FUNDAMENTALS OF FINANCE FOR NON-FINANCIAL MANAGERS
INTRODUCTION TO VALUE BASED MANAGEMENT
Programme content
- Financial Accounting Statements
-Financial accounting principles and procedures
-Balance sheet and income statement accounts
-Cash flow is a fact, profit is an opinion
-Shortcomings of accounting numbers
-The fundamental finance principle
- Analysis and interpretation of financial statements
Basic classification of financial ratios
Liquidity ratios
-Net working capital and working capital requirement
-The matching strategy
-Traditional measures of liquidity
-Efficiency ratios
Profitability and debt ratios
-Measures of profitability
-The key drivers of a firm’s operating profitability
-Debt ratios
-Financial leverage equation
Measuring and forecasting cash flow
-Getting to know cash flows and their sources
-Variations of the cash flow statement
-The cash conversion cycle
-Managing business growth: sustainable growth model
Limitations of ratio analysis
Case studies
3. Analysis of Investment Decisions
-Identifying and estimating a project’s relevant cash flows
-Traditional capital budgeting techniques: payback, accounting rate of return
-The time value of money
-Discounted cash flow techniques: net present value, internal rate of return, profitability index
-Inflation and capital budgeting
-Calculation of the weighted average cost of capital (WACC)
-Case study
4. Introduction to value based management
-Fundamental principles of value creation
-Techniques for measuring value creation: the concept of shareholder value added (SVA), market value added (MVA) and the concept of economic value added (EVA)
-Identifying the drivers of value creation
- When and why growth may not lead to value creation
-How can management increase EVA?
-Common problems in implementing EVA
-Linking operating performance and remuneration to value creation
-Value based management and the balanced scorecard
-Putting it all together: the financial strategy matrix
-Case- study
Programme methodology
The programme combines presentations, discussions and hands-on casestudies to allow to put theory into practice. Participants should bring a calculator or a laptop.
Learning objectives
After having attended this programme, managers should understand :
- The meaning of managing a business for value creation.
-The terminology used in accounting and modern corporate finance.
-The relationship between profit and cash flows.
-How data from a firm’s financial statements can be combined to evaluate the firm’s profitability, its ability to generate cash and its capacity to grow.
-How to measure the value that may be created by a business proposal, such as an investment project.
-Risk, how to measure it and how it affects the firm’s cost of capital.
-When and why growth may not lead to value creation.
-How to measure a firm’s capacity to create value.
Fundamentals of finance Benny Podevyn1