Understanding Finance to Influence Strategic Decisions

ICTD International Centre for Training and Development

How long?

  • 5 days
  • in person

ICTD International Centre for Training and Development

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Who should attend

An understanding of how finance influences strategic decision-making is crucial for every role and at every management level in the organization. In addition to interns, financial analysts, financial controllers, accountants and others active in the planning process this seminar has been designed for business professionals from:

  • sales and marketing

  • engineering

  • project management

  • purchasing

  • logistics

  • human resources

and any other non-financial areas that need or wish to understand the financial aspects of the strategic decision-making process.

About the course

A good understanding of strategic analysis and fundamental financial concepts enables all professionals at every level to make better strategic decisions and achieve improved performance.

This highly interactive seminar has been designed to establish the theoretical framework for analyzing and evaluating strategic alternatives and to review the tools and techniques available to professionals for making strategic financial decisions.

## Course Objectives

The objectives of the course are to enable delegates to:

  • Develop strategic thinking, and use the strategic management process to develop missions and objectives and carry out strategic analysis and decision-making
  • Forecast financial data using various Excel® models
  • Understand the structure of the income statement, balance sheet, and cash flow statement, and analysis of the cash operating cycle, for improved financial performance, and better management of working capital and cash flow
  • Identify the alternative the alternative sources of finance and financial (or capital) structure, and evaluate the models of optimum capital structure and minimization of weighted average cost of capital (WACC)
  • Use the technique of discounted cash flow (DCF) for capital budgeting and evaluation of capital project investment, using net present value (NPV), internal rate of return (IRR), equivalent annual cost (EAC), and the profitability index (PI)
  • Use the techniques of uncertainty analysis and risk analysis and develop appropriate risk management tools of insurance and hedging of interest rates and foreign currency exchange rates.

## Course Outline

Fundamentals of Strategic Planning

  • What is strategy?
  • Strategic management
  • Strategic analysis
  • Mission
  • Objectives
  • The strategic planning process
  • Environmental analysis
  • Resources analysis
  • Strategic choice and strategic decision-making
  • Strategic implementation
  • Corporate objectives and accountability
  • Forecasting financial data

Fundamentals of Financial Statements

  • Financial statements

  • Balance sheet

  • Income statement

  • Alternative asset valuation methods

  • Statement of cash flows

  • Common size (or horizontal) trend analysis of financial statements

  • Vertical trend analysis of financial statements

  • Segmental analysis of financial statements

  • Value added analysis of financial statements

  • Understanding the cash flow cycle and the operating cycle

  • Break-even and multiple product break-even analysis

Capital Structure and Leverage

  • Sources of funds

  • Capital cost models

  • Cost of equity

  • Cost of debt

  • Weighted average cost of capital (WACC)

  • Can we determine a company’s optimal capital structure?

  • Capital structure models

  • Preparing projections to determine financing needs

Capital Budgeting

  • Future values, present values and DCF

  • Capital budgeting principles

  • Methods of evaluating capital investment projects

  • Accounting rate of return (ARR) and payback

  • Net present value (NPV) versus internal rate of return (IRR)

  • How do you choose which method to use?

  • Capital budgeting methods

  • Capital asset pricing model (CAPM) versus arbitrage pricing theory (APT)

  • Does it make a difference whether we lease or buy?

Managing Financial Risks

  • The value of perfect information (VOPI)

  • Types of risk

  • Risk management principles

  • Talking to your bankers about managing risk

  • How to develop the tools for your company?

  • How to minimize risk?

  • Insurance and hedging

  • Interest rate and foreign currency exchange rate risk

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Understanding Finance to Influence Strategic Decisions at ICTD International Centre for Training and Development

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