Accounting, Decision Making and Financial Communications

OBJECTIVES

• understand the content of and relationships between financial statements (income statement, balance sheet, and statement of cash flows
• understand how to use financial statements to evaluate the financial performance of an organization
• understand discounted cash flow (DCF) techniques and their application to financial decision making
• understand how profit margin, asset utilization, and financial leverage are used by managers to maximize the return to investors
• understand the budgeting process, including performance evaluation
• understand cost behavior and its impact on management decisions
• understand the need for and the methods used to allocate overhead
• learn how to communicate and to question financial information effectively 

WHO SHOULD ATTEND?

Professionals in the field of finance and accounting, supervisors, and finance professionals who need to understand, apply and implement practical tools to enable them to run the finance department more efficiently.

COURSE OUTLINE

The Challenge of Profits versus Cash

• Who is interested in profit?
• Finance is a numbers game
• Definition and importance of profit
• The profit and loss account analyzed
• A closer look at costs and expenses
• Profit calculations
• Increasing profit opportunities
• Summarizing profit statements and extracting the key figures
• Decision scenarios explored
• Managing the working capital cycle
• Funding business operations
• The difference between profit and cash
• Accruals principles
• Cash flow forecasting and improvement
• Funding alternatives
• Cash v profit calculations

Financial Statements, Accounting Policies, and Reporting Standards

• Assets employed in business
• Capital employed and business funding
• Asset valuations
• Summarizing the main assets employed in a business
• Summarizing how businesses have financed their growth
• Analyzing and comparing capital employed in businesses
• Financial accounting and management accounting compared
• Fundamental accounting concepts that underpin financial accounts
• Accounting policies chosen by companies
• Accounting standards
• Some Special Issues

Making and Communicating Decisions using Business Based Budgets

• Problems of forecasting
• Using historical data to help predict the future
• Forecasting
• Sales volume
• Pro Forma Financial Statements
• Cash Budgets
• Interrelationship of Financial Projections
• Financial Modeling
• Sensitivity Analysis
• Dynamics and Growth of the Business System
• Leverage and Financial Growth Plans
• What is accounting? Is budgeting broken?
• Management accounting and financial accounting: differences and similarities
• Cost terminology: variable, fixed, controllable, non-controllable, incremental, sunk, opportunity, and relevant
• Cost behaviors in Cost-Volume-Profit scenarios: contribution margin and fixed costs
• Breakeven and targeted net income scenarios
• Business cases with master budgets
• Benefit-cost analysis

CAPEX -Analysis of Investment Decisions with What-if Risks

• Cash Flows and the Time Value of Money
• Discuss the capital project evaluation process
• Ideas for the future with a multiple time periods horizon
• Estimating cash flows within the business system
• Net present value and IRR as superior methods to payback and accounting rate of return
• Defining the approval criteria and review process
• Post-implementation audits of capital projects
• Sensitivity analysis and uncertainty
• Using Monte Carlo simulation techniques in budgeting
• Components of Analysis
• Methods of Analysis
• Applying Time-Adjusted Measures
• Strategic Perspective
• Decisional Framework ARR, IRR, NPV, alternatives?
• Refinements of Investment Analysis
• Dealing with Risk and Changing Circumstances – how do we explain?
• Cost of Capital and Return Standards

Ultimatum Goal of Planning — Valuation and Business Performance

• Definitions of Value – do they trust our plans?
• The budgeting process as a communications process
• Nature and purpose of budgets for planning and control
• Constructing “good" budgets that are integrated via the master budget to the strategy
• Budgetary control and variance analysis
• Price and volume effects within variance analysis: state of the art
• Responsibility centers: cost, profit, and investment
• Measuring responsibility center performance
• Segment reporting internally and externally
• Business Valuation from multiple perspectives
• Managing for Shareholder Value
• Shareholder Value Creation in Perspective
• Evolution of Value-Based Methodologies in planning and budgeting
• Creating Value in Restructuring and Combinations beyond planning and reporting- the case for real change!
• The search for the ‘right number’ — will EVA be that number