Introduction
This two days course is designed to enable participants to focus on:
- Interpreting financial statements
- Planning and budgeting
- Cost control
- Capital budgeting
- Applying cost-volume-profit analysis
- Utilizing breakeven analysis
How you will benefit
- Defend the importance of linking an organization's budget with its strategic plan
- Demonstrate how the budget relates to the key financial statements: balance sheet, income statement, and cash flow
- Prepare the key elements of an operating and capital budget and evaluate the different budgeting approaches used
- Apply cost control tools, analyze management variance reports and take proper corrective action
- Calculate different capital budgeting evaluation techniques as included in a capital expenditure proposal
- Utilize cost-volume-profit analysis in making budgeting decisions
Who should attend
People from small and large organizations will benefit equally
What you will cover
Module 1: Planning and the functions of management
- The critical functions of management
- Aligning the budget with the strategy of the organization
- Road map to strategy
- Budget as a planning tool
- Control: the missing link
- Planning pitfalls
Module 2: The key financial statements
- The accounting system
- The income statement
- The balance sheet
- The cash flow statement
Module 3: Budgeting - process and approaches
- The advantages of budgeting
- The budget process
- Rolling budgets
- The master budget
- Operating and capital budgets
- The budgeted financial statements
- Approaches to budgeting:
- Incremental budgeting
- Zero based budgeting
- Flexible budgeting
- Kaizen budgeting and continuous improvement
- Activity based budgeting
- Tools of forecasting
- Direct and indirect costs
- Characteristics of an effective budget
- Problems in budgeting
Module 4: Cost control
- Budget as a control tool
- The control process
- Characteristics of an effective control system
- Responsibility reporting
- Variance analysis: identifying the components of variance
- Variance analysis: taking the corrective action
Module 5: Capital expenditure budgeting and analysis
- Time value of money
- Simple versus compound interest
- Identifying and analyzing cash flows
- The discount rate: using cost of capital
- Net Present Value (NPV)
- Internal Rate of Return (IRR)
- Profitability Index (PI)
- Pay-Back Period (PBP)
- Accounting Rate of Return (ARR)
- Approval for Expenditure (AFE)
- Sensitivity and risk analysis
Module 6: Cost-Volume-Profit analysis (CVP)
- Identifying the fixed costs and variable costs
- Computing breakeven point in units
- Computing breakeven point in sales
- Assumptions of CVP analysis
- Using CVP in budgeting decisions