Description

ABOUT THE COURSE

This course brings together the key elements of financial statement preparation and analysis to help participants improve their financial preparation and analysis skills, enable them to ask the right questions, and see the real risks facing businesses and investors. In addition, this course helps participants feel more confident in their ability to comment on business activities and performance and analyze financial health for management of a company. These skills and the required technical knowledge will be put into practice throughout the course using interactive examples and case studies, putting theory and technique into context.

COURSE OBJECTIVES 

• List the basic financial statements and determine the best structure and presentation practices
• Recognize important periodical adjustments and their effect on company financial statements
• Explain how to properly account for assets, liabilities, equity, revenues and expenses during recurrent and non-recurrent transactions
• Identify minimum disclosure requirements in the financial statements for major accounts of transactions
• Prepare financial statements starting from raw trial balance and ending with full comprehensive disclosures
• List and differentiate between the important components of basic financial statements
• Explain financial statements' ratios and formulate Excel sheets and graphs for financial statements analysis
• Illustrate creative accounting schemes and critique the validity of accounting rules used
• Assess the quality of financial reports and evaluate quality of earnings and cash flows reported
• Analyze the financial position and performance of a company over a period of time and draw conclusions regarding its sustainability

 COURSE CONTENT

Module One

Financial statements and business decisions

• The financial statement and management uses and information need
• Four or five key financial statements
• Key elements of financial statements
• Key components of financial statements
• Relationship among financial statements
• Essential notes and disclosures to the financial statements
  • Basis of preparation
  • Accounting policies
  • Related parties' transactions
  • Contingencies
  • Risk managements
  • Subsequent event
• Simulation 1: reporting on general information, basis of preparation and significant accounting policies

Income statement

• Revenue and expense recognition: applying the accrual basis
• Matching principle between revenues and expenses
• Other comprehensive income components
• Simulation 2: mapping accounts and preparing income statement using Excel
• Simulation 3: creating income statement disclosures

Module Two

Financial position and statement of owners' equity

• Minimum presentation requirements of financial statement accounts for company
• Definitions of accounts in the Financial Position
• Correct presentation for statement of owners' equity
• Simulation: mapping accounts and preparing equity and Financial Position using excel

Module Three

Cash Flow Statement

• Exploring the three sections of a cash flow statements
• Direct versus indirect method of cash flow statement preparation
• Linking cash flow statements to notes
• Exercises & application on cash flow statements

Module Four

Financial reporting for major accounts and transactions

• Measuring and reporting accounts receivable
• Estimating and accounting for bad debts
• Costs to be capitalized in inventory value
• Inventory cost flow assumptions
• Presenting inventory at lower of cost or net realizable value
• Simulation 5: hands-on preparation of disclosures on current assets
• Classifying, measuring and recording long lived assets
• Repairs, maintenance, and additions to long lived assets
• Depreciation and amortization
• Disposal of long-lived assets
• Accounting and reporting for intangibles
• Accounting for investments
  • Passive investment, exercising significant influence or control
  • Types of equity and debt investments
• Simulation 6: hands-on preparation of disclosures on non-current assets
• Definitions and classification of liability accounts
• Simulation 7: required disclosures on long-term obligations and equity
• Wrapping it up: linking notes to face of financial statements

Module Five

Introduction to advanced financial analysis

-Basics of industry analysis and analyzing ratios using Excel

• Top-down approach for analysis
  • Macroeconomic factors to assess country exposure
    • Indicators of GDP, unemployment rates, inflation and interest rates
    • Deficit-to-GDP, debt-to-GDP and GDP growth rates
  • Industry analysis: understanding Michael Porter's five forces shaping industry's long-term profitability
• Common size analysis to improve comparability
• Calculating trends and growth patterns
• Ratio analysis to assess key aspects of company performance:
  • Profitability
  • Liquidity
  • Efficiency and working capital management
  • Financing structure and risk
• Altman Z-score to assess potential bankruptcy
• Using graphical representation

Assessing quality of financial reports

• Framework for assessing company's quality of financial reports
• Potential problems that affect quality of financial reports
• Defining concept of sustainable and persistent earnings
• Beneish model: M-score to describe degree to which earnings are manipulated
• Recommending adjustments to improve quality and comparability
• Evaluating the earnings quality of a company
• Evaluating the cash flow quality of a company
• Indicators of Financial Position quality
• Sources of information about risk