Fundamentals of Finance, Accounting & Budgeting

Objective:

• Explain basic accounting concepts, terminology, principles, processes and procedures that govern how the financial statements are prepared and the relevance to a business department.
• Identify the basic principles used in safeguarding assets and ensuring the accuracy of accounting records.
• Understand the difference between accrual and cash basis accounting.
• Know the importance of accounting in running businesses.
• Understand the accounting cycle.
• Explain the components of an annual report.
• Understand how financial information, primarily that provided by the financial statements, can be used to analyze business operations and make economic decisions.
• Effectively prepare balance sheets and income statements.
• Analyze a set of financial statements to evaluate the business’ financial health.
• Differentiating the financing options available to a business and situations where each might be used.
• Explain how to prepare a budget and effectively manage the budgeting process.
• How to implement advanced planning and control techniques into your budgeting process.
• Know how to integrate the budgeting process with the development of the company’s long-term strategic vision.
• Successfully build an integrated planning, budgeting and reporting process.
• Know how to provide a decision support structure that provides timely and useful information to decision makers.
• Apply management tools to the budgeting process that contribute to strategic goals.
• Develop ways to increase profitability and performance through streamlined planning and reporting.

Content:

Company Objectives & Fundamentals of Finance & Accounting

• Measuring company performance
• Introduction to finance: Terminology
• Purpose of financial analysis and reporting
• The finance role in running businesses
• Accounting terminology
• Accounting as an Information System
• The Accounting Equation – what does it mean?
• Generally Accepted Accounting Principles
• Understand the nature, purpose and role of accounting
• The accounting environment
• Walking through an Annual Report
• The Role of External Auditor
• Users of accounting and financial information
• Fundamental Accounting Concepts: Cash versus Profit
• Profit and profitability
• Distinguish between accounting and finance

Financial Statements – Understanding and Analysis

• Understanding the Financial Statement
• Why are ratios useful
• Horizontal and trend analysis
• Vertical analysis: common size statements
• Building blocks analysis and reading through the numbers
• Limitations of financial ratio analysis

Management Accounting – Decision-Making Techniques

• Cost behavior: fixed, variable, semi-fixed cost
• Understanding cost behavior and types of costs
• Plan for cost reduction and profit improvement
• Costing Approaches – Full Absorption, Marginal, ABC
• Cost-volume-profit analysis (CVP)
• Break-even Analysis
• Contribution Margin

Working Capital Management

• Definition of working capital and working capital management
• Working capital management strategies for current assets
• Balancing profitability and liquidity
• Working capital management strategies for current liabilities
• A trade-off between profitability and certainty

Budgeting and the Strategic Management Framework

• What is the budget?
• The objectives of budgeting
• Types of Budgets
• The budget process
• The Role of Budgeting
• How to identify problems and limitations of budgetary control
• Approaches to Budget Development
• Using budgets to manage organizational performance
• Finance and budgeting teams – role in supporting strategic planning
• Capital budgeting techniques & Cash Flow
• Using Activity-based Budgeting
• Developing the Cash Budget

Advanced Capital Budgeting Evaluation Techniques

• Business risk and cost of capital
• Classifying investment projects
• Analyzing investment and operating cash flows
• The time value of money concept
• The required rate of return
• Net Present Value (NPV)
• Internal Rate of Return (IRR)
• Multiple internal rates of return
• Modified Internal Rate of Return (MIRR)
• Profitability Index (PI)
• Payback period and discounted payback period
• Capital rationing
• Comparing and evaluating techniques