FINANCIAL INTELLIGENCE

ABUBAKAR SULE DANBATTA

Young Pharmacists Scholars (YPS)

A publication of the YOUNG PHARMACISTS SCHOLARS 4/8/2019

 About the presentation

The Young Pharmacists Scholars (YPS) is a mentoring platform providing support and

guidance regarding research and career progression among young pharmacists in

Nigeria. The platform has members who are Nigerians studying in universities across

the continents (America, Asia, Africa, Australia and Europe). As part of the mentoring

activities, the platform has conducted six research (Two of the studies have been

published and the remaining four accepted for publication). In addition, the platform

conducts weekly presentation on any career or research-related topic. The current

presentation on financial intelligence is part of the weekly presentation delivered by

Pharm A S Danbatta. Danbatta is one of our mentors at the platform with vast

experience in Pharmacoeconomics and pharmacoepidemiology.

Thank you!

Ibrahim Jatau Abubakar

YPS Founder and coordinator
 Financial intelligence

As individuals, it is very important to build financial success and security around us. This

can be achieved through financial discipline, goal setting and periodic reviews. One of the

factors to acquire towards achieving financial freedom is financial intelligence. The type of

intelligence under consideration here is personal financial intelligence. There is financial

intelligence by countries, whereby a financial intelligence unit is set up to detect illicit

financial transactions, like the National Financial Intelligence Unit NFIU, domiciled in CBN

in conjunction with EFCC. It’s the reason why transactions above certain limits for

individuals/corporations are reported by banks to the NFIU. In this lecture, we are focusing

on personal financial intelligence.

Financial Intelligence talks about empowering individuals with basic knowledge of finance

so that they can make sound business/financial decisions.

Financial Intelligence and Its Components

Financial intelligence is a skill set comprising of the following four competencies;

understanding the foundation, understanding the art, understanding the analysis and

understanding the big picture. All the four competencies need to be put into practice and

implemented for wholehearted success of financial intelligence. Let us look at each one after

the other.
1 UNDERSTANDING THE FOUNDATION

The foundation requires a basic understanding of your income statement, cash flow and

balance sheet (assets and liabilities).

When you talk about the balance sheet, you refer to variables such as assets and liabilities.

What you have, is it an asset? Liability? Let’s assume Subject A, owns a phone and uses it

as an asset, e.g. A is into online business with his phone etc. Subject B can hold same phone

as Subject A and it becomes a complete liability. I.e. uses up your data and mobile credit.

It’s the same with house ownership. You have a big plot of land to build a house, the plot can

accommodate two big houses, but you went ahead to build one big house in it for yourself.

The house from all the bills coming through, will probably serve as a liability. But if you

build two houses and rent out one, that very one immediately becomes an asset. Liabilities

eats you, but assets feeds you even when you are not working.

Still on balance sheet, if you have to look at your business or your life and evaluate its

financial strength, how would you do it? How would you know where the business stands

today? It is through a Balance Sheet! As the name implies, it provides the balances of your

various accounts. Essentially, the balance sheet shows what the business owes (liabilities)

and what it owns (assets). The balance sheet helps you understand and analyze important

financial information about a business. It gives you the overall worth of yourself or your

business.

Net worth =Total Assets –All Liabilities

 “So, do a balance sheet of yourself or your business today to know your worth.

Negative or positive”

Apart from the balance sheet, we also made reference to understanding Income statement

(Profit and loss statement). Businesses exist to make a profit, and it is important to measure

it. A profit and loss statement helps you know what the result of the business operation is.

Note, it is made for a period of time, typically, quarterly, half-yearly, and yearly. The two

important items in the statement are Incomes and Expenses. The incomes for the period and

all expenses for that same period matched, the net result is then calculated.

If Revenues exceed expenses, there is a Profit.

If Expenses exceed revenues, there is a Loss.

The last item on understanding the foundation is Cash flow statement. Cash is the lifeblood

of business. The Cash Flow statement, therefore, is a summary of how cash was received

and in what ways it was sent out. It is an important statement as it shows how and when cash

resources will be available to carry out business operations.

