Course Details
Course Outline
5 days course
The Nature and Purpose of Finance and Accounting
- A simple model of an organisation’s accounting framework
- 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: a tool for financial position
- The balanced status
- Statement of owners’ equity
- Statement of cash flows: cash is king
- Wrapping-up: the cycle of financial statements
- External and internal auditors’ responsibilities
Analysis of Financial Statements
- Why are ratios useful
- Horizontal and trend analysis
- Vertical analysis: common size statements
- 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: the ability to manage assets efficiently
- Profitability ratios
- Limitations of financial ratio analysis
Working Capital Management
- Definition of working capital and working capital management
- Working capital management strategies for current assets
- Balancing profitability and liquidity
- Working capital management strategies for current liabilities
- Trade-off between profitability and certainty
The Concept of Financial Management
- Accounting versus finance: rules and responsibilities
- Three pillars of finance:
- Financing decisions
- Investing decisions
- Operating decisions
Breakeven Analysis and Decision Making
- Defining fixed costs
- Defining variable costs
- Contribution margin formula
- Computing breakeven point
- Sensitivity analysis: changing assumptions
Operating Budget Process and Techniques
- What is an 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 exercises involving capital budgeting exercise
- Time value of money: a prerequisite for investing decisions
- Required rate of return for investments
- Examples of cash outflows for capital projects
- Examples of cash inflows for projects
- Net present value calculation
- Internal rate of return
