Course Methodology

The course uses a mix of interactive techniques, such as brief presentations by the consultant, case studies, and group exercises to apply the knowledge acquired throughout the course.

Course Objectives

By the end of the course, participants will be able to:

• Define the four key financial statements: balance sheet, income statement, cash flow, and changes in owner equity, as well as critical financial terms such as profit, margins, and leverage
• Interpret the financial health and condition of a company, division, or responsibility center and use financial information for management and evaluation
• Prepare an operating budget and relate it to the organization's strategic objectives
• Apply capital budgeting techniques to evaluate long-term decisions in projects and capital expenditures
• Use cost behavior concepts to calculate the breakeven point and enhance short-term decision-making

Target Audience

Managers, supervisors, and staff from any function, including finance, need to improve their understanding and usage of financial information.

Target Competencies

• Understanding financial statements
• Financial analysis
• Preparing operating budgets
• Making capital budget decisions
• Financial decision making

The Key Financial Statements

• Understanding the accounting cycle
• The five main accounts in financial statements
• Income statement: A tool for performance measurement
• Accrual basis versus cash basis
• Balance sheet
• Statement of owners’ equity
• Statement of cash flows
• Wrapping-up: The cycle of financial statements
• External and internal auditors’ responsibilities

Analysis of Financial Statements

• Why ratios are useful
• Horizontal and trend analysis
• Building blocks, analysis, and reading through the numbers:
• Liquidity ratios: Ability to settle short-term dues
• Solvency ratios: Ability to settle long-term dues
• Activity ratios: Ability to manage assets efficiently
• Profitability ratios
• Limitations of financial ratio analysis
• Working capital management
• Definition of working capital and working capital management
• Various working capital management strategies

Operating Budget Processes and Techniques

• The meaning of the operating budget
• Steps to budget development
• Master budget components
• Sales forecasting
• Approaches to budgeting
• Incremental budgeting
• Zero-based budgeting
• Budgetary control and correction

Capital Budgeting: The Investing Decisions

• Examples of decisions involving capital budgeting exercise
• Time value of money: A prerequisite for investing decisions
• The required rate of return for investments
• Examples of cash outflows for capital projects
• Examples of cash inflows for capital projects
• Net Present Value (NPV) calculation
• Internal rate of return (IRR)

Cost Behavior Concepts and Breakeven Analysis

• Defining fixed costs
• Defining variable costs
• Contribution margin
• Computing breakeven point
• Sensitivity analysis: changing assumptions