Finance for Non-Financial Managers and Professionals: Sample Outline for a One or Two-Day Course

(An important part of this seminar is the use of examples and exercises directly related to the participants' company or industry.)

I.    Introduction

A.  The financial goals firm
B.  The economics of a business and the consequences of changes in customers, technology and competition
C.  The financial dimensions of a business

II.   Basic Concepts in Accounting and Finance

A.  Fundamental concepts

1.  Accrual accounting, the matching principle and the meaning of depreciation and amortization
2.  "Stock" and "flow" measures: the balance sheet as a "stock" measure and the income statement as a "flow" measure.
3.  The accounting equation: why the balance sheet "balances"

B.  Elements of the Balance Sheet

1.  Current vs. Fixed Assets
2.  Current vs. Long-term Liabilities
3.  Key elements of owners' equity.

C.  Analyzing the Balance Sheet:

1.  Asset Intensity (relationship between assets and revenue)
2.  Asset Structure (relationship between current and fixed assets)

D.  Elements of the Income Statement

1.  Revenue
2.  Costs and Expenses
3.  Interest and Taxes
4.  Special charges or non-recurring items
5.  The "pro-forma" income statement

E.  Analyzing the Income Statement

1.  The earnings model
2.  The importance of gross profit margin
3.  The "high margin" vs. the "low margin" business

 

III.   Putting It All Together: Financial Ratio Analysis

A.  Ratios of liquidity, leverage and activity
B.  Ratios of profitability (e.g. profit margin, return on assets, return on equity, return on capital)
C.  The Return on Assets Model (also known as the "DuPont Model")
D.  The concept of economic value added (EVA) and its relationship to return on assets and return on equity)
E.  Annual report exercise (typically the annual report of the participants' company along with other selected companies are used)

IV.   Cash Flow Analysis

A.  The measurement of cash and cash flow
B.  The difference between profit and cash flow
C.  Cash flow exercise using changes in the balance sheet
D.  Analysis of working capital and the operating cash flow cycle

V.   Tools of Financial Analysis

A.  Cost-volume-profit analysis (also called break-even analysis)

1.  The importance of distinguishing between fixed and variable cost
2.  The concept of operating leverage

B.  Discounted Cash Flow Analysis

1.  The importance of capital budgeting in financial management
2.  The time value of money and the concept of present value
3.  A company's cost of capital or its "hurdle rate"
4.  Computing net present value (NPV) and the internal rate of return (IRR)