This course offers an in-depth overview of the accounting and finance world. Part 1 emphasized the internal workings of the finance/control function as it communicates with external and internal constituencies to provide information for decision making under uncertainty. Part 2 emphasizes the capital markets impact on corporate finance, risk, and governance.

No preparation is necessary except to bring an open mind and a budget document or other financial documents of interest.

By combining techniques with analysis, problems and examples with real case studies, and supporting theories the course provides delegates with key finance terminology and practice. This course not only presents the key financial tools generally used, but also explains the broader context of how and where they are applied to obtain meaningful answers. It provides a conceptual backdrop both for the financial/economic dimensions of strategic business management and for understanding the nature of financial statements, analyzing data, planning and controlling.

The course is targeted at providing a university-quality ‘MBA’ overview of finance/accounting, planning/control, risk management, and corporate governance. Participants are expected to be high-potential learners seeking the next level of learning. Additional bibliographies, readings, and spreadsheets will be provided as takeaways.

The Structure

Module 1 - Accounting, Decision Making, & Financial Communication

Module 2 - Finance, Risk Management & Corporate Governance

Module 3 - Financial Analysis, Modelling & Forecasting

The Goals

• Specify the exact nature and scope of corporate financial reporting
• Identify and criticize specific concepts, rules, and procedures are in place for corporate financial reporting
• Understand multiple interpretations of financial statements via IFRS, FAS, SEC, etc
• Integrate risk management and corporate governance
• 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 the budgeting process, including performance evaluation
• Understand cost behavior and its impact on management decisions
• Learn how to communicate and to question financial information effectively

The Process

This workshop will be highly participatory and your seminar leader will present, guide and facilitate learning, using a range of methods including discussions, case studies and exercises. Where appropriate, these will include real issues brought to the workshop by delegates.

Lessons learned from the seminar will be applied to your own organization. Key performance indicators (KPIs) for the critical success factors (CSFs) will focus attention on high priority action plans for taking back to your organization.

The Benefits

• Improved appreciation for the finance/accounting/governance approach
• Better integration of business plans and strategic intent
• Reduced inter-functional territorial battles
• Improvements in communications between staff and line management
• Higher productivity during the decision making process
• Increased skill set in all phases of finance/accounting/governance
• Greater ability to participate in and to lead the finance/accounting process
• Recognizing the increased professionalism to deal with the current and future topics
• Increased recognition by the organization of their learning and professional commitment
• Challenging themselves in an immersive learning environment

The Core Competencies

Attendees will gain in the following competencies as a result of the program:

• Using financial information for guiding decisions
• Clarifying KPIs across different functions
• Building strategic thinking and implementation orientation into their professional lives
• Challenging the status quo of finance/accounting, budgeting, and decision making
• Recognizing the value of external standards, governance requirements, and measurements of qualitative elements
• Identifying Value Creation principles as the driving force for decision making

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The Programme Content

Module 1: Accounting, Decision Making, & Financial Communication

• Accounting: An introduction
  • What is accounting?
  • What forms can accounting take
  • Definition and importance of profit
  • Decision scenarios explored
  • Funding business operations
  • Who is interested in profit?
  • Cash vs. Accrual accounting
  • Cash flow forecasting and improvement
  • Accounting policies chosen by companies
  • Accounting standards

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Financial Statements, Accounting Policies, and Reporting Standards

• Income Statement – basic components
  • Revenues & the questions
  • Direct/variable/product costs
  • Indirect/fixed/period costs
  • Mixed costs
  • Non-cash deductions: the what, the why & the how
    • Depreciation: various methods explored
    • Amortization: impairment test
    • Depletion: when & how
  • The difference between profit and cash
  • A closer look at costs and expenses
  • Profit calculations
  • Summarizing profit statements and extracting the key figures
• Balance Sheet
  • Assets – current & long term
  • Liabilities – current & long term
  • Equity – components
  • Capital employed - options
  • Managing the working capital cycle
• Cash Flow Statement
  • Operating sources/uses
  • Investing sources/uses
  • Financing sources/uses
• Making and Communicating Decisions using Budgets
  • The master budget
  • The budgeting as a planning tool, a control mechanism, a communications device & value creation
  • Budgeting Sales to “drive” the correct budget
  • Operating budget components
  • Financial budget
  • Pro Forma Financial Statements
  • Cash Budgets
  • Capital budget
  • Interrelationship of Financial Projections
  • Dynamics and Growth of the Business System – a model review
  • Flexible vs. traditional budgets – the pros & cons
  • Variance analysis as a tool for improvement & communications
  • Price and volume effects within variance analysis: state of the art
• Financial vs. Management Accounting: differences and similarities
  • Objectives of Managerial Accounting
  • Managerial Versus Financial Accounting:
  • Role of the Managerial Accountant
  • Financial accounting: what we show to the public
  • Objectives of financial accounting
  • Role of financial accountant
  • 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
  • Cost/Benefit analysis
• Ultimatum Goal of Planning – Valuation, Business Performance & Decision Making
  • Definitions of Value
  • 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!

