Dissecting Financial Statements for Business Performance Measurement

DURATION: 3 DAYS

Delivery Options:

  • In-House
  • Open

Course Objective

The popular saying that “what gets measured gets done” is an apt description of regular measurement and reporting that keeps you focused on making decisions to improve your organisations’ results.

An essential skill required of all business managers is the ability to analyze and interpret financial statements of an organisation using suitable analytical tools.  

This course will enhance participant’s understanding of financial reporting concepts and will expose them to the rudiments of analysing the financial statements of a business in order to make well informed financial and investment decisions.

Expected Learning Outcomes:

At the end of this course, participants will be able to:

  • Explain all the different components of an annual report and their purposes
  • Interpret the components and elements of financial statements
  • Measure the profitability and liquidity position of a business and vis-à-vis its peers
  • Advise a company on how to improve on its profitability and liquidity using certain financial techniques
  • Identify and interpret the working capital components of a business
  • Advise a company on how to improve on its working capital management
  • Prepare a cash budget for taking financial decision
  • Use key investment ratios to identify the viability of a business vis-à-vis other alternative investments.
  • Module 1: Overview of Financial Statements and Annual Report

    • Definition and Purpose of Accounting
    • Users of financial statements   
    • Components of an annual report
      • Chairman’s statement
      • Director’s report
      • Auditor’s report
      • Sustainability report
      • Financial statements

    Module 2: Components of Financial Statements  

    • Statement of financial position
    • Statement of profit or loss and other comprehensive income
    • Statement of cash flow
    • Statement of changes in equity
    • Notes to the accounts

    Module 3: Analyzing Financial Statements

    • Introduction
    • The Analyst’s guide
    • Tools for financial analysis
      • Spreading
      • Common-sizing
      • Financial ratios

    Exercise: Preparing common-sized financial statements using excel spreadsheet   

    Module 4: Financial Ratio Analysis and Interpretation  

    • Profitability Analysis
      • Introduction
      • Business cost structure (fixed and variable cost)
      • Profitability ratios
      • Du Pont Analysis
    • Liquidity Analysis
      • Liquidity Vs Profitability
      • Liquidity ratios

    Exercise: Performing profitability and liquidity analysis of a company’s financial statements using excel spreadsheet   

     

    Module 5: Financial Ratio Analysis and Interpretation (Contd.)

    • Working Capital Analysis
      • Capital Investment Cycle
      • Operating Cycle  
      • Working capital/efficiency ratios
    • Leverage Analysis  
      • Sources of finance
      • Impact of leverage
      • Capital structure policy
      • Leverage ratios

    Exercise: Performing working capital and leverage analysis of a company’s financial statements using excel spreadsheet   

    Module 6: Financial Ratio Analysis and Interpretation (Contd.)

    • Cash flow  Analysis
      • Impact of profit or loss on cash flow
      • Impact of statement of financial position on cash flow
      • Categories of statement of cash flow  
      • Operating Cycle  
      • Working capital/efficiency ratios
    • Cash flow forecast and cash budget
      • Components of a cash budget
      • Usefulness
      • Cash budget template  

    Exercise: Performing cash flow analysis of a company’s financial statements and preparing a cash budget using excel spreadsheet   

    Module 7: Financial Ratio Analysis and Interpretation (Contd.)

    • Investor Analysis
      • Key investor considerations
      • Investor ratios

    Exercise: Performing investor analysis of a company’s financial statements using excel spreadsheet   

    Group Discussion: Interpretations of the financial ratios for taking key financial decisions

     

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