Finance for non-financial managers

This is a three day workshop and is based on unit std 117156 – “Interpret basic financial statements” and unit std 13941 – “Apply the budget function in a business unit”.

The qualifying learner is capable of:

• Analysing the basic elements of an income and expenditure statement.
• Analysing the basic elements of a balance sheet.
• Compiling a personal assets and liabilities statement.
• Using the evidence in financial statements to make a financial decision.
• Explaining the concept of budgeting in a business unit.
• Analysing the budget needs of a business unit.
• Presenting and justifying a proposed budget for a business unit.
• Monitoring and controlling actual expenses and revenue against projected expenses and revenue.

Course Outline

Day 1

Chapter 1 – Review of the Basics (4 hours; presentation of relevant terminology accompanied by examples and exercises to enhance learning)

• Basic terminology to the accounting function.
• The double entry system.
• The Balance Sheet Equation
• Income Statements
• Cash Flow Statement
• Statement of Retained Earnings

Chapter 2 – Asset Management (2 hours; presentation of relevant terminology accompanied by examples and exercises to enhance learning)

• Management of Current Assets
• Managing Receivables Policy
• Inventory Valuation Methods
• Depreciation

Chapter 3 How to Read an Annual Report (2 hours; presentation of relevant terminology accompanied by examples and exercises to enhance learning)

• Start at the Back
• Footnotes
• Financial Statements
• CEO’S letter
• Explanations and Analysis
• Checklist

Day 2

Chapter 4 Rationale for Budgeting and Budget Control (2 hours; presentation of relevant terminology accompanied by case study)

• Financial Tools for Business Decision Making
  • Choosing New Projects and Capital Budgeting
  • Project Execution and Monitoring
• The Basics of Accounting for the Project Manager
• Cash Flow

Chapter 5 Budgeting (4 hours; presentation of relevant terminology accompanied by case study)

• What is a Budget?
  • The Planning Process
• The Budgeting Process
• Limiting factors
• Types of budget
• The advantages of budgeting
• The disadvantages of budgeting
• The Incremental Budget
• Zero- Based Budgets

Chapter 6 How to Prepare Budget Forecasts (2 hours; presentation of relevant terminology accompanied by case study)

• Gathering information
• Anticipating revenues
• Estimating expenditure
• Impact of Inflation on Financial Decisions
  • Calculating the Inflation Rate
  • Real Versus Nominal Rates Of Retur
  • Real Versus Nominal Interest Rates
  • Real Versus Nominal Cash Flows
  • Net Present Value Analysis in an Inflationary Environment

Day 3

Chapter 7 Planning (2 hours; presentation of relevant terminology accompanied by case study)

• Effective Implementation of Integrated Development Planning Process
• Purpose of Performance Budgeting
• Benefits of Performance Budgeting
• Performance Measures in the Strategic Planning and Performance Budgeting System
• Strategic Planning Phase
• Performance Budget Development Phase
• Performance Budget Implementation Phase
• Performance Monitoring Phase
• Foster Internal/External Involvement and Communication

Chapter 8 Capital Structure and Financing Decisions (1 hour; presentation of relevant terminology accompanied by examples and exercises)

• First Principles
• Objective in Decision Making
• Debt: The Basic Trade-Off
• Analysing External Financing Methods
• Impact on shareholder income
• EBIT – EPS Analysis
  • Financial Leverage
• Impact on shareholder risk

Chapter 9 The Time Value of Money (1 hour; presentation of relevant terminology accompanied by examples and exercises)

• Present Value and Future Value
• After – Tax Interest Rates
• Five-Step Procedure for Solving TVOM Problems
• End-of- Period Convention

Chapter 10: Net Present Value (1 hour; presentation of relevant terminology accompanied by examples and exercises)

• The Key to Creating Wealth
• The Net Present Value Decision Rule
• Choosing from among Alternative Projects Using The NPV Rule
• Selecting a Discount Rate
• Weighted Average Cost of Capital

Chapter 11 Alternative Project Decision Rules and Their Failings (1 hour; presentation of relevant terminology accompanied by examples and exercises)

• Introduction
• The Payback Period Rule
• The Discounted Payback Period Rule
• The Internal Rate of Return Rule
• Flaws in the IRR Rule

Chapter 12 How to Project Cash Flows and Calculate Net Present Value (2 hours; presentation of relevant terminology accompanied by examples and exercises)

• Introduction
• Principle 1: Focus on Cash Flows
• Principle 2: Use Expected Values
• Principle 3: Focus on the Incremental
• The Input Data Needed for NPV Analysis
• An Example of NPV Analysis: The Case of Master Chef Pizza Company