Accounting, Decision Making & Financial Communication

Introduction

Many managers and executives have heard that accounting is the language of business yet have yet to take the opportunity to become literate. This financial accounting for decision-making course offers the accounting language in a structured process.

Participants in the financial accounting for decision-making course will gain access to the language in various exercises that eventually link to the annual reports and the budgets prepared and managed by the executives. Preparation is optional except to bring an open mind and a budget or other financial documents of interest.

By combining techniques, analysis, problems, and examples with real case studies, the financial accounting for decision-making course provides delegates with crucial cost awareness and budgetary skills, which are essential in managing and controlling processes/projects in times of increasing global competition where the budgets are inextricably linked with both strategy formulation and cost analysis.

This financial accounting for decision-making course presents the essential financial tools generally used and explains the broader context of how and where they are applied to obtain meaningful answers. It provides a conceptual backdrop for the financial/economic dimensions of systematic business management and for understanding the nature of financial statements, analyzing data, planning, and controlling.

Targeted Groups

• Members of the operational management team.
• Managers who have responsibility for divisional performance.
• Managers who have responsibility for support functions.
• Consultants who provide advice on systems and operations.
• Senior staff members of any department.

Enhancing Financial Decision-Making and Communication

Understanding the pivotal role of financial accounting tools in business decision-making is crucial for professionals across all levels. Financial decision-making skills are honed in this financial accounting for decision-making course through exposure to accounting decision-making processes, reinforcing the importance of decision-making in management accounting.

Participants will learn about accounting for decision-making and control and how management accounting and decision-making interrelate, paving the way for informed choices in accounting and finance for decision-making.

Furthermore, effective financial communication, or communications finance, plays a critical role where participants discover what decision-making in financial accounting entails and how it can drive strategic business outcomes. This comprehensive curriculum empowers learners to make impactful and strategic financial decisions within their organizations.

Course Objectives

At the end of this financial accounting for decision-making course, the participants will be able to:

• Understand the content and relationships between financial statements (income statement, balance sheet, and statement of cash flows).
• How to use financial statements to evaluate the financial performance of an organization?
• Understand discounted cash flow (DCF) techniques and their application to financial decision-making.
• How do managers use profit margin, asset utilization, and financial leverage to maximize investors' returns?
• What is the budgeting process, including performance evaluation?
• Understand cost behavior and its impact on management decisions.
• Understand the need for and the methods used to allocate overhead.
• Communicate and question financial information effectively.

Targeted Competencies

In this financial accounting for decision-making course, the target competencies will be able to:

• Using financial information for guiding decisions.
• Clarifying KPIs across different functions.
• Building strategic thinking and implementation orientation into their professional lives.
• Challenging the status quo of accounting/control, budgeting, and decision-making.
• Recognizing the value of external standards, internal decision-making requirements, and measurements of qualitative elements.
• Identifying Value Creation principles as the driving force for decision-making.

Course Content

Unit 1: Accounting

• An introduction.
• What is accounting?
• What forms can accounting take?
• Definition and importance of profit.
• Decision scenarios explored.
• Funding business operations.
• Who is interested in profit?
• Cash vs. accrual accounting.
• Cash flow forecasting and improvement.
• Companies choose accounting policies.
• Accounting standards.

Unit 2: Financial Statements, Accounting Policies, and Reporting Standards

Income Statement – Basic Components:

• Revenues and the questions.
• Direct/variable/product costs.
• Indirect/fixed/period costs.
• Mixed costs.
• Non-cash deductions: the what, the why, and the how:
• Depreciation: various methods explored.
• Amortization: impairment test.
• Depletion: when and how.
• The difference between profit and cash.
• A closer look at costs and expenses.
• Profit calculations.
• Summarizing profit statements and extracting the key figures.

Balance Sheet:

• Assets for current and long-term.
• Liabilities for current and long-term.
• Equity and components.
• Capital employed and options.
• Managing the working capital cycle.

Cash Flow Statement:

• Operating sources/uses.
• Investing sources/uses.
• Financing sources/uses.

Unit 3: Making and Communicating Decisions Using Budgets

• The master budget.
• Budgeting is a planning tool, a control mechanism, a communications device, and a value creation.
• Budgeting sales to "drive" the correct budget.
• Operating budget components.
• Financial budget.
• Pro Forma financial statements.
• Cash budgets.
• Capital budget.
• Interrelationship of financial projections.
• Dynamics and growth of the business system for a model review.
• Flexible vs. traditional budgets and the pros and cons.
• Variance analysis as a tool for improvement and communications.
• Price and volume effects within variance analysis: state of the art.

Unit 4: Financial VS Management Accounting: Differences and Similarities

• Objectives of managerial accounting.
• Managerial versus financial accounting.
• Role of the managerial accountant.
• Financial accounting: what we show to the public.
• Objectives of financial accounting.
• Role of a financial accountant.
• Cost terminology: variable, fixed, controllable, non-controllable, incremental, sunk, opportunity, and relevant.
• Cost behaviors in Cost-Volume-Profit scenarios: contribution margin and fixed costs.
• Breakeven and targeted net income scenarios.
• Cost/Benefit analysis.

Unit 5: Ultimatum Goal of Planning – Valuation, Business Performance and Decision Making

• Definitions of Value.
• Responsibility centers: cost, profit, and investment.
• Measuring responsibility center performance.
• Segment reporting internally and externally.
• Business valuation from multiple perspectives.
• Managing for shareholder value.
• Shareholder value creation in perspective.
• Evolution of value-based methodologies in planning and budgeting.
• Creating value in restructuring and combinations beyond planning, reporting, and the case for real change!