This course is ideal for anyone in your financial institution who must be able to understand and assess accrual-based financial statements-explores fundamental accounting and cash flow concepts from a lender’s perspective.

Learning Objectives

• At the end of this session, participants will be able to
• Analyze a firm’s financial statements when undertaking corporate valuations, including how to derive underlying earnings and cashflow
• Prepare Ratio analysis, including profitability, performance, leverage, liquidity, returns to firm and equity
• Conduct valuation of debt, financial assets, quasi-debt, provisions, deferred taxes, off balance sheet liabilities and other factors

Day 1

• Dealing with the fundamentals
  • Introduction to financial analysis
  • Identifying the relationship between cash flow and profit
  • Development of an integrated cash flow model
  • Recognizing it’s all about cash
  • Understanding the relationships between the three main accounting statements

• Fundamentals of accounting statements-the profit and loss account
  • How the PandL has changed over the last 25 years
  • Detailed review of the Profit and Loss account including explanation of all significant accounting terminology
  • Profit types - trading, asset and business
  • Inventory, depreciation, capitalized interest
  • Minority interests and consolidation
  • Exceptional and material items

• Fundamentals of accounting statements-the balance sheet
  • Detailed review of the balance sheet including explanation of all significant accounting terminology
  • Understanding the fixed assets note
  • Accounting goodwill -what is it?
  • Liabilities, pension fund accounting
  • Debt and other liabilities like debt
  • Deferred tax, contingent liabilities

• Financial analysis techniques-ratio analysis
  • Objectives of ratio analysis
  • Developing ratio analysis skills
  • Different types of ratios
  • How much information is there in ratios?
  • Ratio rules - avoiding errors of principle
  • Uses of ratios

Day 2

• Cash flow analysis and accounting issues
  • Understanding cash flows
  • Detailed review of the cash flow statement
  • Analyzing and interpreting cash flows
  • Summarizing cash flows for analysis

• Cash flow analysis
  • The four phases in the life of a business

• Cash flow analysis-taking it further
  • Dealing with the consequences of growth and no-growth

• Accounting abuses and update
  • Abuses of Fair Accounting
  • Basic abuses relevant to all businesses
  • More complex abuses relevant to larger groups
  • Global accounting in the new century
  • Overview of the International Accounting Standards Board
  • The implications of the IFRS

Day 3

• Financial mathematics and project analysis
  • The time value of money
  • Present and future values
  • Defining the discount factor

• Net present value -developing the concept
  • NPV’s and varying future cash flows
  • Perpetuities and annuities

• Project analysis
  • Introduction to project analysis
  • Developing a forecast of the project cash flows
  • Identifying the key risk areas

• Evaluating capital investment projects
  • Discounted cash flow techniques
  • Calculating the internal rate of return

• The responsibilities of management
  • The essential aspects of the management task

• Costing and break-even analysis
  • Fixed and variable costs
  • Marginal, absorption and standard costing