Training on Fundamentals of Finance, Accounting & Budgeting

Module 1:Company Objectives & Fundamentals of Finance & Accounting

• Measuring company performance

• Introduction to finance: Terminology

• Purpose of financial analysis and reporting

• The finance role in running businesses

• Accounting terminology

• Accounting as an Information System

• The Accounting Equation – what does it mean?

• Generally Accepted Accounting Principles

• Understand the nature, purpose and role of accounting

• The accounting environment

• Walking through an Annual Report

• The Role of External Auditor

• Users of accounting and financial information

• Fundamental Accounting Concepts: Cash versus Profit

• Profit and profitability

• Distinguish between accounting and finance

• Case Study: Analyzing a company’s annual report to evaluate performance and identify key financial insights

Module 2:Financial Statements: Understanding and Analysis

• Understanding the Financial Statement

• Balance Sheet

• Profit and Loss Account (Income Statement)

• Cash Flow Statement

• Why are ratios useful

• Horizontal and Trend Analysis

• Vertical Analysis: Common Size Statements

• Building Blocks Analysis and reading through the numbers:

  • Liquidity Ratios: ability to settle short-term dues

  • Solvency Ratios: ability to settle long-term dues

  • Activity Ratios: the ability to manage assets efficiently

  • Profitability Ratios

• Limitations of financial ratio analysis

• Case Study: Performing ratio analysis on a real or simulated company to assess financial health

• Practical Exercise: Prepare horizontal, vertical, and trend analysis for a sample organization

Module 3:Management Accounting

• Decision-Making Technique

• Cost behavior: fixed, variable, semi-fixed cost

• Understanding Cost behavior and types of costs

• Plan for Cost Reduction and Profit Improvement

• Costing Approaches – Full Absorption, Marginal, ABC

• Cost-Volume-Profit Analysis (CVP)

• Break-even Analysis

• Contribution Margin

• Working Capital Management:

  • Definition of working capital and working capital management

  • Working capital management strategies for current assets

  • Balancing profitability and liquidity

  • Working capital management strategies for current liabilities

  • A trade-off between profitability and certainty

• Case Study: Evaluating a company’s cost behavior and break-even analysis to recommend efficiency improvements

• Practical Exercise: Prepare a contribution margin and CVP analysis for a sample business

Module 4:Budgeting and the Strategic Management Framework

• What is the budget?

• The objectives of budgeting

• Types of Budgets

• The budget process

• The Role of Budgeting

• How to identify problems and limitations of budgetary control

• Approaches to Budget Development

• Using budgets to manage organizational performance

• Finance and budgeting teams – role in supporting strategic planning

• Capital budgeting techniques & Cash Flow

• Using Activity-based Budgeting

• Developing the Cash Budget

• Case Study: Designing a cash budget and identifying potential pitfalls in budget management for a real organization

• Practical Exercise: Prepare an activity-based budget and analyze variances

Module 5 :Advanced Capital Budgeting Evaluation Techniques

• Business risk and cost of capital

• Classifying investment projects

• Analyzing investment and operating cash flows

• The time value of money concept

• The required rate of return

• Net Present Value (NPV)

• Internal Rate of Return (IRR)

• Multiple Internal Rates of Return

• Modified Internal Rate of Return (MIRR)

• Profitability Index (PI)

• Payback period and discounted payback period

• Capital rationing

• Comparing and evaluating techniques

• Case Study: Evaluating multiple investment projects using NPV, IRR, MIRR, and PI to determine optimal capital allocation

• Practical Exercise: Perform discounted cash flow analysis and capital budgeting for a sample project