Course Overview
Financial awareness is an essential requirement for every role and at every level in organisations. The integration of all processes within businesses means that accounting and financial information and techniques must be understood and communicated by all functions but at a level greater than the budgeting and recording of financial information.
Participants in the Financial Management for Non-Financial Professionals training course will be provided with knowledge that can be shared amongst their own colleagues, and with other departments. The awareness and understanding of the various financial techniques available will enable delegates to communicate better with financial professionals, within and external to their organisation.
Course Duration
5 Days
Who Should Attend
- Non-financial professionals in every functional area of responsibility in all industries
- Personnel from any function, including finance, who need to improve understanding and usage of financial information
Course Objectives
- Analyse the profit and loss account (income statement), balance sheet, and cash flow statement, and use ratios to interpret financial statements and identify their limitations.
- Appreciate the significant importance of cash flow (rather than profit) and discounted cash flow (DCF) in creating shareholder value.
- Develop costing systems such as activity-based costing (ABC) for optimal decision-making to maximize shareholder wealth.
- Appreciate the role of managers in the budget process and the use of activity-based budgeting (ABB).
- Determine the cost of capital in order to evaluate alternative sources of financing and optimal financial structure (gearing).
- Effectively manage cash and working capital to reduce costs and improve cash flow
Course Outline:
Module 1 -Company Objectives, Accounting Standards and Financial Statements
- Measuring company performance
- Value creation and the primary objective of maximization of wealth
- Profit and loss account (income statement)
- Balance sheet
- Cash flow statement
Reading and Interpreting Financial Statement
- Measurement of operating performance
- Measures of financial performance and financial position
- Risk measurement
- Limitations of ratio analysis
Cost/Volume/ Profit (CVP) Analysis
- Cost, volume, profit relationships
- Break-even analysis
- Profit modeling
- Limitations of break- even analysis
Module 2 - Discounted Cash Flow (DCF)
- The importance of the timing of cash flows
- Future values
- Present values
- Loan payments and valuation of annuities
Capital Investment Appraisal
- Methods for evaluating capital projects
- Payback
- Net present value
- Internal rate of return
- Discounted payback
Capital Budgeting
- Capital rationing
- Ranking investment projects
- Inflation and investment
- Using expected values and standard deviations to make decisions
Module 3 - Financial Structure
- Cost of debt
- Cost of equity
- Weighted average cost of capital (WACC)
- Optimal capital structure
Costing
- Fixed costs, variable costs, and overheads
- Overhead allocation, absorption and the use of activity based costing (ABC)
- Expenses versus inventory (stock valuation)
- Contribution compared with profit
Decision-Making
- Make versus buy decisions
- Shut-down or contribution decisions
- Product mix decisions and limiting factors
- Decisions trees
Module 4 - Budgeting
- Purposes of budgeting
- The budget process
- Activity based budgeting
- Uncertainty and risk – worst and best outcomes
- Maximin and minimax regret rules
- Motivation and behavioral aspects of budgeting
- Problems in budgeting
Budgetary Control
- Organisational and accounting control systems
- Standard costing
- Flexed budgets
- Variance analysis
- Types of variances and the reasons they occur
- Planning and operational variances
Module 5 -Working Capital Management and Cash Improvement
- Working capital and working capital requirement
- Managing working capital
- Cash improvement techniques
- Cash management and the banking facilities
Business Valuation
- Types of valuation methods
- Stock market valuation
- Net assets valuation
- Capitalised earnings valuation
- P/E ratio valuation
- Gordon growth model valuation
- DCF valuation
