Financial Intelligence Essay

Document Type:Case Study

Subject Area:Business

Document 1

On the flipside, there are organizations which last for more than five years, and will probably exist for a long time. One of the factors leading to early business closure is using models which lack harmony with the agenda. This begs the question, what makes a business last? The answers lie in the ability to incorporate carefully thought through decisions in their daily activities. These decisions are mainly influenced by managers who are able to carefully analyze data and make an appropriate interpretation of the data; a trait widely termed as financial intelligence. At the core of any successful business lies managers who are financially intelligent. Being a game of numbers, those who truly understand the numbers are the real players.

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Assessing an enterprise's performance is of importance in maintaining its financial health and the capacity for evaluation is mainly pegged on financial intelligence and knowledge of asset allocation. The knowledge of asset allocation is imperative in choosing processes through which a venture will offer its good and service. Of greater importance, nevertheless, is the ability of managers to identify market trends and make future projections of how the market will be. The ability to ‘see into the future' will enable the firm make proper adjustments to their goods to meet future demands. The reason behind this is that, in today's life, every transaction is based on money and how you handle your finances largely determines the kind of life you will live.

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A probable advantage of financial literacy is an improvement in an individual's problem-solving skills. Financial wisdom gives an individual the ability to carefully think through monetary challenges. Transferring the critical thinking skills to other aspects of their life, an individual is better adapted to solve the challenges and obstacles in life. Improvement in financial fluency can be a result of understanding economics. For a person who is not keen on establishing a business, being well conversant with the concepts of assets and liabilities will help in the making of a financially independent person and a competent money manager. A decrease in liabilities and an increase in assets acquisition after thoroughly thinking through the process will eventually lead to more savings. Financial intelligence and the ability to understand numbers help in the estimation of a firm's profitability.

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This is done through representing a company's net profit as a ratio of its net worth. Banks, in deciding the creditworthiness of an organization, apply the principles of careful analysis of the establishment's financial statement. Decisions that influence the wealth-generating potential of a person or organization are made by people competent enough to evaluate current data and make future projections on the same. Understanding asset distribution and the use of scarce resources to satisfy human want are the major influencers of such decisions. Financial Intelligence Units were established on the premise of financial intelligence. These units are tasked with identification of patterns that criminal organization use to finance their activities. In America, Financial Crimes Enforcement Network conducts financial analysis focusing mainly on money laundering and identification of funding sources of a terror group.

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