Course Outline
Planning for Success
- What are planning strategies?
- Work with the planning cycle
- Mission
- Strategic analysis
- Strategic choice
- Strategic implementation
- Corporate objectives
- Corporate value and shareholder value
- The agency problem and corporate governance
- Planning requirements and working capital
- Plan outline
- Financial planning for growth
- Financial modelling
- Development of the key performance indicators (KPIs)
- The balanced scorecard
The Forecasting Process
- Determine the purpose and objective of the forecast
- Analysing data
- Statistical analytical tools
- Quantitative analysis and forecasting
- Forecasting techniques
- Univariate analysis models: time series; moving averages; exponential smoothing; trend progression
- Causal analysis models – regression analysis
The Nature and Behaviour of Costs
- Cost behaviour
- What is cost?
- What is an activity?
- Cost classification
- Fixed costs and stepped fixed costs
- Variable costs and semi-variable costs
- Notional costs
- Cost allocation
- Product costs and period costs
- Product costing for inventory valuations and profit ascertainment
- Absorption costing
- Cost / volume /profit (CVP) and ‘what-if’ analysis
The Budgeting Process
- Why do we budget? – the purposes of budgeting
- Planning and control
- Budgeting for sales and costs
- Stages in the budget process
- Budget preparation process
- Accounting for headcount and labour costs in the budget model
- Accounting for depreciation in the budget model
- Putting the budget together
Budgetary Control
- Standard Costing
- The purposes of standard costing
- Flexed budgets
- Variance analysis
- The reasons for variances
- Planning and operating variances
Projecting Expenses – Activity Based Costing (ABC) And Activity Based Budgeting (ABB)
- The activities that cause costs
- Processes and activities
- Under- and over-costing – product cost cross subsidisation
- Activity based costing (ABC)
- Refinement of the costing system
- ABC and cost management
- Design of ABC systems
- The cost hierarchy and cost drivers
- Advantages and disadvantages of ABC systems
- From traditional budgeting to activity based budgeting (ABB)
- The ABB process
- Motivation and the behavioural aspect of budgeting
The Time Value of Money
- The impact time has on the value of money
- Future values and compound interest
- Present values
- Discounted cash flow (DCF)
Evaluating Capital Project Proposals
- Various types of capital projects
- Capital project evaluation
- Capital investment project appraisal
- Accounting rate of return (ARR)
- Payback method
- Net present value (NPV)
- Internal rate of return (IRR)
- Discounted payback method
- Choosing the right investment appraisal method
- Equivalent annual cost (EAC) method
- Modified internal rate of return (MIRR)
- Capital budgeting methods
- Capital rationing
- Profitability index (PI)
Putting the Pieces Together – The Budget
- Long- and short-term funding
- Sources of finance
- Capital cost models
- Cost of equity
- Cost of debt
- Weighted average cost of capital (WACC)
- Risk and the cost of capital
- Capital asset pricing model (CAPM) and the beta factor
- Optimal capital structure
- Capital structure models
Budget Re-projection – Evaluating Risk And Uncertainty
- Risk and uncertainty decision rules
- Worst and best case scenarios
- The value of perfect information (VOPI)
- Analysing risk: expected values; standard deviation
- Sensitivity analysis
- Simulation model
- Scenario analysis
- NPV break-even