NON-IT COURSES

FINANCIAL ANALYSIS

DESCRIPTION
At the end of the 24-hour Workshop, the participants are expected to, understand the relation between management reports and effective financial management, understand the relation between financial performance analysis and operating control, have an appreciation of the processes involved in generating financial management reports, understand the rationale behind the various techniques used in reading management reports and interpreting them.
COURSE CONTENT

Duration: (24 hours)

MODULE 1: INTRODUCTION

I. Leveling of Expectations 

       -  Individual Activity: Participants’ expectations

  • Write on a piece of paper the following:
    • Background – education and experience, especially those related to accounting, basic duties and responsibilities
    • Expected benefits from the seminar relevant to personal knowledge and duties and responsibilities in the office
  • Lecturette:
    • Workshop objectives [compare with participants’ expectations and rationalize the exclusions of expected topics]
    • Workshop format and methodology
  • Grouping of participants, maximum of 3 members each group

II. The Workshop Coverage in Perspective

  • Lecturette:
    • Management functions and accounting
    • The two basic types of accounting: Managerial vs. Financial Accounting
  • Lecturette:
  • Contents and format of basic financial statements
  • The concept of “Responsibility Accounting”
  • Group case analysis 1
    • Wrap up of preliminary session 1 and Q&A
  • Fun Game 1

MODULE 2: ACCOUNTING AND ANALYSIS OVERVIEW

  • Lecturette:
  • Planning and Budgeting
  • Planning and budgeting differentiated
  • Purposes and uses of a budget
  • Types of budgeting
    • The Business Cycle
  • Planning and budgeting cycle
  • Revenue and collection cycle
  • Purchase and disbursement cycle
  • Other business cycle
  • Individual Activity – Testing the cycles
    • Accounting in a Nutshell
  • Accounting defined
  • Financial vs. Managerial Accounting
  • Debit/Credit vs. Increase/Decrease
    • Individual Activity – Another test of the cycles
  • Lecturette:
    • Basic accounting equation
    • Basic accounting concepts
  • Business entity concept
  • Cost concept
  • Matching principle
    • Types of organizations
  • Single proprietorship
  • Partnership
  • Corporation
  • Group Activity
    • Basic Financial Statements
  • Lecturette:
    • Balance Sheet
    • Income Statement
    • Statement of Changes in Equity
    • Cash Flow Statement
  • From Operating Activities
  • From Investing Activities
  • From Financing Activities
    • Sample list and classification of accounts in the financial statement
    • Classification of operating expenses
  • Personnel-related
  • Property-related
  • Function-related (Marketing expenses vs. Administrative expenses)
  • Financing-related
  • Tax-related
    • Wrap up of Session 2 on Accounting Overview and Q&A
      • Individual Activity – Another test of the cycles)
    • General Analytical Techniques
    • Lecturette:
    • General objectives of financial analysis
    • Performance measurement [Concepts of profitability, liquidity and solvency]
    • Basis for decision and action
      • Commonly-Used Techniques
    • Ratio/vertical analysis
    • Comparative analysis
    • Trend/horizontal analysis
    • Individual Activity 4

 

MODULE 3: PROFITABILITY MEASUREMENT

  • Profitability Analysis

Lecturette:

  • One-Statement Profitability/Vertical Ratio Analysis
  • Return on Net Sales [Ratio of Net Income to Net Sales]
  • Gross Profit Ratio [Ratio of Direct Costs/Cost of Sales to Net Sales]
  • Ratio of Operating Expenses to Net Sales
  • Ratio of major accounts or groups of accounts to Net Sales
    • Two-Statement Profitability Ratio Analysis
  • Total Operating Assets Turnover
  • Return on Assets
  • Return on Equity
  • Return on Investments
    • Group Activity Lunch Break
    • Fun game 2
  • Lecturette
    • Trend/Horizontal Analysis
  • Absolute increase/decrease
  • Percentage increase/decrease
    • Variance Analysis
  • Contribution margin variance
  • Sales price variance
  • Sales volume variance 
  • Comparative Analysis
  • Against budget
  • Against prior period
  • Against companies with comparable operations
  •  Group Activity 6
  • Wrap up of Session 3 on profitability measurement and Q&A

 

MODULE 4: LIQUIDITY MEASUREMENT

  • Lecturette:
    • Concept of Current Assets and Current Liabilities
    • Overall liquidity measurement
  • Current ratio
  • Quick asset ratio
  • Working capital balance
  • Common size balance sheet
    • Group Activity 7 Snack
    • Group Activity 7 (Continuation)

    Lecturette:

    • Liquidity measurement related to receivables
    • Receivable turnover
    • Days’ Sales in Receivables [Average collection period] vs. term of sales]
    • Amount and percent of increase/decrease [trend analysis]
    • Ratio to total assets
    • Aging of receivables
    • Liquidity measurement related to inventory
    • Inventory turnover
    • Number of days’ supply in inventory vs. terms of purchase
    • Amount and percent of increase/decrease [trend analysis]
    • Ratio to total assets
    • Obsolete and slow moving inventories
    • Group Activity 8
    • Consultation on topics for the day; allowance for slippage in schedule
    • Group Activity 7 Snack
    • Group Activity 7 (Continuation)

    Lecturette:

    • Liquidity measurement related to receivables
    • Receivable turnover
    • Days’ Sales in Receivables [Average collection period] vs. term of sales]
    • Amount and percent of increase/decrease [trend analysis]
    • Ratio to total assets
    • Aging of receivables
    • Liquidity measurement related to inventory
    • Inventory turnover
    • Number of days’ supply in inventory vs. terms of purchase
    • Amount and percent of increase/decrease [trend analysis]
    • Ratio to total assets
    • Obsolete and slow moving inventories
    • Group Activity 8
    • Consultation on topics for the day; allowance for slippage in schedule

     

    • Group Activity 8 (Continuation)

    Wrap up of Session 4 on liquidity measurement and Q&A (15 minutes)

     

    MODULE 5:  SOLVENCY RATIOS

    Lecturette:

    • Total assets turnover
    • Excess of assets over liabilities
    • Equity ratio
    • Number of times interest earned
    • Group Activity 9:
    • Continuation of Group Activity 9
    • Wrap up of Session 5 on solvency measurement and Q&A

     

    MODULE 6:  COST-VOLUME-PROFIT ANALYSIS

    Lecturette

    • Cost behavior
    • Types of costs
    • Cost-Volume-Profit Analysis
    • Breakeven sales
    • Breakeven volume
    • Contribution margin
    • Safety margin
    • Target profit operation
    • Group Activity 10
    • Fun game 3
    • Continuation of Group Activity 10
    • Wrap up of Session 6 on cost-volume-profit analysis

    MODULE 7:  SHORT TERM DECISIONS

    Lecturette:

    • Short-Term Decisions
    • Make or buy decisions
    • Accept or reject an order
      • Group Activity 12
    • Continuation of Group Activity 12
      • Wrap up 7 on differential costing and pricing and Q&A
      • Written evaluation of Seminar
      • Consultation on topics for the day; allowance for slippage in schedule
      • Closing Ceremonies; Awarding of Certificates of Attendance