Financial Skills: Finance for Non-financial Managers (3 day)

Course Overview

All too often, a manager's performance is measured by how effectively they oversee departmental budgets. To succeed as a non-financial manager, knowledge of basic financial principles and the budgeting process is critical. This course transforms financial and accounting concepts into decision-making tools you can use successfully every day. You learn to apply the fundamentals of finance to improve budget management, increase potential profits, and assess the financial viability of projects.

Course Workshops

• Case studies reinforce the fundamentals of finance presented throughout the course. Participants work in teams to gain experience in:
• Analysing and creating profit and loss accounts, balance sheets and cash flow statements
• Establishing and managing realistic operating budgets
• Selecting the most profitable projects or activities
• Calculating a budget to achieve stated financial goals
• Applying financial principles to real-world situations

Audience

Non-financial managers and anyone who wants to develop their knowledge of financial practices to improve their managerial skills.

Skills Gained

You Will Learn How To

• Integrate financial concepts and policies into the management decision and budgeting process
• Evaluate the financial viability of projects and activities through income statements and balance sheets
• Employ cash flow tools to analyse business status
• Calculate the cost of business activities
• Control business operations through effective budget management
• Communicate effectively with financial executives and staff

Course Outline

Why Finance Matters

• Demystifying financial jargon
• Generally Accepted Accounting Principles (GAAP)
• Public vs. private financial methodologies
• Accountability and responsibility for financial information

The Key Building Blocks of Financial Control

Decoding the profit and loss account

• Differentiating income, operating and capital expense items
• Putting the pieces together to measure profit and business success
• When a sale becomes a sale: sales recognition

Analysing the balance sheet

• Evaluating the worth of an established business
• Distinguishing between fixed and current assets and liabilities
• Defining depreciation and amortisation
• Linking the profit and loss account to the balance sheet
• Shareholder equity

Cash Flow: The Lifeblood of Organisations

Making the key connection between business activity and cash flow

• Differentiating between cash flow, profit and net worth
• Connecting cash management to line management
• Credit and cash flow--maximising benefits and minimising costs
• How much cash is enough?

The importance of depreciation and amortisation

• How depreciation impacts your budget over time
• Methods for calculating depreciation
• Advantages and disadvantages of various key methods
• Impacting the management budget
• Where depreciation rules come from

Managing a Profit or Cost Center

Selecting the best costing method for your situation

• Absorption, marginal, activity-based costing
• Determining costs in service businesses
• Avoiding costing traps

The unique features of project costing

• Estimating project duration and future costs
• Leveraging debt to your advantage
• Anticipating problems using cost control
• Making estimates based on incomplete information

Choosing projects that optimise shareholders' interests

• Making the financial case using return on investment (ROI)
• Advantages and disadvantages of ROI, payback, discounted cash flow (DCF) and NPV techniques
• Selecting viable projects

A Manager's Guide to Budgeting

Recognising that budgets are more than numbers

• Budgeting as sociology, not accounting
• The politics of getting a budget approved
• The relationship between a well-designed budget and how others measure your performance
• Managing effectively within budgeting constraints

Comparing budget approaches

• Top-down
• Bottom-up

Types of budgets

• Incremental
• Zero-based
• Rolling
• Others
• Developing the budget numbers

Budgeting as a planning and control tool

• Using the budget to control the business
• Limiting factors
• Budget process and coordination
• Forecasting sales revenues and expenses
• Adjusting the budget to reality

Pulling It All Together

• Applying financial tools and concepts in the real world
• Evaluating a company's health through its annual report
• Comparing public and private sector practices
• Recognising potential traps in creative accounting
• Learning from recent examples

Financial Skills: Finance for Non-financial Managers (3 day) / F-NFM3