2 UNDERSTANDING THE ART

Finance, as well as accounting, is considered science and art. The discipline tries to quantify

or interpret what cannot always be represented as numbers. Individuals should be able to

apply this art/science to scenarios and make financial sense out of them. If you are planning
to go into stock, for example, you should be able to understand what the stock language is

saying. You should learn how to interpret the figures and make sense out of it. Dangote once

advised that you should never go into an investment you have no knowledge on. Fact is FI is

all about knowing what the numbers/language is saying, don’t just be optimistic about a

particular financial decision you are about to embark on, know the arithmetic. That is

financial intelligence. If you want to become financially independent, you have to know and

understand your numbers.

3 UNDERSTANDING THE ANALYSIS

Once the basic idea of finance is formulated, the application part comes from the picture.

Numbers presented can be better understood, the right questions can be asked, and further

analysis can be done around what has been presented. Financial intelligence equips you to

make sense of various ratio analyses, return on investment, etc. The new understanding helps

you make informed and calculated decisions.

4 UNDERSTANDING THE BIG PICTURE

Financial numbers alone do not tell the complete story. Financial results must be understood

from a broader perspective. Macro-environmental factors which influence financial results

such as government regulations, technologies, etc. must be considered before making a

financial decision. Assume you plan to invest your savings in treasury bills or Sukuk bonds.

You must study the body language of the government. What is the forecast on the Monitory

Policy Rate (MPR) for example? For an economy like ours, that is almost wholly dependent

on crude oil, what are the numbers saying on future crude price? All these are information
available from your search engine. A futuristic rise in crude oil prices will put more money

in government coffers, as such government is likely not going to rush to citizens to borrow

money, so the yield (Profit) on treasury bills or Sukuk bond is likely going to drop. Same

intelligence you should gather if you plan to invest in the stocks of a particular company.

Give yourself a time frame, say in 2 years. What is the company into? Say Oil Company?

What will be the value and relevance of oil in 2 years? You can predict if the shares of that

company is likely to appreciate or depreciate within the period. You plan to buy a land to

keep. You can predict the likely appreciation of the area say in 5 years’ time. Or you plan to

build a house to rent out, for area A, plots are been sold at 1 million naira, but the rent of two

bedroom is 50,000. For area B, the plot goes for 3 million but the rent of the same type of

house is 400,000. These are an example of intelligence gathering before investing.

CONCLUSION:

According to Robert K, “money without financial intelligence is money soon gone” Most

schools only teach people how to work for money. They are designed to produce good

employees instead of employers. What is lacking in formal education is the so-called

financial attitude, that is, what you do with the money once you make it, how long you keep

it, and how hard that money works for you in future. Financial struggle is often directly the

result of people working all their life for someone else. Many people will have nothing at the

end of their working life. Acquire the finance and use them to purchase income-generating

real assets; anything with value, i.e. stocks, bonds, mutual funds, income-producing real
estate, notes, royalties from intellectual property, etc. Part of FI is to strive to have good

knowledge in four broad areas of expertise – accounting, investing, understanding

markets, and law. It will help you understand how to protect and enhance your assets. The

one thing that holds most of us back is self-doubt. In the real world, it’s not the smart that

gets ahead but the bold. If you don’t think big and take risks, you will spend your entire life

waiting for something that is not bound to happen. We always believe we have time and as

such, we neglect the need to save and invest. Your first goal towards financial freedom is to

start saving. Create part of your income (salary) say anything between 20% and above as

savings. Live your life with the rest. It’s possible. It can be done. That extra discipline is what

is needed. Then with your acquired FI, you can now invest the savings and watch them grow

your life towards prosperity and financial security.

In the words of Warren Buffet

“In the long run, it’s not just how much money you make that will determine your future

prosperity, it’s how much of that money you put to work by saving and investing”

You can contact YPS through YPS connect via:

+2348032391159, youngpharmscholars@gmail.com, @ypscholars