Part 1
The Nature and Purpose of Finance and Accounting
- A basic model of an organisation’s financial framework
- Understanding the accounting process
- The five primary accounts in financial reports
- Income statement: a tool for assessing performance
- Accrual basis vs cash basis
- Balance sheet: a tool for evaluating financial standing
- The balanced condition
- Statement of owners’ equity
- Statement of cash flows: cash is vital
- Conclusion: the flow of financial statements
- Responsibilities of external and internal auditors
Part 2
Analysis of Financial Statements
- Why are ratios beneficial
- Horizontal and trend analysis
- Vertical analysis: common-size reports
- Building blocks analysis and interpreting the figures:
- Liquidity ratios: ability to settle short-term obligations
- Solvency ratios: capacity to settle long-term obligations
- Activity ratios: efficiency in managing assets
- Profitability ratios
- Limitations of Financial Ratio Interpretation
Part 3
Working Capital Management
- Defining working capital and its management
- Strategies for managing current assets in working capital
- Balancing profitability and cash flow
- Strategies for managing current liabilities
- The trade-off between profitability and stability
The Concept of Financial Management
- Accounting vs finance: principles and duties
- Three main areas of finance:
- Financing decisions
- Investment decisions
- Operational decisions
Part 4
Breakeven Analysis and Decision Making
- Identifying fixed costs
- Identifying variable costs
- Contribution margin equation
- Calculating the breakeven point
- Sensitivity analysis: altering assumptions
Operating Budget Process and Techniques
- What is an operating budget
- Stages of budget creation
- Master budget components
- Sales projection
- Approaches to budgeting
- Incremental budgeting
- Zero-based budgeting
- Budget control and adjustments
Part 5
Capital Budgeting: The Investment Decisions
- Examples of capital budgeting exercises
- Time value of money: a necessity for investment decisions
- Required return rate for investments
- Examples of cash outflows for capital projects
- Examples of cash inflows for projects
- Net present value calculation
- Internal rate of return