Course outlines:
Module One:
Introduction to Advanced Financial Analysis
- Why analyze 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.