Budgeting With Forecasting and the Planning Process

Overview:

Unit 1: 

Strategic Management and Financing:

• Strategic Analysis, Strategic choices, and evaluation, and strategic implementation.

• The Links between Strategy, Forecasting, Planning, Budgeting, Performance Measurement.

• Strategic capability and avoiding the Spiral of Death.

• Shareholder Wealth maximization, Corporate and Shareholder value creation.

• Financial Strategy, Dividend Policy, the Agency Problem, and Corporate Governance.

• Long-term Financing:

  • Debt and Equity; Cost of Equity using Dividend Growth and Capital Asset Pricing Model (CAPM); Cost of Debt; Weighted Average Cost of Capital (WACC).

• Capital Structure Optimisation Models to minimize WACC.

• Using Strategy Maps to link strategies to Performance Measurement: The Balanced Scorecard.

Unit 2:

Financial Planning, Forecasting, and Risk Analysis:

• The Financial Planning Process and Modelling using Excel.

• Statistical Forecasting Tools and Techniques:

  • Time series; moving averages; exponential smoothing; Pareto Analysis; trend progression; linear regression; correlation.

• Forecasting long- and short-term sales revenues, and sales pricing:

  • Porter’s generic strategy of cost leadership and differentiation; Bowman’s strategy clock; full cost pricing; marginal cost pricing; target cost pricing; life-cycle costing; kaizen costing; value-based pricing.

• Using Excel for Optimum Product mix decisions.

• Short-term Financing, Working Capital, and the Cash Operating Cycle.

• Direct and Indirect Cash Flow Analysis and Cash Flow Forecasting using Excel.

• Uncertainty and Risk: Business Risk, Financial Risk, Systematic Risk, Unsystematic Risk.

Unit 3:

Cost Analysis Techniques:

• Cost Behaviour and Activities.

• Fixed and Variable Costs, Direct and Indirect Costs.

• Product Costs and Period Costs.

• Cost Allocation and Absorption of Overheads.

• Absorption or Full Costing.

• Marginal Costing.

• Cost-Volume-Profit (CVP) and ‘what-if’ analysis using Excel.

• Activity-Based Costing (ABC) and Activity-Based Management (ABM).

Unit 4:

Budgeting, Budgetary Control, and Performance Improvement:

• To Budget or Not – Purposes and Reasons for Budgets.

• Stages in the Budget Preparation Process and Preparation of the Master Budget.

• Activity-Based Budgeting (ABB).

• Responsibility Accounting and Variance Analysis:

  • Standard costing; flexed budgets; budgetary control to measure organizational and management performance.

• Advantages, Disadvantages, and Behavioural Aspects of Budgeting.

• The Conflict between Performance Improvement and the Costing System.

• Lean thinking and integrating continuous performance improvement into the Budget Process.

Unit 5: 

Project Appraisal and Capital Budgeting:

• The Time Value of Money.

• Future Values & Present Values.

• Discounted Cash Flow (DCF).

• Capital investment Project Appraisal:

  • Accounting Rate of Return (ARR); payback; Net Present Value (NPV); Internal Rate of Return (IRR); Modified Internal Rate of Return (MIRR); Discounted Payback; Equivalent Annual Cost (EAC).

• Project Risk:

  • Sensitivity Analysis; simulation; scenario analysis; NPV break-even.

• Capital Rationing and Capital Budgeting and the Profitability Index (PI).