When it comes to Australia’s top CEOs, nearly half hold a background in finance.

Research compiled in Robert Half’s CEO Tracker found that among Australia’s top 200 listed companies, almost one in two (47%) CEOs have a finance background.

For any candidate with their career goal set on the top job, here is why developing your finance skills could help you meet the chief executive requirements.

Understanding the language of business – critical among chief executive requirements

All business leaders need a clear understanding of the numbers that make up a company.

However, finance is not just about figures. It’s also the language of business. It is critical for anyone holding the top job to be able to analyse, dissect, discuss and report on the financial information that a company generates.

Fluency in finance goes beyond familiarity with jargon terms like EBIT or ROI. When a CEO has strong financial skills, they understand true business issues – that rising sales don’t always equate to an uptick in profit, or that a dollar earned today is not the same as a dollar earned in a year’s time.

Moreover, as companies face constant pressure to improve profit margins and deliver increased value to investors, chief executives with financial capabilities are well placed to interpret the ramifications of business decisions through a financial lens.

The CFO shouldn’t hold all the financial knowledge

While the role of the CFO is to oversee the financial operations of the business, the position traditionally works hand-in-hand with the CEO to assess and forecast critical decision affecting the business.

Chief executives who have a financial background will be in a stronger position to interpret and collaborate on financial decisions of the company, rather than relying solely on the CFO to be the ultimate decision-influencer for all finance issues.

Often the role of the CEO is called on to personally sign off on financial reports, demanding the ability to distil the information provided and recognise what it means for the company. With the benefit of financial and commercial acumen, a chief executive can also communicate the financial meaning of company reports in a way that colleagues and investors can understand – and field questions if necessary.

Evaluation of performance – a core skill

The health of a company, regardless of size, is revealed in its financial reports. Profitability, solvency, the cost of earning revenue – it’s all told through financial reports. A CEO needs to be able to use those reports to form a clear picture of the organisation’s health.

Possessing such analytical skills will allow CEOs to know what they are looking at. They can readily evaluate performance, and they understand the questions they may need to put to the executive team to know why a business has failed to live up to expectations and how performance can be improved.

Finance skills are critical to identify opportunities

Accounting reports tend to be backward looking but a CEO is called on to make forward-looking decisions to guide a company to growth.

A finance background gives a chief executive the skills needed to not just identify trends, but to analyse risks, weigh up benefits, and use this information to identity genuine opportunities for expansion.

Navigating a future path through forecasting

When it comes to financial forecasting, chief executives need to ask pointed questions: How will our bottom line alter if expenses change? What is the likely trajectory of our funding costs? Is the company protecting itself against fluctuating currency values?

Being able to ask the right questions hinges on having the financial acumen to understand the key disruptors that could impact a company’s bottom line, and making strategic decisions to maximise on opportunities to the business.

The world may be evolving, but the need for chief executives to have outstanding financial capabilities looks likely to remain a cornerstone of the C-suite for some time.

If you have your sights set on the CEO role, increasing your financial acumen is a sensible step towards achieving your ambitions of claiming the corner office.