By the end of this course, delegates will be able to:

• Read and understand their organization’s Annual Financial Report
• Evaluate their firm’s financial performance
• Understand and use analytical tools and techniques in practical case-study situations.
• Use analytical techniques to project future performance.
• Make critical judgments of accounting policies when evaluating company performance
• Appreciate the importance of new investments in maintaining growth and competitiveness.
• Improve their management skills and increase their value to the organization

Introduction to Advanced Financial Analysis

• Who are the users of financial data?
• What types of financial information are available to each user group?
• The published Annual Financial Report (AFR) – what is its purpose?
• The structure and contents of an AFR
• The non-financial elements of the AFR
• Understanding the three main financial statements
• Income Statement
• Balance Sheet
• Cash flow Statement
• Comparison of different formats for the financial statements
• Identifying the important numbers from the financial statements

Understanding and Analyzing the AFR

• Why do we need to analyses the AFR?
• Using common-size analysis to improve comparability
• Calculating trends and growth patterns
• Using Ratio Analysis to assess five key aspects of company performance
• Profitability
• Liquidity
• Efficiency and Working Capital Management
• Financing Structure and Risk
• Investment Performance and Potential

Analytical Tools and How to Analyze the Cash Flow Statement

• Introduction to Excel tools for analyzing financial statements
• Setting up spreadsheets for common-sizing and ratio analysis
• Using statistical tools mean, standard deviation, regression analysis
• Using graphical representation
• Why do we need the Cash flow Statement?
• Key ratios we can calculate from the Cash flow Statement
• How to use current cash flow information to forecast future revenues and profits

Financing the Business and Valuing the Business

• Analyzing the Balance Sheet to identify debt and equity
• Short-term and long-term finance
• Measuring the company’s capital structure and estimating the costs of capital
• Cost of Equity (Ke), using DVM and CAPM
• Cost of Debt (Kd)
• Weighted Average Cost of Capital (Ko)
• Case study on Cost of Capital calculation
• Why do we need to value a business?
• Business valuation models
• Net Asset value – balance sheet, replacement cost or realizable value
• Price/Earnings ratio value
• Dividend growth value
• Present value of future free cash flows

Identifying Creative Accounting and Forecasting Future Failure

• What is creative accounting?
• Who benefits from creative accounting?
• How does creative accounting work?
• The symptoms of financial distress
• Financial and non-financial factors
• Using ratio analysis to identify financial distress or predict future failure Forecasting future failure using ratio combinations