Development Financial Performance and Financial Plans

Course details

Objectives:
The Program is designed to help the participants:

• Understand the principles of financial planning and forecasting and the practical problems and how to overcome them.
• Understand how economic outcomes of business decisions are planned for and reflected in your organization’s financial reports.
• Communicate more effectively with the financial executives in your organization.
• Improve your financial vocabulary so that you are better able to understand and interpret financial information.
• Increase your comprehension of current analytical financial planning and forecasting practices and techniques.
• Learn to use financial forecasting information in managerial decision-making.
• Discuss current financial problems.

 
Outline:
The fundamentals of Financial Planning and Forecasting

• What is a financial plan?
• Why is planning an important concept in managing a business?
• What is the difference between planning and forecasting?
• Who is responsible for the financial planning function in the business?
• Planning for costs and revenues
• Why do business costs need controlling?
• Uncontrollable costs – do they exist?
• Who has the responsibility for cost management in the business?
• Overview of the financial statements and how they interrelate
• The Balance Sheet – the financial “snapshot” of the business
• The Profit and Loss Statement. How can we project it out for 5 years?
• What are the more important items you should look for?
• What the financial statements will not disclose – how can we get behind the figures?

Exercise: An example of a financial plan
Forecasting and controlling revenues: sales and service income

• How are sales revenues to be estimated – top down or bottom up?
• Are there different approaches between manufacturing and service businesses?
• Does market and field research have apart to play in this process?
• Working Capital and its importance
• What is working capital and what does it mean for business?
• How much working capital does a business need in the future?
• The importance of cash flow forecasting

Exercise: Cash flow
Forecasting materials usage in manufacturing and non-manufacturing businesses

• Classifying materials used in manufacturing
• Valuing materials and controlling stocks of materials
• Managing Non-manufacturing material costs – indirect costs
• Budgeting for materials and purchases – direct costs

Forecasting and budgeting direct and indirect labour costs

• Planning labour costs both direct and indirect
• Recording direct and indirect labour costs
• Budgeting for direct and indirect labour costs

Forecasting and Budgeting direct & indirect expenses

• Forecasting direct & indirect expenses
• Types of expenses
• Budgeting for direct and indirect expenses

Discussion & Individual exercises
Flexible budgets: concepts, development and application

• What is flexible budgeting?
• Use of sensitivity analysis
• Importance of flexible budgeting in practice

Group & individual exercises
Budgeting and forecasting capital expenditures

• Difference between capital and revenue expenditure
• Organization of capital expenditure budget approval systems
• Need for capital project monitoring

Discussion & review
Budgeting and controlling cash flows

• Turning budgeted sales revenues, costs and capital expenditure plans into a cash budget forecast

Completion procedures and applications of the overall profit plan or master budget

• The financial planning and forecasting process as a control system within the business
• The behavioral aspects of accounting control systems
• Responsibility budgeting, accounting & control ideas
• Zero based budgeting concept (ZBB)
• Activity based management (ABM) and Activity based costing (ABC) defined

Updated on 13 May, 2019