Course Objectives
- How are business strategies developed?
- How does financial management support strategic development?
- What is the exact nature and scope of the business problems to be analysed?
- Which specific variables, relationships, and trends are likely to be helpful in analysing problems?
- Are there possible ways to obtain a quick ‘ballpark’ estimates of likely outcomes of decisions?
- How precise an answer is necessary with regard to problem-solving and decision-making?
- How reliable are available financial data, and how is uncertainty and risk likely to impact on the outcomes of decisions?
- In economic and financial analysis what are the implications and relative importance of cash flow as distinct from accounting profit?
- What limitations are inherent in financial data and the key financial statements, and how will these affect financial analysis?
- How important are qualitative judgments in the context of decision-making?
Course Content
Understanding Finance to Influence Strategic Decisions
Fundamentals of Strategic Planning
What is strategy?
Strategic management
Strategic analysis
Mission
Objectives
Strategic decision-making
The strategic planning process
Environmental analysis
Resources analysis
Strategic choice
Strategic implementation
Corporate objectives and accountability
Forecasting financial data
Fundamentals of Financial Statements
Financial statements
Balance sheet
Income statement
Alternative asset valuation methods
Cash flow statement
Common size (or horizontal) trend analysis of financial statements
Vertical trend analysis of financial statements
Segmental analysis of financial statements
Value added analysis of financial statements
Understanding the cash flow cycle and the operating cycle
Break-even and multiple product break-even analysis
Capital Structure and Leverage
Sources of funds
Capital cost models
Can we determine a company’s optimal capital structure?
Capital structure models
Preparing projections to determine financing needs
Capital Budgeting
Future values, present values and DCF
Capital budgeting principles
Methods of evaluating capital investment projects
Accounting rate of return (ARR) and payback
Net present value (NPV) versus internal rate of return (IRR)
How do you choose which method to use?
Equivalent annual cost (EAC) method
Capital budgeting methods
Capital asset
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
Integration of Financial Performance Analysis
Some Special Issues
Projection of Financial Requirements
Interrelationship of Financial Projections
Operating Budgets