Module 1: Advanced Financial Statements Analysis

 Introduction to Advanced Financial Analysis

• Why analyse financial data?
• Who are the users of Financial Information?
• Sources of Financial Information
• Published Annual Reports and Accounts – What is their purpose?
• The Structure and Contents of an Annual Report and Accounts
• Creative Accounting, Financial Scandals, and the Agency Problem
• Corporate Governance, Sustainability, Ethics and Corporate and Social Responsibility (CSR) Reporting

The Three Main Financial Statements

• Income Statement
• Balance Sheet
• Statement of Cash Flows

Analysing the Annual Report and Accounts

• Using Ratio and Other Analyses of the Annual Report and Accounts to Assess Financial Position and Financial Performance
• Profitability and Cost-Volume-Profit (CVP) Analysis
• Efficiency and Working Capital
• Liquidity and the Short-term Solvency
• Investment and Growth
• Financial Structure and Long-term Solvency
• Ratio Analysis using Excel
• Excel Trend Analysis using Common-size Horizontal Analysis and Vertical Analysis for Comparability

Analytical Tools, Cash vs. Profit and the Cash Forecast

• The Dupont System of Ratio Analysis and Pyramids of Ratios
• Segmental Analysis and Value Added Analysis of the Annual Report and Accounts
• The Fundamental Statistical Tools and Graphical Representations
• Using Statistical Techniques to Analyse and Forecast Financial Data
• The Impact of Alternative Asset Valuation Methods on the Balance Sheet and Profitability
• Cash flow vs. Profit – The Best Measure of Financial Performance
• Working Capital and the Cash Flow Operating Cycle
• Direct and Indirect Cash Flow Analysis and the Cash Flow Forecast

Financing the Business, Capital Investment Project and Business Valuation

• Analysis of the Balance Sheet to Identify Long-term Debt and Equity, and Short-term Financing
• Capital Cost Models: Cost of Equity using Dividend Growth and Capital Asset Pricing Model (CAPM); Cost of Debt
• Weighted Average Cost of Capital (WACC)
• Optimal Capital Structure Models to Minimise WACC
• Future Values, Present Values, and Discounted Cash Flow (DCF)
• Using Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR) and Equivalent Annual Cost (EAC) to Analyse and Evaluate Capital Projects
• The Reasons for Business Valuations
• Business Valuation Models

Analysing and Predicting Corporate Failure, Business and Financial Risk

• Predicting Financial Distress and Corporate Railure – The Altman Z-score Model
• Risk and Uncertainty
• Risk Analysis using Expected Values, Standard Deviation and Coefficient of Variation
• Sensitivity, Simulation, Scenario and Break-even Analysis Techniques
• The Analytical Tools to Manage Risk
• Systematic Risk, Unsystematic Risk, Business Risk and Financial Risk
• Financial Risk– Interest Rate and Foreign Currency Exchange Rate Exposures
• Using Insurance, Hedging and Derivatives to Mitigate and Minimise risk

Module 2: Financial Accounting & Reporting

Day SIX: Financial Accounting and Reporting – Business Context and Key Principles

• Purpose of financial accounting and reporting
• Key principles in corporate governance
• Building a winning business model
• Key concepts in financial accounting
• Structure of financial accounting systems
• Fundamentals of financial reporting
• Creative accounting, scandals, and fraud

The Statement of Financial Position and Income Statement

• The IASB Conceptual Framework
• Statement of Financial Position: purpose structure and presentation
• Tangible and intangible assets
• Financial assets and liabilities
• Inventories
• Statement of Changes in Equity: purpose structure and presentation
• Income Statement: purpose structure and presentation
• Revenue recognition principles

The Statement of Cash Flows and Group Reporting

• Statement of Cash Flows: purpose structure and presentation
• Understanding business cash flow drivers
• Equity capital and debt capital
• Leases
• Optimising working capital
• Cash flow forecasting techniques
• Group Accounts: purpose structure and presentation

Analysis and Interpretation of Financial Reports

• Fundamentals of analysing financial reports
• The shareholder value concept
• Measuring and managing profitability
• Measuring and managing liquidity
• The effect of gearing on risk and shareholder value
• Predicting corporate distress and failure
• Forecasting financial performance and financial position

Designing and Presenting Effective Financial Reports

• The limitations of financial reports
• Designing effective internal business reports
• Incorporating Excel graphics in internal reports
• Developing and using business dashboards
• Making effective financial presentations
• Developments in Integrated Reporting (IR)
• Integrated Reports: purpose, structure, and presentation