Understanding Finance and Accounting for Non-Financial Managers
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Experienced managers in marketing, sales, production, engineering, R & D, human resources and others who do not have financial backgrounds but want to expand their knowledge of finance and financial measures of performance will want to participate in these intense three day course. Understanding Finance and Accounting will equip non-financial managers with the financial knowledge necessary to communicate more effectively with financial managers, analyze financial statements and understand how they relate, interpret a company's profitability, solvency and liquidity, explore the sources and costs of capital and the factors of investment decisions, and learn valuation principles and their impact on the value drivers of the firm.
Overview of Financial Statements
It is difficult to be an effective manager without a solid understanding of the primary financial statements. The first session introduces the basic financial statements and illustrates them through a variety of real-world examples. The objective of this first session is to provide a 30,000 foot overview of the concepts that underpin the basic financial statements.
The Balance Sheet
The components of the balance sheet - assets, liabilities and equity - are the economic building blocks of business enterprises. This session focuses on how to read and understand balance sheets and how to understand firms' financing and investment decisions. We look at the balance sheets of several major corporations as examples.
The Income Statement
The revenues minus the expenses reported in the income statement equal the proverbial "bottom line." We will find out that it's not always easy to decide when a company has earned revenues or when it has incurred expenses. Importantly, we will learn about the concept of 'accrual-basis accounting,' a very old but very ingenious method of calculating the bottom line.
Understanding how basic economic transactions impact the primary financial statements is fundamental to the understanding of a business enterprise. No one can really claim to understand a balance sheet or income statement unless they can coherently analyze how those statements change in the wake of common economic transactions. Thus, one portion of the course is devoted to a critical and detailed evaluation of how the financial statements are derived and how they change as a result of economic events.
Financial Ratio Analysis
The financial statements tell a story, and a careful analysis of the accounting ratios can reveal the plot. This session demonstrates how information in the financial reports can be used to evaluate management performance, credit risk, and valuation issues. We spend most of our time unraveling the mysteries contained in the annual reports of some major corporations.
Foundations of Finance and Introduction to Valuation
The sessions will begin with an overview of six basic tenets that are critical in measuring value and enhancing financial decision-making. Following those foundations, the session will allow us to explore the various basic, yet powerful, methods associated with present value and future value concepts - methods that allow us to measure what assets and liabilities are worth and to plan for future resource allocation.
Pricing of Stocks and Bonds; Introduction to Capital Budgeting - Measuring Value
Using the concepts discussed at the earlier session, the material in this session will focus on applying the techniques in order to price fixed income securities, value stocks in a basic framework, think about P/E ratios, and estimate the value of capital expenditures on fixed asset investments.
Issues in Forecasting Cash Flow
Forecasting cash flow is a critical element in estimating value. This session will explore some of the subtle issues involved in forecasting cash flow - in particular the need for external capital and the management of growth. Participants will be asked to complete estimates of cash flow and growth and discuss the assumptions they made to accomplish the task.
Cost of Capital and Valuation
The final session will include estimation of the components used in calculating the cost of capital in a company. General issues and examples will be discussed, with participants being asked to apply those concepts in estimating cost of capital for a specific company and forecasting future value.
Using case studies, current business articles, in-class exercises, interaction and small group projects, our faculty will lead you to focus on the key knowledge and skills you need to understand and apply concepts to your organization's activities.
Who should attend
Managers in marketing, sales, production, engineering, R & D, human resources and others who wish to know about more about accounting and finance. Participants often use (or should be using) financial statements and want to develop more confidence in their analytical skills. No prior classroom experience in accounting or finance is expected, but familiarity with the general language of business will be assumed.