Financial Analysis

Increasing the value of a company is a primary goal for management. This seminar establishes a fundamental but simple financial statement template for displaying that the company is being managed to produce increasing value. You will also learn how to evaluate past performance and plan for future investments: capital projects and acquisitions.

Who Should Attend

This seminar is dedicated to helping managers of for-profit companies succeed. If you are responsible for managing a department, a business unit or a company to increase its value, or responsible for evaluating an acquisition or the financial condition of a customer or vendor, this course is for you.

Note: Please bring your organization’s financial statement and a financial calculator, HP 12C or equivalent.

What You will cover

• Detailed mastery of the income statement, the balance sheet and the statement of cash flows
• Drivers of company value
• What owners want to see on the financial statements
• What lenders want to see on the financial statements
• The true meaning of cash flow from operating activities
• Discounted cash flow techniques: future value, present value, net present value, annuities, internal rate of return
• The importance of and calculation of the Weighted Average Cost of Capital (WACC)
• How to value capital projects
• How to price an acquisition

How will you Benefit

• Specify the financial requirements for your company's strategic and operating plans 
• Manage the structure of the income statement and the balance sheet to increase shareholder value
• Choose the right metrics for evaluating your company's solvency
• Determine your company's debt capacity - how much you can safely borrow
• Use the statement of cash flow to measure success
• Create a capital project evaluation spreadsheet
• Determine which metrics to use to evaluate capital projects

Outline

 Learning Objectives

• Analyze Financial Statements
• Apply Financial Analysis Methods and Tools to Measure Performance Against Internal and External Standards and Industry Benchmarks
• Make Sound Decisions Based on Accurate Assessments of Business Performance and Results
• Ask Better Questions to Gain a Clearer Understanding of the Business and Focus Attention on Areas of Greatest Impact
• More Effectively Manage Value in the Business

The Nature of Financial Analysis

• List the Principal Questions Answered By Financial Analysis
• Identify the Financial Statement Sources of Data Used in Financial Analysis
• List the Major Tools Used in Financial Analysis

The Planning Cycle

• Identify Components of the Planning Cycle
• Describe the Role of the Financial Analyst

Income Statement and Balance Sheet

• Identify Key Accounts and Subtotals of the Income Statement
• Identify the Major Sections of the Balance Sheet and How Analysts Use Them
• Explain Why Companies Own Assets and How They Pay for Them
• Use Common Size Financial Statements

Measurement of Performance

• Calculate Solvency Ratios, Liquidity Ratios, and Profitability Ratios
• Explain How Ratios Relate to the Creation of Shareholder Value
• Define How Growth Rates Are Used to Indicate Performance

Cash Flow

• Analyze a Company’s Gross Cash Flow from Operating, Investing and Financing Activities
• Describe Why an Analysis That Fails to Take Cash Flow into Account Is Inadequate
• Define a Company’s Free Cash Flow
• Use Cash Metrics to Measure Value Creation

Creating Shareholder Value

• Calculate a Company’s Weighted Average Cost of Capital and Total Capital in Accordance with CAPM
• Understand Why the WACC Is Important

Analyzing Enterprise Investments—The Theory of Interest and the Time Value of Money

• Use a Financial Calculator
• Calculate Future Value, Present Value, and Compound Growth Rates
• Calculate the Present and Future Value of an Annuity and Annuity Payments
• Calculate and Understand Internal Rate of Return
• Calculate the Present Value of a Perpetuity

Analyzing Enterprise Investments—Capital Project Evaluation

• Define the Steps Necessary to Perform a Capital Project Evaluation
• Create a Spreadsheet to Describe a Project
• Choose a Hurdle Rate for a Project
• Apply the Major Techniques: NPV, IRR, EPVI, Payback
• Define Terminal Value
• Price an Acquisition