareholders. But the work of the CFO is not done after the approval of the project. Now, she has to raise capital to pay for this project. Should she borrow from a bank, issue bonds, or sell common shares?

Finance is also present in every day life of a Human Resource (HR) Officers. They deal with retirement, health insurance, hiring of new personnel, lawsuits on a daily basis. All these tasks are related with finance.

In terms technology, it is hard to overestimate its role in finance. Finance is usually one of the early adopters of the technology and one can see its effect on banking fintech, blockchains and cryptocurrency, insurance, robo-advising and algorithmic trading, etc.

Finally, even if you decide not to peruse a career in the business world, learning finance will help you make better personal decisions when it comes to money. How much interest you can afford when buying a house? How to save for retirement? How to save for you children’s college? … making the right financial decisions will have a significant impact on your quality of life and mental health in the future.