Introduction

Financial analysis, planning and controlling budgets is targeted towards finding meaningful answers to the significant questions relating to the financial management of companies and determining whether or not the results are fully quantifiable. This seminar presents the key financial tools and explains the broader context of how and where they are applied to obtain meaningful answers. It provides a conceptual backdrop both to the financial/economic dimensions of systematic business management and to understanding the nature of financial statements, analysing data, planning and controlling.

The setting and appropriate control of budgets are techniques fundamental to every successful business. It is important to appreciate the links between strategy and budgeting and forecasting and budgeting and how actual performance can be measured to help companies control variances from the budget. This all leads to more accurate budgets and improved business performance in the future. This seminar will further help delegates to understand the jargon and methodology of financial planning, forecasting, budgeting and analysis to enable them to contribute more effectively to their organisations’ further.

Seminar Objectives

The seminar provides delegates with the tools required to find better answers to questions such as:

• What is the exact nature and scope of the issue to be analysed?
• Which specific variables, relationships and trends are likely to be helpful in analysing the issue?
• Are there possible ways to obtain a quick ‘ballpark’ estimate of the likely result, and how precise an answer is necessary in relation to the importance of the issue itself?
• How reliable are the available data, and how is this uncertainty likely to affect the range of results? Should cash flow or accounting profit be used to evaluate the financial implications of a decision?
• What limitations are inherent in the tools to be applied and how will these affect the range of results obtained?
• How important are qualitative judgments in the context of the issue and what is the ranking of their significance?
• How do we interpret the financial impact of strategic decisions?
• How should we forecast and plan at a business level?
• How do we distinguish between different cost systems?
• How do we manage corporate budgeting, variance analyses and the monitoring of business performance?
• How do costs behave and how does activity based costing analysis help with an understanding of the problems of overhead allocation, decision-making and pricing strategies?

Training Methodology

The seminar is based on a combination of interactive activities, team and individual exercises, case studies and discussions.

Delegates will gain both a theoretical and a practical knowledge and understanding of the topics covered. The emphasis is on the practical application of the topics and as a result delegates will return to the workplace both with the ability and the confidence to apply the techniques learned in carrying out their duties.

All delegates will receive a comprehensive set of notes to take back to the workplace, which will serve as a useful source of reference in the future. In addition, all delegates will receive a CD-ROM containing additional reference material and the Excel® models used in the seminar.

The environment will be a supportive one in which individuals with varying degrees of experience will be encouraged to share their current approaches as well as trying out new ones they encounter in the seminar. The seminar instructor will be able to answer any questions a delegate may have and to act as a facilitator for building and applying new approaches.

We aim for this to be an enjoyable as well as a learning experience and feel that the mix of style and learning techniques will prove valuable to those that attend.

Organisational Impact

This seminar provides an integrated and conceptual backdrop both to the financial/economic dimensions of systematic business management and to understanding the nature of financial statements. It will enable delegates to work through the challenges they face in their organisations ready to implement the improvements they have learned on their return to work.

All the topics on the seminar are viewed in the context of creating shareholder value: a fundamental concept that is a theme referred to throughout this seminar.

Delegates will emerge with a thorough understanding of the techniques of financial management and budgeting essential for their companies to succeed in a competitive environment. The use of Excel® models as tools to assist in resolving financial issues will greatly enhance delegates’ skills in using this powerful software package.

Personal Impact

Delegates will acquire the ability to choose the most appropriate tools from the wide variety of financial analytical and budgeting techniques available to generate quantitative answers. Selecting the appropriate tools from these choices is clearly an important part of the task. Yet, experience has shown again and again that first developing a proper perspective for the problem or issue is just as important as the choice of the tools themselves. Delegates will develop a better understanding of the relationship between the two main purposes of budgeting, planning and control.

They will further enhance their knowledge of a variety of functions and formulations of an Excel® spreadsheet and increase their confidence in using this package.

Competencies Emphasised

• Obtaining the relevant information, given the context of the situation
• Choosing the most appropriate tools for financial management and budgeting
• Knowing the strengths and limitations of the available tools
• Understanding the fundamental important of creation of shareholder value
• Appreciating the importance of cash flow
• Viewing all analysis, planning and control decisions in the context of their impact on shareholder value
• Gaining an appreciation of the international business environment

Who Should Attend?

This seminar is a ‘must’ for Chief Financial Officers, Financial Planners, Financial Controllers, Finance Managers and Executives, Accountants, General Managers, Directors, Treasurers, Corporate Planning and Business Development Managers, Sales and Marketing Managers.

Business professionals with direct or indirect financial responsibilities and personnel who manage departments with budgetary plans and who are responsible for cost and strategic analysis will also find this seminar highly useful in their career advancement.

All participants will be able to offer their input, based on their individual experiences and will find that the seminar provides a forum that gives an opportunity to consider new ideas and methods and for upgrading and enhancing their understanding of corporate finance and budgeting best practices.

Seminar Outline

Day 1 – The Challenge of Financial/Economic Decision-making

• The practice of financial/economic analysis
• The value-creating company
• Corporate value and shareholder value
• A dynamic perspective of business
• The agency problem and corporate governance
• What information and data to use
• The nature of financial statements
• The context of financial analysis

Day 2 – Assessment of Business Performance

• Ratio analysis and 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 modelling

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 reorganisations
• Management buy-outs (MBOs) and management buy-ins (MBIs)

Day 6

Strategic planning for Setting Budgets

• Understanding what strategic planning is and why it is important
• Clarify the difference between vision, mission statement, goals and objectives
• The outside environment: the need to understand the economic cycle
• SWOT and PESTEL analysis
• Tying the strategic plan to the budget

Financial Planning - Elements of Costing and Cost Strategies

• The nature and behaviour of costs, fixed, variable, semi-variable, direct and indirect costs
• Standard and actual costing - the difference
• Understanding overheads
• Calculating the variances at a detailed level to give real meaning to them
• Activity base costing ABC
• Full cost pricing and managerial costing

Day 7

Forecasting & Preparing the Business Estimates

• The purpose of forecasts for the business
• The limiting factors
• How to predict sale revenues - different approaches
• Percentage of sales forecasting
• Using the three financial statements for forecasting
• Break-even analysis

Forecasting methods

• The most useful forecasting techniques
  • Quantitative approaches
  • Qualitative approaches
• Forecasting methods demonstrated

Forecasting case study

Day 8

Budgeting - The Corporate Budgeting Process

• Understanding the benefit of budgeting to an organisation
• Budgets' forms and purposes; the master budget
• The different types of budgets - fixed, flexible, zero based, & ABB
• Preparing, coordinating and monitoring a budget
• Should we budget for customer satisfaction?

Presenting a Business Budget

• Giving clear information
• Presenting the main variables
• Negotiating agreement
• Putting it clearly onto paper
• The budgets and performance measurement as tools for communications
• Budgets and issues of motivation

Budgeting case study

Day 9

Tracking Expenditure for Performance

• Reconciling actual with budgeted expenditure
• Critical variances
  • Material: Price vs. Quantity
  • Mix vs. Yield
  • Labour: Rate vs. Efficiency
• Identifying cost saving opportunities
• Looking for volume discounts
• Phasing expenditure to help cash flow

Capital Budgeting

• Capital budgeting overview
• Net Present Value
• Internal Rate of Return
• Modified Internal Rate of return
• Profitability Index

Capital Budgeting case study

Day 10

Controlling the budget variances

• Interpreting the variance analysis report
• What is critical & what is not
• Creating accountability
• Action planning - the essential next steps
• What next?