Business Acumen

Gross Margin

(Revenue-COGS)/Revenue; Shows the % of total sales revenue that the company retains after incurring the direct costs associted with producing the goods and services sold by the company

Strategic Perspective Components

5 core components to successfully run a business; long term vision, core values, interconnections, interdependencies, decision making

Financial Acumen

A comprehensive understanding of what drives profitability and cash flow

Interdependencis

A deep awareness of inter-relationships among actions and events, and how they affect your organization (internal)

Market Dynamics

A deep understanding of th external environment that may impact the internal organization

Cash

Money on hand, petty cash, cash in the bank, cash equivalents (certifications of deposits or CDs), liquid investments; your cash position is an indication of financial strength

Net Margin

Net Profit/Revenue; Shows how much of each dollar earned by the copany is translated into profits

NAICS Codes

North American Industry Classification System; 4 digit codes that assign and classify business industries

Private Company

Not traded publicly, has privately held shares, not required to disclose financial informatino, not requird to have shareholder approval of operational and growth strategy decisions; corporations, LLCs, partnership, and sole proprietorships

Organic Growth

Occurs because of a company's existing business

Inorganic Growth

Occurs from mergers and/or acquisitions

Annual Report

Provides a financial picture of the business for the prior year, provides general company info for shareholders, offers marketing info to other interested parties, offers insight on future plans for buisness, serves a compliance role where needed

Interconnections

The ability to recognize patterns and relationships among events and circumstances outside your organizations (external)

Emotional Intelligence

The ability to sense, understand, and effectively apply the poweer of emotions as a source of human energy, information, and influence

Margin

The remainder after all expenses are paid; expressed in dollars or %

Public Company

Traded publicly, sales securities to the general public (stocks, bonds, loans, etc.), can be listed on the stock exchange, should not be confused with government entiies; more like private companies in decision making

Market Literacy

Use PIERS to understand what's important to your market or industry

Strategic Perspective

An overall, big picture understanding of business

EI's Relation to Business Acumen

Self awareness and social awareness

Long-Term Vison

An overarching objective and clear understanding of the desird long-range future of the organization

Organizational Literacy

An understanding of the internal organization structures and custome roles

Business Acumen

Astuteness and quickness when dealing with a business situation in a manner likely to lead to a good outcome; keenness or depth of perception in matters related to business; business discernment; intuitive and applicable understanding of how a company makes money

Growth

Can occur within (existing customers); significant positive cash flow or earnings; increased earnings that is faster than the overall econcomy; most common causes for growth are sales, profit, and earnings per share

Core Values

Clearly defined, understood and accepted values tha speak to themoment by people at all level of the organization

Balance Sheeet

Continuously updates; snapshot of instant information; summarizes company's assets, liabilities, and shareholder's equity at a specific point in time

Statement of Cash Flow

Deals specifically with where cash was generated; inflows and outflows related to cash and assets

Divisional Organizational Structure

Decentralized, grouped by region or product, has it own internal functional hierarchy

Benefits of Functional Structure

Defined work responsibilities, lines of communication are clear and consistent; most common structure but hinder creative process and hard to communiate across organizatons

Cash Flow

Difference between cash flowing in an cash flowing out of a business at a given point in time; also known as cash generation

Functional Organizational Structure

Employees are grouped to accomplish a common goal such as finance, marketing, information technology

Types of Organizational Structures

Line, functional, divisional, matrix

Profitability

Making money, yielding resuls; sales- expenses; growing your business by cutting operation costs, increasing revenue or cash flow, increasing productivity, reducing waste; increasing the bottom line by focusing on the interconnections and interdependencies

Horizontal Market

Meets the needs of a variety of industries, rather than just 1; accounting, HR, IT

Line Organizational Structure

Org is small or in early stages; all employees work toward common goal

Matrix Organizational Structure

Project-based business, employees are pooled to accomplish rojects; engineering firms, construction firms, IT firms; everyone reports to a different manager

Income Statement

Represents the company's profitability over a period of time; statement of revenues and expenses

Most Common Causes for Growth

Sales, Profit, Earnings per Share

Decision Making

Shapes how decisions are made in the moment with consideration to long-term vision, core value, inteconnections, and interdependencies

Finnancial Statement in Annual Report

Statement of income, blance sheet, statement of cash flow