2 Days

Introduction

This interactive seminar will update and develop your skills in analyzing business activities. It will guide you through the key steps of analyzing financial statements, evaluating new investments and measuring the performance of an organization. It will develop your ability to generate growth and improve profitability, as well as pinpointing problem areas for remedial action. You will have the opportunity to acquire skills and technical knowledge that will enable you to manage more effectively.

The seminar will consider the key risks that organizations face in today’s uncertain economic, political, and physical environment. Effective risk management is of vital importance in the global business environment. The seminar will explore how organizations may analyze, manage and mitigate/minimize their exposures to both business and financial risk. Throughout the seminar worked examples, exercises and case studies will be used to ensure that delegates can relate their learning to real-world issues and problems.

This seminar will highlight:

  • The value of the annual report and accounts and other sources of key financial information
  • Use of a range of tools and techniques to analyze and evaluate financial position and financial performance
  • Effective acquisition and use of financial resources
  • Analysis and valuation of capital investment projects and businesses
  • Analysis and management of business and financial risk

Objectives

By the end of this seminar, participants will have learned how to:

  • Analyze and interpret an organization’s annual report and accounts
  • Use ratio analysis to evaluate financial position and financial performance
  • Use analytical techniques to forecast future performance
  • Critically evaluate the impact on financial position and performance of the subjective nature of accounting policies
  • Identify the impact of profit, cash flow and risk on capital investment projects and business valuations

Training Methodology

  • The seminar will be conducted along workshop principles with presentations, examples, exercises and case studies. Relevant worked examples will illustrate the application of each of the tools and techniques covered in a real-world environment. Each learning point will be reinforced with practical examples. Group discussion will promote exchange of experiences and ideas.
  • Interactive team case studies and exercises reinforce the application of each of the learning points and topics covered. These are supported with the help and advice of your Instructor and his extensive practical experience and knowledge of financial analysis. Difficult mathematical concepts are minimized wherever possible and handled in a visual way that is easy to understand – our aim is for this to be an enjoyable learning experience.

Organizational Impact

Participants in this seminar will provide benefits for their organization through the enhanced knowledge and set of skills that they will take back to the workplace:

  • Awareness of the relevance and importance of financial statements
  • Use of the tools and techniques to monitor and improve business performance
  • Identification of problem areas, and suggested realistic solutions
  • Financial analysis for better informed decision-making
  • Appreciation of the impact of financing on the cost of capital, investment projects and business valuations
  • Identification, analysis and management of business and financial risk

Personal Impact

You will greatly improve your Financial Analysis skills and develop:

  • Improved understanding of the language of finance and accounting
  • Increased awareness of the tools and techniques of financial analysis
  • An appreciation of the importance of cash flow versus profit
  • Greater confidence to tackle new situations
  • The ability to identify, analyze and manage risk and other problem areas
  • An exchange of ideas and knowledge with other professionals

Seminar Outline

Introduction to Advanced Financial Analysis

  • Why analyze financial data?
  • Who are the users of financial information?
  • Sources of financial information
  • Published annual report 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 and corporate social responsibility (CSR) reporting
  • The three main financial statements: income statement; balance sheet; statement of cash flows

Analyzing 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

Analytical Tools, Cash Versus 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 analyze and forecast financial data
  • The impact of alternative asset valuation methods on the balance sheet and profitability
  • Cash flow versus 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

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 minimize 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 analyze and evaluate capital projects
  • The reasons for business valuations
  • Business valuation models

Analyzing and Predicting Corporate Failure, Business and Financial Risk

  • Predicting financial distress and corporate failure – the Altman Z-score model
  • Risk and uncertainty
  • 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 minimize risk