Evaluating Financial Performance

Financial Analysis & Capital Budgeting

INTRODUCTION

Today’s companies are more competitive and dynamic than ever before. As a result, the days when corporate financial analysis and budgeting was merely a routine process of estimating the coming year’s revenues and expenses have long ended. Successful companies are constantly improving their ability to predict their future operations and their related resource requirements, enabling them to adjust their plans as needed and stay ahead of the competition. Not only does this heighten the importance of the analysis and budgeting process, but it also changes the traditional roles of spreadsheets, systems, and software created in-house.

WHO SHOULD ATTEND?

• Financial Officers who want to use the most advanced budgeting tools
• Account Personnel and Business Consultants
• Accountants responsible for budget preparation and management reporting
• Treasurers who need to go beyond the traditional budgeting tools
• Controllers who want to go beyond budgeting limitations

COURSE OUTLINE

DAY 1 – Getting started with Financial Analysis: Finance is F.U.N.

• The role of financial management
• The role of functional management in respect to financial management
• The basic financial statements and their articulation
• Why ROI is still a good place to start
• Competitive perspectives related to financial statements
• Understand strategy via financial statements
• Identifying key success factors in your industry sector

DAY 2 – Annual reports, footnotes, and corporate governance

• Annual reports using GAAP, IAS, or other standards
• Role of exchange commissions and social policy
• Do the different standards make a difference?
• Footnotes and beyond; what can they signal?
• Where do I find even more details?
• How do I interpret these details?
• Corporate governance in all organizations

DAY 3 – Industry financial analysis and balancing the scorecard

• Understanding an industry sector with ratios and other financial statements
• What can we learn from industry sector analysts?
• What sustainable growth can an industry sector expect?
• Value drivers for sustainable growth
• Non-financial inputs to financial statements
• Cash to capital to cash (Karl Marx) and how to leave an industry sector
• Competence based costing and financial analysis

Day 4 – Capital Budgeting: The real test

• The practice of capital budgeting
• Pro forma financial statements
• Determining incremental cash flows
• Evaluation of cash flow estimates
• Working capital changes and its impact
• Net Present Value (NPV)
• Internal Rate of Return (IRR)
• Modified Internal Rate of Return (MIRR)

Day 5 – Flexible versus Fixed Budgets

• Flexible budgeting and overhead analysis
• The advantages of the flexible budget approach over the static budget approach
• Prepare a performance report for both variable and fixed overhead costs using the flexible budget approach
• Use the flexible budget to prepare a variable overhead performance report containing only a spending variance
• Use the flexible budget to prepare a variable overhead performance report containing both a spending and an efficiency variance
• Explain the significance of the denominator activity figure in determining the standard cost of a unity of product
• Apply overhead cost to units of product in a standard cost system
• Compute and interpret the fixed overhead budget and volume variances