Introduction

A good plan should begin with a good forecast, which in turn, may lead to a good budget. A strategy is a long-term plan of what the company is going to do to achieve its policy. The budget is the short-term plan of how strategies may be achieved. It is a quantification of the activities the company must develop to achieve its short-term plans. This leading-edge course explains:

• The planning and budgeting process from beginning to end
• Budget development
• How alternative decisions affect the ‘bottom line’ in terms of both profit and cash flow
• Comparison of variances in actual performance against the plan and what these budget variances are saying and how they should be used to control financial performance

• The use of Excel as the toolbox of choice for financial model development, used within this course to develop forecasts, and long- and short-term plans.

Course Objectives 

The objectives of the seminar are to enable delegates to:

• Develop strategic thinking, and use the strategic management process to develop missions and objectives and carry out strategic analysis and decision-making
• Understand the relationship between financial planning, forecasting, and budgeting and integration of the strategic management process with the budgeting cycle
• Understand cost behavior, the use of alternative costing systems, and cost/volume/profit (CVP) analysis, and develop and prepare an operating budget and how it may be funded using the alternative sources of finance
• Use various Excel© models to forecast sales pricing, optimal product mix, long- and short-term sales levels, and build financial growth planning models and traditional and activity-based budget models, and improve budget accuracy
• Use the techniques of budgetary control: development of product standards, flexed budgets, and variance analysis and use of the results of variance analysis to improve operational performance
• Determine a company’s cost of capital and use the technique of discounted cash flow (DCF) for capital budgeting and evaluation of capital project investment, and risk analysis using the techniques of sensitivity, simulation, and scenario analysis.

Target Audience

Forecasting and budgeting are essential skills that should be acquired at the appropriate level by all the professionals in an organization, in particular:

• Financial professionals, finance controllers, treasurers, and inventory professionals
• Senior professionals with direct responsibility for financial management and control
• Accountants, sales and purchasing professionals and those responsible for the relationship with banks
• Any professional, at junior or senior level, who is a part of the financial decision- making a team
• New interns and trainees with finance-related responsibilities
• Department heads, process owners, administrative personnel associated with budget management, financial and technical professionals, sales and marketing professionals, project professionals, and anyone who needs to understand how to develop cost projections for their department, projects.

 Course Outlines 

DAY 1 – Strategic Planning and Financial Forecasting

• Planning strategies and the planning cycle
• Mission, strategic analysis, and strategic implementation
• Corporate objectives and shareholder value
• Corporate governance and the agency problem
• Financial planning for growth
• Financial modeling concepts
• Development of Key Performance Indicators (KPIs)
• The Balanced Scorecard
• Forecasting objectives and data analysis
• Statistical and quantitative forecasting techniques
• Time series, moving averages, and exponential smoothing
• Regression and causal analysis models

DAY 2 – Revenue Forecasting and Cost Management

• Projecting revenues and sales budgeting
• Long-term and short-term sales forecasting
• Revenue assumptions and sales pricing
• Full cost pricing and marginal cost pricing
• Optimum product mix analysis using Excel®
• Nature and behavior of costs
• Cost classification and cost allocation
• Fixed, variable, and semi-variable costs
• Product and period costs
• Absorption costing
• Cost-volume-profit (CVP) and what-if analysis

DAY 3 – Budget Preparation and Budgetary Control

• Purpose and importance of budgeting
• Planning and control through budgets
• Budget preparation process
• Sales and cost budgeting
• Labor, headcount, and depreciation budgeting
• Building integrated budgets
• Standard costing principles
• Flexed budgets and variance analysis
• Planning and operational variances
• Budgetary control techniques

DAY 4 – Activity-Based Budgeting and Capital Investment Decisions

• Introduction to Activity-Based Costing (ABC)
• Cost drivers and cost hierarchy
• Design and implementation of ABC systems
• Advantages and limitations of ABC
• Activity-Based Budgeting (ABB) process
• Behavioral aspects and motivation in budgeting
• Time value of money concepts
• Present value and future value analysis
• Discounted cash flow (DCF) techniques
• Capital project evaluation methods
• ARR, Payback, NPV, IRR, MIRR, and Profitability Index (PI)
• Capital rationing and investment appraisal techniques

DAY 5 – Capital Structure, Risk, and Budget Re-Projection

• Sources of finance and long-term funding
• Cost of equity and cost of debt
• Weighted Average Cost of Capital (WACC)
• Capital Asset Pricing Model (CAPM) and beta factor
• Optimal capital structure models
• Risk and uncertainty in financial decision-making
• Worst-case and best-case scenario analysis
• Value of Perfect Information (VOPI)
• Expected values and standard deviation analysis
• Sensitivity analysis and simulation models
• Scenario analysis and NPV break-even analysis
• Budget re-projection and risk evaluation techniques