Course Outline

Module I: Advanced Budgeting & Cost Management

DAY 1

Introduction: The Relevance of Budgeting and Cost Management within Strategy Execution  

• The Link between Strategy, Planning, Budgeting and Cost Management
• Why Budgeting and Costing are so important to manage your company?
• Towards a Cross-functional Process-view of the Organization
• Financial vs. Managerial Accounting (Where you get information for decision-making)
• Understand your Processes: Integrating Financial and Non-financial Aspects
• Identify and Discuss the Key issues in terms of Budget / Costing for your own Organization

DAY 2

The Budgeting Framework and its Role within the Management Process  

• The Role of Budgeting within Management Accounting
• The Value of Budgeting in your Company
• Behavioral Implications of Budgeting
• Key Concepts and Terminology
• Advantages and Disadvantages: Critical issues to be Discussed
• Overview on the Financial Statements - Balance sheet, Income statement and Cash-Flow

DAY 3

Cost Management for Budgeting Purposes  

• Cost Concepts and Terminology
• Different Costs for Different Purposes
• Fixed vs. Variable Costs: The Cost-Volume-Profit Analysis Model
• Contribution Margin Analysis
• Manufacturing vs. Non-manufacturing Costs
• Period vs. Product Costs: Inventory Evaluation and Control
•  

DAY 4

Traditional vs. Advanced Techniques in Cost-control  

• Under-costing and Over-costing: The Consequences for Profitability
• How to refine a Costing System?
• Indirect vs. Direct costs: Traditional Cost Allocations Systems vs. Activity-Based Costing
• Cost Drivers: Linking Resources, Activities and Management
• Introducing Activity-Based Budgeting (ABB) and Management (ABM)

DAY 5

Broadening the Performance Measurement Systems  

• Shortcomings of Traditional Approaches to Budgeting and Performance Measurement
• Need to Linking Financial to Operational Issues
• Recent Best Practices: the Balanced Scorecard and Six-sigma
• Financial Perspective and Customer Perspective
• Internal Business Process Perspective and Learning & Growth Perspective
• Developing and Adapting the Scorecard

Module II: Advanced Financial Statements Analysis

DAY 6

Introduction to Advanced Financial Analysis

• Why analyse financial data?
• Who are the users of Financial Information?
• Sources of Financial Information
• Published Annual Reports and Accounts – What is their purpose?
• The Structure and Contents of an Annual Report and Accounts
• Creative Accounting, Financial Scandals, and the Agency Problem
• Corporate Governance, Sustainability, Ethics and Corporate and Social Responsibility (CSR) Reporting
• The Three Main Financial Statements
  • Income Statement
  • Balance Sheet
  • Statement of Cash Flows

DAY 7

Analysing the Annual Report and Accounts

• 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

DAY 8

Analytical Tools, Cash vs. Profit and the Cash Forecast

• 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 vs. 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

DAY 9

Financing the Business, Capital Investment Project and Business Valuation

• 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

DAY 10

Analysing and Predicting Corporate Failure, Business and Financial Risk

• Predicting Financial Distress and Corporate Railure – 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