Advanced Financial Analysis

Advanced Financial Analysis

Methodology

The training course utilizes a combination of interactive techniques, such as brief presentations by the instructor, group exercises, and case studies using Excel to apply the acquired knowledge, followed by participants’ presentations of their findings.

Course Objectives

By the end of the course, participants will be able to:

• Identify and differentiate between important elements in the basic financial statements.
• Explain financial ratios and use Excel and charts to analyze financial statements.
• Illustrate creative accounting practices and critically evaluate the underlying accounting principles.
• Evaluate the quality of financial reports and assess the quality of disclosed earnings and cash flows.
• Analyze the financial position and performance of a company over a period of time and determine its sustainability.
• Forecast financial data based on the analysis of the company’s historical performance.

Target Audience

Chief accountants, accounting managers, senior accountants, financial affairs managers, financial analysts, financial controllers, financial account managers, heads of financial departments, balance sheet auditors, corporate financiers, credit risk analysts, bankers, and relationship managers.

Training Program Content:

• Introduction to Advanced Financial Analysis
• Users of Financial Data
• Content of the Annual Financial Report
• Regional Standards vs. Global Standards
• Non-financial Elements in the Annual Financial Report and their Importance
• Emotional and Cognitive Biases Affecting Analysts’ Judgments
• Understanding the Income Statement, Balance Sheet, and Cash Flow Statement
• Other Comprehensive Income Components
• Basics of Sector Analysis and Financial Ratio Analysis using Excel
• Top-Down Analysis Methodology
• Macroeconomic Factors for Credit Risk Assessment
• GDP Indicators, Unemployment Rates, Inflation, and Interest Rates
• GDP Deficit, Debt-to-GDP Ratio, and GDP Growth Rates
• Sector Analysis: Understanding Michael Porter’s Five Forces for Long-term Sector Profitability
• Company Case Studies: Starbucks, Apple Inc., Nike, McDonald’s
• Common-Size Analysis to Enhance Comparability
• Trend Analysis and Growth Patterns
• Ratio Analysis to Evaluate Key Aspects of Company Performance
  • Profitability
  • Liquidity
  • Efficiency and Working Capital Management
  • Risks and Financial Structure
  • Altman Z-Score for Assessing Probability of Bankruptcy
  • Using Graphical Representations
• Beautifying Financial Data and Creative Accounting
• Signals from Inventory Balances
• Last In, First Out (LIFO) vs. First In, First Out (FIFO) Inventory Valuation
• Measuring Inventory at Net Realizable Value: Identifying Signals of Obsolete Inventory
• Analysts’ Perspective on Inventory Examination
• Evaluating the Impact of Capitalizing vs. Expensing Costs on Ratios and Financial Data
• Capitalizing Interest Costs
• Capitalizing Research and Development Costs
• Effect of Different Depreciation Methods on Financial Data
• Impairment of Long-term Assets
• Revaluation of Long-term Assets
• Choosing Operating Leases vs. Finance Leases
• Using Special Purpose Entities to Address the General Budget
• Stock Options and Stock Grants instead of Bonuses
• Case Study: Creative Accounting Scandals in Enron, WorldCom, and Parmalat
• Evaluating the Quality of Financial Reports
• Framework for Assessing the Level of Financial Report Quality for a Company
• Potential Issues Affecting the Quality of Financial Reports
• Beneish Model: M-Score to Describe Earnings Manipulation Degree
• Evaluating the Quality of Earnings for a Company
• Evaluating the Quality of Cash Flows for a Company
• Indicators of Public Budget Quality
• Information Sources on Risks
• Case Study: Investment Decision-making at Nestle
• Financial Forecasting Techniques for Analysts
• Revenue Forecasting: Bottom-Up vs. Top-Down Approach
• Forecasting Cost of Goods Sold
• Forecasting Fixed and Variable Costs
• Forecasting General Budget Accounts:
  • Using Average Collection Period
  • Using Average Days Inventory on Hand
  • Using Average Payment Period
• Forecasting Fixed Assets Balance
• Retained Earnings Policy and Dividend Distributions
• Three-Year Forecasting for Johnson & Johnson