Understanding and Analysing Financial Statements

Objectives

Upon completion of this workshop, participants will be able to;

• Understand the meaning and fundamental structure of the financial statements
• Learn the inter-relationship of the items in the statements
• Learn to apply the key management ratios to evaluate the strengths and weaknesses of the business operations
• Know how to apply various analytical techniques to examine the performance of the business operation

Target Audience

Managers and Executives who do not work in accounting but who need to know how basic accounting work and apply accounting related techniques when making business decisions.

Duration

Two days

Curriculum

• What You Want to Know about the Financial Statements?
  • Nature and Role of Accounting
  • Desirable Qualities of a Financial Report
  • Accounting as an Information System
  • Financial and Management Accounting Compared
  • Fundamental Accounting Assumptions
  • Accounting Policies
  • Objectives of Financial Statements. User Groups and their Areas of Interest
• Balance Sheet
  • Source and Use of Funds Approach
  • Vertical Format Presentation
    • Current Assets
    • Fixed Assets
    • Liabilities
    • Shareholders’ Funds
    • Capital Employed
    • Net Worth
    • Working Capital
    • Long and Short Balance Sheet Analysis.
  • Profit and Loss Account
    • Timing Adjustments
    • Distribution or Appropriation of Profits
    • Cash Flow Statement
  • Cash Flow Statement
    • Operating Cash Cycle
    • Relationship Between Depreciation and Cash Flow
    • Non-Operating Cash Outflows and Inflows
• Interpretation of Auditors’ Reports
  • Objectives and Scope of Audit
  • Reasonable Assurance
  • True and Fair View
  • Auditors Opinion
    • Unqualified
    • Emphasis of Matters
    • Qualified
    • Disclaimer
    • Adverse Opinion
• Analysing Performance of an Enterprise – Part 1
  • Liquidity Ratios
    • Importance of Liquidity
    • Application, Case Study and Interpretation Techniques
  • Profitability Ratios
    • Importance of Profitability
    • Meaning of Return on Investment (ROI)
    • Drivers of Margin on Sales
    • Drivers of Sales to Total Assets
    • Operating Profit Model
    • Application, Case Study and Interpretation Techniques
  • Solvency Ratios
    • Importance of Solvency
    • Application, Case Study and Interpretation Techniques
• Analysing Performance of an Enterprise – Part 2
  • Asset Management Ratios
    • Importance of Asset Management
    • Application, Case Study and Interpretation Techniques
  • Stock Market Ratios
    • Application, Case Study and Interpretation Techniques
  • Competitor Analysis
    • Approaches and Techniques of Conducting Competitor or Industrial Analysis

Methodologies

Presentation, interactive discussion, individual exercises, case studies and group activities. Published corporate information and recent corporate development both local and overseas will be used to provide “real-life” examples.

Note: Each participant needs to bring calculator for this course.Participants may bring financial statements and annual reports of corporations to the workshop for discussion and analysis.