Financial Analysis Management

Day 1

Introduction to financial analysis

• Identifying the relationship between cash flow and profit

• Development of an integrated cash flow model

• Recognizing it’s all about cash

• Understanding the relationships between the three main accounting statements

• Exercise 1 - Accounting terminology

Fundamentals of accounting statements-the profit and loss account

How the P&L has changed over the last 25 years

• Detailed review of the Profit and Loss account including an explanation of all significant accounting terminology

• Profit types - trading, asset, and business

• Inventory, depreciation, capitalized interest

• Minority interests and consolidation

• Exceptional and material items

Fundamentals of accounting statements-the balance sheet

Detailed review of the balance sheet including an explanation of all significant accounting terminology

• Understanding the fixed assets note

• Accounting goodwill – what is it?

• Liabilities, pension fund accounting

• Debt and other liabilities like debt

• Deferred tax, contingent liabilities

Financial analysis techniques-ratio analysis

Objectives of ratio analysis

• Developing ratio analysis skills

• Different types of ratios

• How much information is there in ratios?

• Ratio rules – avoiding errors of principle

Day 2
Cash flow analysis and accounting issues

Understanding cash flows

• Detailed review of the cash flow statement

• Analyzing and interpreting cash flows

• Summarizing cash flows for analysis

Cash flow analysis

• The four phases in the life of a business Cash flow analysis-taking it further

• Dealing with the consequences of growth and no-growth

Accounting abuses and update

• Abuses of Fair Accounting

• Basic abuses relevant to all businesses

• More complex abuses relevant to larger groups

Global accounting in the new century

• Overview of the International Accounting Standards Board

• The implications of the IAS Initiative

• Review of new standards produced in the last five years

Day 3

Financial mathematics and project analysis

The time value of money

• Present and future values

• Defining the discount factor

• Exercises: Discounting calculations

Net present value -developing the concept

• NPVs and varying future cash flows

• Perpetuities and annuities

• Exercises: Annuities and perpetuities

Project analysis

• Introduction to project analysis

• Developing a forecast of the project cash flows

• Identifying the key risk areas

Evaluating capital investment projects

• Discounted cash flow techniques

• Calculating the internal rate of return

The responsibilities of management

• The essential aspects of the management task

Costing and break-even analysis

• Fixed and variable costs

• Marginal, absorption, and standard costing

Day 4

Spreadsheet analysis skills

Introduction to spreadsheets

• Using spreadsheet programs for business analysis and forecasting

• The issue of spreadsheet risk

 Day 5

• Financial Accounting

• Analysis of Financial Statements

• Short-term Financial Management Decisions

• Long-term Financial and Investment Decisions