FROM STRATEGY TO FINANCE / And we march on ...

And the rollercoaster continues. We just finished a two-day module of "Introduction to Corporate Finance" and the funny (or not-so-funny) thing is that I had prepared the wrong materials for the course.

We had a small booklet on finance but instead of reading that I prepared "financial accounting" which deals with the mechanics of accounting, i.e., simply the flows of money in and out of a corporation: asset purchases, accounts receivables and payables, infusions of equity and so on. Strictly speaking, accounting seems for the most part to be neutral and not require a whole lot of interpretation or judgment; on the contrary, precision is perhaps the most important skill to bring to it.

I managed to catch up by the second day and was able to realize that finance is actually about making decisions about whether or not to purchase assets or capital, whether or not to solicit funds (financing) from banks or from investors (equity) ... so it's much less mechanical and requires one to be able to decide what sort of cash flows (the money going in and out of a company and, in particular, the money that a company needs to generate revenue from its assets) the company needs.

So it's really fascinating, because the decision-making process used here is interconnected with the strategic-decision making process from the previous course.

It's a mad pace (a new course every four days) but if you step back and try to think how it all relates, it does kind of make sense. And it's given me a new way of looking at the business news that I come across on the pages of the Wall Street Journal and Financial Times. Still no expert, though, mind you!