FINANCIAL ANALYSIS, MODELLING & FORECASTING

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