Advanced Financial and Statement Analysis for Business Planning and Decision Making

Introduction

This interactive course will update and develop your skills in analyzing business activities. It will guide you through the key steps of analyzing financial statements, evaluating new investments, and measuring the performance of your organization. It will develop your ability to generate growth and improve profitability, as well as pinpoint problem areas for remedial action. You will have the opportunity to acquire skills and technical knowledge that will enable you to manage more effectively.

The course will consider the key risks that organizations face in today’s uncertain economic, political, and physical environment. Effective risk management is of vital importance in the global business environment. The course will explore how organizations may analyze, manage, and mitigate/minimize their exposures to both business and financial risk. Throughout the course worked examples, exercises, and case studies will be used to ensure that delegates can relate their learning to real-world issues and problems.

This course will highlight:

• The value of the annual report and accounts and other sources of key financial information
• Use of a range of tools and techniques to analyze and evaluate the financial position and financial performance
• Effective acquisition and use of financial resources
• Analysis and valuation of capital investment projects and businesses
• Analysis and management of the business and financial risk

Objectives

By the end of this course, participants will have learned how to:

• Analyze and interpret an organization’s annual report and accounts
• Use ratio analysis to evaluate the financial position and financial performance
• Use analytical techniques to forecast future performance
• Critically evaluate the impact on financial position and performance of the subjective nature of accounting policies
• Identify the impact of profit, cash flow, and risk on capital investment projects and business valuations

Training Methodology

This is an interactive course. There will be open question and answer sessions, regular group exercises and activities, videos, case studies, and presentations on best practices. Participants will have the opportunity to share with the facilitator and other participants on what works well and not so well for them, as well as work on issues from their own organizations. The online course is conducted online using MS-Teams/ClickMeeting.

Who Should Attend?

This course is suitable for a wide range of personnel from companies, corporations, and governmental organizations. In addition to anyone working in the Finance, Accounting, Costing, Budgeting, and Planning departments, this course will greatly benefit:

• Project managers and other professionals
• CFOs, controllers, and treasurers responsible for the financial management of the organization and any other managers who wish to improve, refresh and update their understanding of analysis of financial information, and application to effective decision-making

Course Outline

• Why analyse financial data?
• Who are the users of financial information?
• Sources of financial information
• Published annual report and accounts – what is their purpose?
• The structure and contents of an annual report and accounts in the UK and other countries
• Creative accounting, financial scandals and the agency problem
• Corporate governance and corporate social responsibility (CSR) reporting
• The three main financial statements: income statement; balance sheet; statement of cash flows

• Using ratio and other analyses of the annual report and accounts to assess financial position and financial performance
• Profitability and cost-volume-profit (CVP) analysis
• Efficiency and working capital
• Liquidity and the short-term solvency
• Investment and growth
• Financial structure and long-term solvency
• Ratio analysis using Excel
• Excel trend analysis using common-size horizontal analysis and vertical analysis for comparability

• The Dupont system of ratio analysis, and pyramids of ratios
• Segmental analysis and value added analysis of the annual report and accounts
• The fundamental statistical tools and graphical representations
• Using statistical techniques to analyse and forecast financial data
• The impact of alternative asset valuation methods on the balance sheet and profitability
• Cash flow versus profit – the best measure of financial performance?
• Working capital and the cash flow operating cycle
• Direct and indirect cash flow analysis and the cash flow forecast

• Analysis of the balance sheet to identify long-term debt and equity, and short-term financing
• Capital cost models: cost of equity using dividend growth and capital asset pricing model (CAPM); cost of debt
• Weighted average cost of capital (WACC)
• Optimal capital structure models to minimise WACC
• Future values, present values, and discounted cash flow (DCF)
• Using net present value (NPV), internal rate of return (IRR), modified internal rate of return (MIRR) and equivalent annual cost (EAC) to analyse and evaluate capital projects
• The reasons for business valuations
• Business valuation models

• Predicting financial distress and corporate failure – the Altman Z-score model
• Risk and uncertainty
• Risk analysis using expected values, standard deviation, and coefficient of variation
• Sensitivity, simulation, scenario and break-even analysis techniques
• The analytical tools to manage risk
• Systematic risk, unsystematic risk, business risk and financial risk
• Financial risk – interest rate and foreign currency exchange rate exposures
• Using insurance, hedging and derivatives to mitigate and minimise risk