Advanced Financial Analysis

Course Outlines:

Module One:

Introduction to Advanced Financial Analysis

• Why analyse financial data?
• Who are the users of Financial Information?
• Sources of Financial Information
• Published Annual Reports and Accounts – What is their purpose?
• The Structure and Contents of an Annual Report and Accounts
• Creative Accounting, Financial Scandals, and the Agency Problem
• Corporate Governance, Sustainability, Ethics and Corporate and Social Responsibility (CSR) Reporting
• The Three Main Financial Statements
  • Income Statement
  • Balance Sheet
  • Statement of Cash Flows

Module Two:

Analyzing the Annual Report and Accounts

• Using Ratio and Other Analyses of the Annual Report and Accounts to Assess Financial Position and Financial Performance
• Profitability and Cost-Volume-Profit (CVP) Analysis
• Efficiency and Working Capital
• Liquidity and the Short-term Solvency
• Investment and Growth
• Financial Structure and Long-term Solvency
• Ratio Analysis using Excel
• Excel Trend Analysis using Common-size Horizontal Analysis and Vertical Analysis for Comparability

Module Three:

Analytical Tools, Cash vs. Profit, and the Cash Forecast

• The Dupont System of Ratio Analysis and Pyramids of Ratios
• Segmental Analysis and Value-Added Analysis of the Annual Report and Accounts
• The Fundamental Statistical Tools and Graphical Representations
• Using Statistical Techniques to Analyze and Forecast Financial Data
• The Impact of Alternative Asset Valuation Methods on the Balance Sheet and Profitability
• Cash flow vs. Profit – The Best Measure of Financial Performance
• Working Capital and the Cash Flow Operating Cycle
• Direct and Indirect Cash Flow Analysis and the Cash Flow Forecast

Module Four:

Financing the Business, Capital Investment Project, and Business Valuation

• Analysis of the Balance Sheet to Identify Long-term Debt and Equity, and Short-term Financing
• Capital Cost Models: Cost of Equity using Dividend Growth and Capital Asset Pricing Model (CAPM); Cost of Debt
• Weighted Average Cost of Capital (WACC)
• Optimal Capital Structure Models to Minimize WACC
• Future Values, Present Values, and Discounted Cash Flow (DCF)
• Using Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR) and Equivalent Annual Cost (EAC) to Analyze and Evaluate Capital Projects
• The Reasons for Business Valuations
• Business Valuation Models

Module Five:

Analyzing and Predicting Corporate Failure, Business and Financial Risk

• Predicting Financial Distress and Corporate Failure – The Altman Z-score Model
• Risk and Uncertainty
• Risk Analysis using Expected Values, Standard Deviation and Coefficient of Variation
• Sensitivity, Simulation, Scenario and Break-even Analysis Techniques
• The Analytical Tools to Manage Risk
• Systematic Risk, Unsystematic Risk, Business Risk and Financial Risk
• Financial Risk– Interest Rate and Foreign Currency Exchange Rate Exposures
• Using Insurance, Hedging and Derivatives to Mitigate and Minimize risk

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