Financial Tools for Better Corporate Decision Making

Description

Accounting Tools for Better Corporate Decision Making provides a useful basis to think and analyze financial and accounting reports and schedules and meaningfully discuss corporate strategies and responses to challenges that may emanate from macroeconomic instability, market competition or concerns of business efficiency or sustainability.    The emphasis on an analytical framework approach provides the participant with relevant and effective tools to assess and understand a given business rather than simply provide a menu of best practice options that may or may not be relevant to that business sector or for that matter in a given developing country.

The professional development workshop covers the business context – the macroeconomic context, the political economy context and the regulatory context.  It identifies    It identifies Financial Statements,  Financial Ratios,  Forecasting,  Investment Analysis and Management Accounting as the principal accounting tools to explore. It specifically covers:

• Financial Statements - The most common accounting tool used for business decisions are financial statements made up of the income statement, balance sheet and statement of cash flows.  The workshop demonstrates how these financial  statements can provide business owners with specific information about revenues, expenses, assets, liabilities and positive or negative cash-flow functions. The review of such information can identify for management where resources are being applied, their inventor carrying costs, the debt profile and the levels of profitability.  The course also provides insight into how financial statements can be used to help business owners develop budgets for planning future expenditures.
• Financial Ratios - provide for a more in-depth analysis of the company’s financial statements.  The course shows how useful financial ratios extract information from the financial statements and other complimentary sources to develop indicators that can provide insights into the strengths and weaknesses of the company. For example financial ratios measure the company’s ability to pay short-term liabilities, the use of assets to generate revenues, long-term cash-flow sustainability and the amount of leverage used to finance business resources. These indicators may also be compared to a leading competitor or an industry standard to determine how well the company operates compared with other businesses.  
• Forecasting - simple effective forecasting tools are presented based upon  internal and  external analysis methods  used to determine the potential production output or sales of the company’s products or services. Internal forecasting determines the amount of economic resources that small businesses need to produce the highest amount of output at the lowest production cost. External forecasting uses basic economic analysis to determine at what price point consumers will be most willing to purchase the maximum amount of goods.
• Investment Analysis -the course provides an introduction to the use of accounting to conduct investment analyses. Investment analysis may be applied to new business opportunities that will maximize the company’s profitability, or selecting equity securities to generate passive income streams, or securing debt financing for business funding.  
• Management Accounting - the course explores how management accounting, an internal business function, is used to allocate business costs to goods or services produced by a company.  Management accounts, properly interpreted, can be used to ensure that all production costs are recouped on the sale of goods or services in the economic marketplace.  Other important topics covered include break-even analyses, cost-volume-profit reports and other financial information to determine the minimum amount of money a company must generate to pay for fixed and variable expenses.

The course has been designed specifically with the developing country context in mind.  There are particular challenges that come with such a context.  The course provides a framework within which the government’s fiscal policies and budgetary implementation can be assessed, along with its monetary policies and the political economy to gain a better handle on macroeconomic trends and tendencies.   Such an understanding may be crucial to corporate decision making. 

Objective

The principal professional workshop objective is to provide participants with the introductory tools to use accounting tools effectively to support better corporate decision making.  Further the course encourages discussion and interaction with other participants who may share common challenges.

Audience

The target audience is owners and senior managers of small and medium enterprises who are responsible for the strategic direction of their companies.  It is targeted at business professionals with little or no experience of public financial management.  

Pre-requisites

This course is designed for people with little or no experience with accounting; however given its intensive and comprehensive approach, it will be useful for participants to familiarize themselves with basic economic and accounting concepts and terminology prior to attending the course.   

Learning outcomes

By the end of the course participants should:

• Understand the basic accounting identity and the classification of accounting transactions into flows and stocks, the basic structure and content of financial statements including the income statement, the cash flow statement and the balance sheet;
• Be aware of the key elements of the macroeconomic and political economy context within which businesses in developing countries operate;
• Be equipped with some basic frameworks for extracting financial ratios from financial statements and using such to identify the strengths and weakness in a given company’s operations.  To be able to thus identify where a company’s opportunities for increased profitability might be and where threats may emerge;

• Be equipped with some basic analytical frameworks for looking at investments and assessing their profitability and impact on the company’s operations building a balanced investment portfolio of money market and capital market instruments ;
• Understand the use of financial statements for budgeting and forecasting both revenues as well as production and service costs;
• Understand how to interpret management accounts to ensure that all costs are fully recouped by the pricing levels and design

Learning methods

The learning methods will include the following

• Introduction to key concepts through the “teaching and discussion” methods
• The use of original source material of key writers/thinkers in financial and investment analysis
• The use of extensive examples from many different industry and service sectors with different experiences to illustrate the points put across
• The use of exercises (in particular short "buzz-group" sessions) to provoke and consolidate certain points raised
• The use of major case studies –to illustrate in more detail some of the key points of the course.