Module 2: : Finance, Risk Management & Corporate Governance

• What is Finance & Working Capital – liquidity or bankruptcy
  • Finance is a numbers game
  • Yet finance is more than the numbers
  • The three major components of finance
  • Working capital (WC) defined
  • Relationship to current ratio
  • Components of WC
  • Inventory
  • Accounts receivable
  • Cash
  • Accounts payable
  • Notes payable
  • The critical rations to compute
  • What should they be & why
  • The questions to ask
  • The answers you want
• Capital Structure – what it is & why it is important
  • Equity capital - what it is
  • Equity capital – calculating it costs/required rate of return
  • Debt capital – what is it really
  • Debt capital – calculating it costs/required rate of return
  • Weighted Cost of Capital (WACC) – why it is so important
  • Calculating your WACC
  • When & how to use WACC
  • Leverage: two-edged sword - defined
  • Operating leverage - calculated
  • Financial leverage - calculated
  • Combined leverage – Wow! Look at the impact
• 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 (NPV) & Internal Rate of Return (IRR) as preferred methods
  • Profitability Index (PI) & Modified Internal Rate of Return (MIRR) as reasonable alternatives
  • Defining the approval criteria and review process
  • Post-implementation audits of capital projects
  • Refinements of Investment Analysis
  • Dealing with Risk and Changing Circumstances – how do we explain?
  • Cost of Capital and Return Standards
  • Benchmarking Discount & Hurdle rates
• Risk Management as an integral part of Corporate Governance
  • Understanding uncertainty and risk/opportunity
  • Identifying strategic financial risks
  • Identifying operational risks
  • Identifying functional financial risks
  • Assessing financial risks in each perspective
  • Finding our personal risk profile (appetite for risk)
  • Clarifying desired outcomes, expected outcomes, and actual outcomes
  • Performance measures – the need for FRM/ERM
  • Quantitative and qualitative risks
  • Developing FRM/ERM strategy – do we need a CRO?
  • Other risk issues to be concerned with: Joint ventures, alliances, product liability, environmental risk, outsourcing risk, growth risk, R&D risk, natural disasters, catastrophic risks, supply chain risk, reputation risk, and psychology of risk among others
• Corporate Governance
  • What is Corporate Governance?
  • Corporate Governance environment
  • Relevance of Corporate Governance
  • Perspectives on Corporate Governance
  • Shareholders vs. Stakeholders
  • Voluntary vs. Enforcement
  • 1-tier vs. 2-tier boards
  • Chairman/CEO duality
  • The independent director
  • Corporate Governance models
  • Structure & practices
  • Emerging trends in Corporate Governance
  • Principal-Agent theory and applications
  • Independence in fact versus appearance

Module 3 - Financial Analysis, Modelling & Forecasting

• Introduction and overview of Financial Modelling and the International Business Environment
  • Define the Terms Model and Financial Model
  • Learn the 10 steps to create good Financial Models
  • Use Flowcharting Techniques to improve your model
  • Overview of the strategic and operational aspects of a global business entity
  • The Organizational Planning Model
  • The Product/Decision/Information Cycle
  • The Objectives of Financial Analysis
  • Creating wealth by adding value
  • Basic metrics of wealth creation and financial performance
• Analysing the Annual Report and Creating Shareholder Value
  • Ratio Analysis – The heart of Financial Analysis
  • Use Excel® templates to calculate and interpret liquidity, leverage and profitability ratios
  • Interpret the results of ratio analysis from an accrual accounting perspective
  • The inter-relationship between the DuPont Formula and EVA®
  • How to use the Altman Z-Score
  • Use various investment surveys to benchmark the results of financial analysis
  • What constitutes “Shareholder Value?”
  • Finding the cost of equity
  • Determine the Cost of Debt, Preferred Equity and Common Equity
  • Calculate Weighted Average Cost of Capital (WACC)
  • Develop the EVA© Model
  • Impact of Acquisitions on WACC
• The Time Value of Money and the Steps in Building Financial Models
  • The impact time has on the value of money
  • Understand the various interest calculations
  • Using WACC and ROIC as benchmarks
  • Use Excel®, to determine Present Value, Future Value, Net Present Value, Internal Rate of Return, Modified Internal Rate of Return
  • Using IRR as a basis for capital project evaluation
  • Situations that require models
  • Models and Shareholder Value (EVA®)
  • Identification of Forecast Validation Criterion
  • Determination of Model and Forecast Horizons
  • The recognition of risk in forecasts
  • The Role of Assumptions in Financial Forecasting
• Evaluating Capital Project Proposals and Effective Management of Historical Data Using Excel®
  • Identify the various types of capital projects
  • Discuss the capital project evaluation process
  • Determining the initial and subsequent capital project cash flows
  • Development of the “Hurdle Rate” for capital projects
  • Discuss the use of “Terminal Value” in evaluating capital projects
  • Use Excel® to evaluate capital projects by applying NPV, IRR, and Discounted Payback models
  • Understanding the Approaches Used to Build Financial Forecasting Models
  • Recognizing the Basic Patterns Inherent in Historical Data
  • Using the Exploratory Data Analysis Tools Available in Excel®
  • Key Factors in Determining the Proper Time Horizon to Choose for Your Model
  • Determining Degrees of Reliability in Model Projections
  • Selecting the Degree of Robustness and Sensitivity of the Model
• Use of Time Series Analysis and Evaluating Investment Portfolio’s
  • Development of Time Series Models using histograms, moving averages, exponential smoothing, and regression analysis
  • Mastering the use of Exponential Smoothing as a Data Analysis tool
  • Validation of Time Series Analysis
  • Appreciate the Meaning and Importance of Sensitivity Analysis
  • Developing “What-if” Scenarios in Your Financial or Operational Models
  • Using the Excel tools “Scenario and Goal Seek”
  • Principles of risk measurement in individual shares
  • Graphing expected return and risk using variance analysis
  • Modern portfolio theory using the capital asset pricing model
  • Managing a balanced portfolio
  • Use Excel® to determine the beta of listed share on a securities market