The first step in improving financial literacy is grasping basic financial terminology. This guide explores a range of foundational finance concepts, including:
- General concepts like accounting standards, the general ledger, and the difference between accounting and finance.
- Building blocks such as assets, cash, income, expenses, liabilities, and depreciation.
- Profitability and the different ways it's calculated.
- Financial statements such as the balance sheet, income statement, and cash flow statement.
- Calculating value using formulas like ROI, NPV, IRR, and TCO.
The guide is complemented throughout with tips on how these concepts apply to an IT context.