Advanced Accounting & Finance Management

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

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