Wharton@Work

September 2016 | Finance

Corporate Finance: Mastering the Fundamentals

Understanding corporate finance is integral to all senior-level executives, not just those whose primary focus is finance. Division leaders across all business units increasingly must understand the financial implications of their decisions in order to create value for their organization. Equally important, they must also be able to effectively communicate those implications to financial executives if they hope to get support and backing.

Wharton Finance for Executives, a new program, was designed to empower these leaders, giving them both proven tools and hands-on experience with real business cases. The program will help leaders better understand the financial implications of the decisions they make, and improve their understanding of corporate finance.

“This program removes the shroud of mystery that people often have about finance and empowers them to use it to improve their business, show their value to the organization, and further their professional development,” says Wharton finance professor Michael R. Roberts who is academic director of this program. He emphasizes that it is not intended to “make a marketing person into a finance person,” for example, but rather empower a senior-level non-finance executive with the tools necessary to make better decisions and communicate more effectively with financial executives.

Today’s increasingly volatile and globally competitive economy have made value-oriented strategies critical for success — and corporate finance provides the perspective by which those strategies are judged. Yet, despite the centrality of financial performance to a corporation’s success, many senior-level executives who don’t work in finance are often challenged both to recognize the financial implications of their business decisions and to communicate with their financial colleagues and investors.

In Roberts’ experience working with executives across multiple sectors and business disciplines, the further people move up in their organization, the more important financial implications of decisions become. Having a greater understanding of finance and increased financial literacy is “not just an investment in your organization, but in yourself,” he adds.

Executives in functional areas such as marketing, sales, operations, manufacturing, and engineering, as well as general managers who have been promoted along these job functions into current senior leadership roles, will benefit from the program. Mid- to senior-level finance executives looking for a complement to their existing skills or perhaps just a refresher of those skills will also benefit.

Wharton Finance for Executives includes a mix of classroom lectures from top finance faculty and immediate application of learning through small group case project work and simulated business scenarios. Participants are taught how to "think financially” so that they can apply the tools and knowledge they gain at Wharton to a broad range of situations.

“Our goal is to provide executives with an ability to look at their organization and the decision-making in the organization through a lens that emphasizes ‘Does this strategy or decision create value?’ With this objective as an organizing principle, we are then able to explore precisely how a particular strategy or decision creates value, what the implications are for key financial metrics such as margins, earnings, cash flow, and liquidity, and what the associated risks of that decision are.”

Roberts says executives who attend the program will acquire the finance skills to “depoliticize strategic decision making” by highlighting objective and quantifiable metrics as opposed to subjective criteria, ambiguous arguments, and ad hoc rules of thumb. “Finance forces leaders to justify decision-making with objective facts and in the process forces leaders to better understand the decisions that they make,” he explains.