Financial Analysis, Planning & Controlling Budgets

Day 1:

The Challenge of Financial Economic Decision-Making

• The practice of financial-economic analysis

• Corporate value and shareholder value

• A dynamic perspective of business Benchmarking your own strategic position/competitor analysis

• The agency problem and corporate governance

• What information and data to use?

• The nature of financial statements

• The context of financial analysis and decision-making

Day 2:

Assessment of Business Performance

• Ratio analysis and business performance

• Management’s point of view

• Owners’ point of view

• Lenders’ point of view

• Ratios as a system – pyramids of ratios

• Integration of financial performance analysis – the Dupont system

• Economic value added (EVA)

• Predicting financial distress

Day 3:

Projection of Financial Requirements

• Interrelationship of financial projections

• Operating budgets

• Standard costing and variance analysis

• Cash forecasts and cash budgets

• Sensitivity analysis

• Dynamics and growth of the business system

• Operating leverage

• Financial growth plans

• Financial modeling

Day 4:

Analysis of Investment Decisions

• Applying time-adjusted measures

• Net present value (NPV) and internal rate of return (IRR)

• Strategic perspective

• EVA and NPV

• Refinements of investment analysis

• Equivalent annual cost (EAC)

• Modified internal rate of return (MIRR)

• Sensitivity analysis, scenario analysis, simulation, and NPV break-even

• Dealing with risk and changing circumstances

Day 5:

Valuation and Business Performance

• Managing for shareholder value

• Shareholder value creation in perspective

• Evolution of value-based methodologies

• Creating value in restructuring and combinations

• Financial strategy in acquisitions

• Business valuation

• Business restructuring and reorganizations

• Management buyouts (MBOs) and management buy-ins (MBIs)

Setting and Controlling Budgets

Day 6:

Strategic and Financial Planning

• Financial vs. managerial accounting

• Exploring the linkages between strategy, budgeting, costing and performance measurement

• Understanding what strategic planning is and why it is important

• Mission; Vision; Strategy; Goals and Objectives

• The outside environment and the internal context: SWOT and PESTEL analysis

• What is happening in your company

• Looking for the drivers of value creation

• Examples and cases

Day 7:

The Framework for Budgeting

• What is a budget - why create a budget?

• The budgeting framework

• Various types of budgets

• The budgeting process and the human side of budgeting

• Sales forecasting and budgeting schedules

• What is the budgeting process in your company?

• Top-down vs. bottom-up budget; incremental vs. zero-based

• Examples of budgetary schedules

Day 8:

Cost Analysis for Budgeting

• What is costing? Defining costs

• Cost behavior – Fixed and variable

• Breakeven models - The Equation Method

• The contribution margin concept

• Direct and indirect costs

• Traditional vs. Activity Based Costing

• Product vs. period costs

• Case study and examples

Day 9:

Budgeting: case study day - Controlling the budget variances

• What is the situation in your organization?

• Is budgeting organized by department and/or projects?

• Budget variance analysis

• Describe the difference between a static budget and a flexible budget

• Compute flexible-budget variances and sales-volume variances

• Explain why standard costs are often used in variance analysis

• Integrate continuous improvement into variance analysis

• Case study, examples and exercises

Day 10:

Beyond Budgeting: Broadening Performance Measurement Systems

• Advantages and disadvantages of budgeting

• How to improve budgeting in your organization

• What next? Beyond the Budget…

• The Balanced Scorecard: linking Strategy to budgeting to Performance Measurement

• Financial perspective, Customer perspective

• Internal Business Process perspective, Learning and growth perspective

• Developing and adapting the scorecard

• Case study illustration