| Day
1 |
Session
1.
Discounting future cash flows (present
value techniques)
|
- Need to compare cash flows at
different points in time
- Examples from practice
- The methodology (formula and Excel)
|
| |
Session
2.
Cost of capital and adjusting for
risk
|
- Begin with risk-free (Government)
interest rates
- Develop how interest costs vary
across different debt instruments
- How that cost changes as we go
from debt to equity
- Blended cost given by Treasury
to operating divisions
|
| |
Session
3.
Financial Statements (Balance Sheet
and Income Statement) |
- Develop the major items on these
two statements
- Emphasize the differences between
the objectives of these two statements,
and yet how they mesh together.
- Impact of using historical costs
and matching revenues with expenses.
|
| |
Session
4.
Financial Statements (Cash Flow Statement) |
- Why create a cash flow statement?
- Incremental information provided
over the two prior statements
|
| |
Individual
and Group Study
Exercise on ratio analysis |
- Identify the items from the Balance
Sheet, Income Statement, and Footnotes
that are needed to calculate the
important ratios
- Calculate the ratios
|
| Day
2 |
Session
1.
Calculating financial ratios |
- Go over the homework assignment
- Consider other important ratios
that may be relevant in your business
|
| |
Session
2.
Interpreting financial ratios |
- What are the benchmarks for the
different ratios?
- How might some ratios differ
across industries?
- Building a cohesive model that
combines the key ratios
|
| |
Session
3.
Projecting financial statements and
cash flows |
- Understanding the analysis required
to invest in a new product, a new
project, or even acquire a company
- Building a spreadsheet model
for valuing a company
|
| |
Session
4.
Valuation using multiples |
- Simpler ways to value companies
- Using these techniques to value
a company
- Wrap-up and Q&A
|
| |
Individual
and Group Study
Case Preparation |
|
| Day
3 |
Session
1.
Opportunity costs and Decisions |
- Opportunity costs
- Sunk costs
- Making efficient business decisions
|
| |
Session
2.
Costs and Measurement |
- Fixed, marginal, and average
costs
- Linear approximation and cost-volume-profit
analysis
- Cost estimation
- Causes of financial failure
|
| |
Session
3.
Allocation of Costs |
- Joint costs
- Death spiral
- Insulating and non-insulating
schemes
|
| |
Session
4.
Activity-Based Costing |
- Incentives to overproduce
- Inaccurate cost estimates and
consequences
- Choosing cost drivers
|
| |
Individual
and Group Study
Case Preparation |
- Industrial Designs Associates
|
| Day
4 |
Session
1.
Decentralization of Decision-making |
- Cost centers
- Profit centers
- Investment centers
|
| |
Session
2.
Transfer Pricing |
- International Taxation
- Information and incentives
- Current practices
|
| |
Session
3.
Budgeting |
- Planning and coordination
- Contract
- Performance evaluation
- Information and participation
|
| |
Session
4.
Control in Organizations |
- Organization as a set of contracts
- Managerial incentives and balance
- Causes of financial failure
|
