Course Objectives:
At the end of this course the participants will be able to:
- Develop the basics of strategic financial planning
- Apply the latest financial analysis techniques
- Use the tools of finance, such as the time value of money
- Determine key performance indicators to manage the drivers of business success
- Create tools to use within their own business
- Identify the key steps in developing a financial model
- Analyze a company’s annual report identifying key performance indicators to understand what the numbers are saying and make projections of future performance
- Understand the theory of interest and the time value of money and their applications
- Develop an Economic Value-Added model to see the organization from the shareholders’ perspective
- Extend the benefit of Capital Investment
- Learn how to use Excel® tools such as Solver, Goal Seeker, and Scenario
- Impact upon shareholder value
- Develop greater confidence in discussing financial strategy
Course Content:
Unit 1: Overview of Financial Modelling and the International Business Environment:
- Define the Terms Model and Financial Model
- Learn the 10 steps to create good Financial Models
- Use Flowcharting Techniques to improve your model
- Overview of the strategic and operational aspects of a global business entity
- The Organizational Planning Model
- The Product/Decision/Information Cycle
- The Objectives of Financial Analysis
- Creating wealth by adding value
- Basic metrics of wealth creation and financial performance
Unit 2: Analysing the Annual Report and Creating Shareholder Value:
- Ratio Analysis – The heart of Financial Analysis
- Use Excel templates to calculate and interpret liquidity, leverage and profitability ratios
- Interpret the results of ratio analysis from an accrual accounting perspective
- The inter-relationship between the DuPont Formula and EVA®
- How to use the Altman Z-Score
- Use various investment surveys to benchmark the results of financial analysis
- What constitutes “Shareholder Value?”
- Finding the cost of equity
- Determine the Cost of Debt, Preferred Equity and Common Equity
- Calculate Weighted Average Cost of Capital (WACC)
- Develop the EVA© Model
- Impact of Acquisitions on WACC
Unit 3: The Time Value of Money and the Steps in Building Financial Models:
- The impact time has on the value of money
- Understand the various interest calculations
- Using WACC and ROIC as benchmarks
- Use Excel®, to determine Present Value, Future Value, Net Present Value, Internal Rate of Return, Modified Internal Rate of Return
- Using IRR as a basis for capital project evaluation
- Situations that require models
- Models and Shareholder Value (EVA®)
- Identification of Forecast Validation Criterion
- Determination of Model and Forecast Horizons
- The recognition of risk in forecasts
- The Role of Assumptions in Financial Forecasting
Unit 4: Evaluating Capital Project Proposals and Effective Management of Historical Data Using Excel:
- Identify the various types of capital projects
- Discuss the capital project evaluation process
- Determining the initial and subsequent capital project cash flows
- Development of the “Hurdle Rate” for capital projects
- Discuss the use of “Terminal Value” in evaluating capital projects
- Use Excel® to evaluate capital projects by applying NPV, IRR, and Discounted Payback models
- Understanding the Approaches Used to Build Financial Forecasting Models
- Recognizing the Basic Patterns Inherent in Historical Data
- Using the Exploratory Data Analysis Tools Available in Excel®
- Key Factors in Determining the Proper Time Horizon to Choose for Your Model
- Determining Degrees of Reliability in Model Projections
- Selecting the Degree of Robustness and Sensitivity of the Model
- Understanding and Applying Selected Modelling Techniques
Unit 5: Use of Time Series Analysis and Evaluating Investment Portfolio:
- Development of Time Series Models using histograms, moving averages, exponential smoothing, and regression analysis
- Mastering the use of Exponential Smoothing as a Data Analysis tool
- Validation of Time Series Analysis
- Appreciate the Meaning and Importance of Sensitivity Analysis
- Developing “What-if” Scenarios in Your Financial or Operational Models
- Using the Excel tools “Scenario and Goal Seek”
- Using the Excel tools “Scenario and Goal Seek”
- Principles of risk measurement in individual shares
- Graphing expected return and risk using variance analysis
- Modern portfolio theory using the capital asset pricing model
- Managing a balanced portfolio
- Use Excel to determine the beta of listed share on a securities market
Targeted Groups:
- Financial Accounting Team Members
- Cost and Management Accounting Staff
- Finance Managers
- Planning Managers
- Commercial Managers
- Capital Investment and Project Team Members
Targeted Competencies:
- Performing capital budgeting analysis
- Forecasting cash flow
- Calculating the cost of capital
- Practicing financial modeling
- Understanding scenario analysis
- Calculating free cash flow
- Using advanced Excel
