Details
Improved Skills
Improved Performance
We support professionals and organizations with business skills development through hands-on public and in-house training courses.
Learning objectives
- Interpret cash flow statements and ratios, and identify positive and negative corporate performance;
- Appreciate why cash flow analysis is more important than balance sheet and income statement analysis;
- Evaluate free cash flow and the ability of companies to meet their financial commitments;
- Use the latest computer spread sheet formats in projecting cash flow.
- Comparison of different cash flows;
- Compare debt capacity and cash flow in a corporate;
- Analyse cash flow ratios versus traditional financial ratios;
- Construct a cash flow statement;
- Prepare a detailed cash budget;
- Build a forecast model and incorporate debt service capacity.
- Review figures of selected international companies and highlight the differences between profits and cash;
- Analyse major companies’ cash flows;
- Review different companies’ cash flows and identify potential problems;
- Prepare interpretation of numerous cash flow statements;
- Evaluate the drivers of cash flow of numerous companies;
- Prepare a simple forecast model to incorporate seasonality.
Outline
Session 1
Accounting For Cash
- Difference between cash and profit
- Cash inflows
- Cash outflows
- The cash conversion period
- Accruals and non-cash items
The Cash Flow Statement
- A tool for analyzing sources and uses of cash
- The published and the derived cash flow statement
- Accounting standard
- Exercise: Prepare interpretation of numerous cash flow statements
Constructing the Cash Flow Statement
- From the books of accounts – The accountancy method
- From the balance sheet and income statement – The
- banking method
- Case Study: Construct a cash flow statement
Analyzing Historic Cash Flow Statements
- Structure of cash flow statements
- Profitability measures
- Working investment management
- Investment decisions – impact of capital expenditure, acquisitions and disposals
- Funding decisions
- Different drivers in different businesses
- Relating cash flows to loan repayment
- Case Study: Review selected international companies’ cash flow
Cash Flow Ratios
- Calculating and understanding cash flow ratios
- Cash flow ratios as a predictive tool – success versus distress
- The use of cash flow ratios as loan covenants
- Case Study: Analyze cash flow ratios versus traditional financial ratios (selected corporates)
Understanding the Priority of Cash Flows
- Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
- Operating cash flow and free cash flow ǽǽ Lumpy and volatile cash flows
- Allocating available cash to appropriate resources
- Debt capacity and structure
- Case Study: Compare debt capacity and cash flow in a corporate
Analyzing Complex Cash Flows
- Looking at cash flows in conglomerate companies
- Understanding typical cash flows in different businesses
- Spotting creative accounting situations
- Cash flows in groups – inter-company trading
- Exercise: Analyze major companies’ cash flows
Session 8
Identifying Cash Flow Problems
- The benefits of up-to-date forecasting
- Watching the market closely for changes
- Signs that your customers are in difficulty
- How to avoid cash flow problems
- Exercise: Review different companies’ cash flows and identify potential problems
Cash Budgets
- Cash inflows
- Accounts receivable
- Average collection period
- Accounts receivable to sales ratio
- Accounts receivable aging
- Cash outflows
- Accounts payable aging schedule
- Case Study: Prepare a detailed cash budget
Key Concepts Financial Forecasting
- Types of forecasts and their uses:
- Simple statements of when funds are due;
- Hard copy schedules provided;
- Simple Excel based ‘direct’ cash forecasts;
- Comprehensive Excel based ‘indirect’ methods.
- Professionally developed multi-tab Excel models
- Appropriate financial forecast models:
- Understanding credit risk;
- Mapping the type of forecast to the underlying industry.
- Sources of information.
- Exercise: Evaluate the drivers of cash flow of numerous companies.
- Business model;
- Business risk:
- Sustainability of sales;
- Predictability of sales;
- Volatility;
- Seasonality;
- Cycles.
- Industry risk:
- Competitiveness;
- Benchmarking.
- Exercise: Prepare a simple forecast model to incorporate seasonality.
