Finance for Non-Finance People

Finance for Non-Finance People

OBJECTIVES

• Integrate financial concepts and policies into the management decision and budgeting process
• Evaluate the financial viability of projects and activities through income statements and balance sheets
• Employ cash flow tools to analyze business status
• Calculate the cost of business activities
• Control business operations through effective budget management
• Communicate effectively with financial executives and staff

WHO SHOULD ATTEND?

Non-financial persons and anyone who wants to develop their knowledge of financial practices to improve their managerial skills.

COURSE OUTLINE

Why Finance Matters

• Demystifying financial jargon
• Generally Accepted Accounting Principles (GAAP)
• Public vs. private financial methodologies
• Accountability and responsibility for financial information

The Key Building Blocks of Financial Control
Decoding the profit and loss account

• Differentiating income, operating and capital expense items
• Putting the pieces together to measure profit and business success
• When a sale becomes a sale: sales recognition

Analyzing the balance sheet

• Evaluating the worth of an established business
• Distinguishing between fixed and current assets and liabilities
• Defining depreciation and amortization
• Linking the profit and loss account to the balance sheet
• Shareholder equity

Cash Flow: The Lifeblood of Organizations
Making the key connection between business activity and cash flow

• Differentiating between cash flow, profit and net worth
• Connecting cash management to line management
• Credit and cash flow–maximizing benefits and minimizing costs
• How much cash is enough?

The importance of depreciation and amortization

• How depreciation impacts your budget over time
• Methods for calculating depreciation
• Advantages and disadvantages of various key methods
• Impacting the management budget
• Where depreciation rules come from

Managing a Profit or Cost Center
Selecting the best costing method for your situation

• Absorption, marginal, activity-based costing
• Determining costs in service businesses
• Avoiding costing traps

The unique features of project costing

• Estimating project duration and future costs
• Leveraging debt to your advantage
• Anticipating problems using cost control
• Making estimates based on incomplete information

Choosing projects that optimize shareholders’ interests

• Making the financial case using return on investment (ROI)
• Advantages and disadvantages of ROI, payback, discounted cash flow (DCF) and NPV techniques
• Selecting viable projects

A Manager’s Guide to Budgeting
Recognizing that budgets are more than numbers

• Budgeting as sociology, not accounting
• The politics of getting a budget approved
• The relationship between a well-designed budget and how others measure your performance
• Managing effectively within budgeting constraints

Comparing budget approaches

• Top-down
• Bottom-up

Types of budgets

• Incremental
• Zero-based
• Rolling
• Others
• Developing the budget numbers

Budgeting as a planning and control tool

• Using the budget to control the business
• Limiting factors
• Budget process and coordination
• Forecasting sales revenues and expenses
• Adjusting the budget to reality

Pulling It All Together

• Applying financial tools and concepts in the real world
• Evaluating a company’s health through its annual report
• Comparing public and private sector practices
• Recognizing potential traps in creative accounting