Finance For Non-Financial Managers

The course covers: Contents of accounts The profit and loss account and balance sheet Ratio analysis Cash flow analysis IFRS, IAS and the IASB The time value of money Project analysis The cost of capital Business valuation Presenting financial information Who should attend: The course is ideal for those persons seeking a proper grounding in the fundamentals of finance and accounting, including: Non-financial managers from backgrounds such as design, production, engineering, sales, marketing, legal, IT and HR. Entrepreneurs and consultants. Financial services managers seeking the basics of finance and accounting. Other non-financial specialists who wish to know more about finance and accounting. Course background Finance for Non-Financial Managers is an intensive five-day course designed to provide non-financial managers and others with the knowledge and confidence required to comprehend and participate in financial decision-making and analysis. The course is in the style of a series of presentations interspersed with case study material. Delegates are required to carry out a fair amount of financial manipulation and are introduced to spreadsheets with a number of cases. The case studies are designed to enable the delegate to take ownership of the knowledge offered by applying it to a case immediately after the relevant presentation. This is further reinforced by the completion of group cases towards the end of the course. The course is ideal for managers and others who are not financially trained, but who need to be familiar with the overall concepts and language used in corporate financial management, financial analysis, credit transactions and other corporate finance activities. Delegates should have with them a simple calculator for use in financial analysis cases (a specialist financial calculator is not necessary). A portable computer with spreadsheet software is preferable for completing a number of cases. Whilst the course is not explicitly designed as a spreadsheet software training course delegates less familiar with spreadsheets should be able to develop their spreadsheet knowledge from the case study material offered in the course. Delegates are encouraged to ask questions and develop their knowledge by enquiry. The presentation style is intensive, inclusive and informal. In the pre-course period delegates are expected to read from cover to cover a complete set of published statutory accounts.
Day 1 Dealing with the fundamentals Introduction to financial analysis Differences in UK/US accounting terminology Identifying the relationship between cash flow and profit Development of an integrated cash flow model Recognising it’s all about cash Understanding the relationships between the three main accounting statements. Exercise 1 - Accounting terminology exercise Fundamentals of accounting statements the profit & loss account How the P&L has changed over the last 25 years Detailed review of the Profit and Loss Account including explanation of all significant accounting terminology. Profit types - trading, asset and business Inventory, Depreciation, Capitalised interest, Minority interests and consolidation Exceptional and material items Fundamentals of accounting statements the balance sheet Detailed review of the Balance Sheet including 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 Case study – Use of ratios Delegates match ratios to different types of businesses. Delegates consider what ratios do and don’t tell us. Day 2 Cash flow analysis and accounting issues Understanding cash flows Detailed review of the Cash Flow Statement Analysing and interpreting cash flows Summarising cash flows for analysis Case study - Summarising cash flows Delegates summarise cash flows for analysis purposes Cash flow analysis The four phases in the life of a business Case study - Examining patterns of cash flows Delegates match cash flows to sectors Cash flow analysis - taking it further Dealing with the consequences of growth and no-growth. Case study - Growth & no-growth cash flows Delegates restate cash flows to improve their understanding of performance Accounting abuses and update Abuses of Fair Accounting Basic abuses relevant to all businesses More complex abuses relevant to larger groups Case study - major Travel group Delegates examine and evaluate the P&L of this major UK based travel group 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 & future values Defining the discount factor Exercises. Discounting calculations Net present value – developing the concept NPV’s & varying future cash flows Perpetuities & 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 Case study - Speculative housing project Delegates perform investment appraisals to decide whether to proceed with a capital investment Case study - Project analysis Delegates create a summary of the project cash flows & Identify the principal project risks Case study - Eight Projects Delegates evaluate a number of projects and decide which projects should be pursued and which rejected. Management information Budgeting Monthly reporting Costing Forecasting Planning Credit analysis - the basic concepts Introducing credit analysis frameworks Financial analysis - review of the issues Non-financial analysis – Developing a framework Day 4 Cost of capital and valuation The cost of capital and the underlying corporate finance theory The cost of debt The capital asset pricing model The tax subsidy effect The cost of equity Portfolio theory The Equity Risk premium Completing the WACC Mogdiliani Miller and the theory of leverage Funding structures The relationship between business risk & financial risk The four phases of the corporate life-cycle Identifying appropriate funding structures Recognising the drivers of funding strategies Cash flow valuation Preparing the forecast Identifying the free cash flows Competing the valuation Case study - Beautific Other valuation methods Earnings based valuation Dividend discounting Asset valuation Case study - Valuation methods - Magnificence Delegates use a variety of methods to value a business Funding structures The relationship between business risk & financial risk The four phases of the corporate life-cycle Identifying appropriate funding structures Recognising the drivers of funding strategies Day 5 Case studies and presentation skills Case study: Business analysis Delegates analyse a business using the methods presented earlier in the course Case study: Business valuation Delegates value a business using the methods presented earlier in the course. Case study: Financial presentation In small groups delegates prepare and present a slide based presentation of the salient features gained from the analysis case in session one using spreadsheets and graphical techniques