Forecasting Cash Flow
- The key cash drivers
- Looking at historical cash flows as a basis for future cash flow
- Using value drivers to make decisions for future business profiles
- Working with uncertainty – sensitizing within a range of possibilities
- Use of sensitivity analysis and simulations
- General principles of the structure of cash flow projections
- Cash Flow Available for Debt Service (CADS)
- Debt capacity – debt service capacity as a key indicator of risk
- Projections – short, medium and long-term
- Case Study: Build a forecast model and incorporate debt service capacity
Cash Flow, Income Statement, and Balance Sheet
- A model will be loaded on your PC to enable you to use historical information as a basis for forecasting
- You will input assumptions about value drivers
- The resulting forecasts will then be used to answer a number of questions about the company’s borrowing and repayment capabilities and the need for extra security on any financing
- Building the Forecast
- Assumptions
- Revenue forecast and growth – decompose sales
- Cost of goods sold – decomposing
- Inflation – real versus nominal
- Revenues and costs; the level of fixed and variable costs
- Income Statement:
- Reviewing the income statement
- Balance Sheet:
- Assumptions
- Non-current assets
- Current assets
- Equity
- Liabilities – amortization table
- Linkages to income statement and cash flow statement
- Working capital budget
- Capital expenditure budget
- Cash Flow Forecast:
- Linking to the income statement and balance sheet
- Balancing
- Using the Forecast:
- Sensitivity and scenarios
- What ifs
- Using ratios
- Interpreting the results
Summary and Close
- Course Review
- Evaluation
PRE-COURSE
This part of the learning experience is meant to ensure a smooth transition to the face to face training. Participants are required to take the following steps:
- Pre-course evaluation quiz - take a short quiz to establish the current level of knowledge;
- Learning experience - analyze a document presenting guidelines on how to maximize your learning experience;
- Pre-requisite reading - go through a series of documents to better understand the core-course content.
AFTER-COURSE
- Action plan - create a plan for the actions and initiatives you intend to implement after the training course;
- Additional reading - go through a series of resources to expand your content related knowledge;
- Learning journal - reflect upon your 3 stages learning experience and complete a journal.
The process is finalized only when you complete all of the 3 stages of the learning experience. Nonetheless, you will receive a:
- Certificate of Attendance: after participating at the 2 days of on-site training course;
- Certificate in Cash Flow and Forecasting: after you have successfully completed all of the 3 stages of the learning experience.
Speaker/s
CREDIT, CORPORATE FINANCE AND FINANCIAL MODELLING
Andre Lanser has delivered courses around the world in the areas of Credit, Corporate Finance, Valuation and Financial Modelling both for Corporates and Banks.ndre originally qualified as a Chartered Accountant, completing articles with PricewaterhouseCoopers. He started his career with a subsidiary of Commercial Union, involved in the steel manufacturing industry. His experience ranged from systems implementation, credit assessment of the highly risky construction industry customers, heading up the finance functions to successfully turning the business around and then selling the company through a trade sale.
Special Offer
If you have a group of five or more to train you can save time and money by running this training course in-house. Use the contact details provided to request a customized offer from one of our training solution specialists.
Call us and we will assist you through the registration process.
The KPI Institute is a research institute specialized in business performance. It operates research programs in 12 practice domains, ranging from strategy and KPIs to employee performance and from customer service to innovation performance. Insights are disseminated through a variety of publications, subscriptions services and through a knowledge platform available to registered members. Support in deploying these insights in practice is offered globally through training and advisory services. The KPI Institute is considered today the global authority on Key Performance Indicators (KPIs) research and education. It developed the first KPI Management Framework and operates www.smartKPIs.com, the result of the research program dedicated to documenting and cataloguing how KPIs are used in practice, an online portal containing the largest collection of documented KPI examples. Multinationals, government agencies, academic institutions, non-profit organizations and individuals all turn to us for insights and performance improvement solutions. Therefore, we’re committed to building powerful products, delivering exceptional services, providing best practice resources and growing a vibrant user community. ...