Understanding Business Financials

FLO & YFLO Hyderabad’s Spark Tank initiative hosted an online session by speaker Prof. Harshali Damle from IIM, Bangalore. The session was curated by the team of GrowthForge, led by Ms. Radhika Agarwal and team members – Sravika Vadavalli & Kulpreet Marwaha. In her talk, Prof. Harshali emphasized that understanding financials is critical for any entrepreneur, as a business’s core function is to generate profits. She broke down key financial concepts using relatable analogies, making them easier to grasp.

Important financial questions:

• How much working capital is needed?
• Can working capital be negative?
• How much credit should be extended to customers (in terms of days)?
• How much inventory should be held for 3 months?

Prof. Harshali reinforced that every company is in the business of making a profit. She advised early-stage businesses to minimize credit dependency and focus on cash management for sustainability.

Essential financial indicators for startups, according to Prof. Harshali are – Customer Acquisition Cost (CAC) – the cost of acquiring one customer, Burn Rate – understanding how quickly a startup is using up its capital, helping in investment planning, and Forecasting – the importance of planning financial projections based on business models.
Prof. Harshali’s engaging approach, coupled with practical examples, made the session not just informative but transformational.