Budgeting and Forecasting Process, Tools and Techniques
Course Overview
Course Objectives
- Improve their ability to think strategically and participate in the integration of the organization’s strategic management and budgeting processes.
- Use forecasting techniques most appropriate to their organization’s strategic planning and budgeting.
- Apply the techniques that relate to the key principles of financial management: shareholder wealth maximization; cash flow; time value of money; risk.
- Appreciate the behavior of costs and identify the costing methods that may best be used in financial planning, budgeting, and budgetary control.
- Use best practice to develop operating budgets, capital expenditure budgets, and cash flow budgets and forecasts in line with organizational strategic objectives.
Course Audience
- Line Managers.
- Project Managers.
- Professional Advisers.
- Consultants.
- Financial Managers.
- Financial Analysts.
- Strategic Planning Managers.
Course Methodology
Course Outline
Day 1 :Strategic Management and Financing
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Strategic analysis, choices, evaluation, and implementation
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Links between strategy, forecasting, planning, budgeting, and performance measurement
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Strategic capability and avoiding the “Spiral of Death”
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Shareholder wealth maximization and value creation
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Financial strategy, dividend policy, agency problem, and corporate governance
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Long-term financing and capital structure optimization (minimizing WACC)
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Strategy Maps and Balanced Scorecard integration
Day 2 :Financial Planning, Forecasting, and Risk Analysis
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Financial planning process and modeling using Excel
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Statistical forecasting tools and techniques
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Forecasting sales revenues and pricing (short- and long-term)
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Excel for optimum product mix decisions
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Short-term financing, working capital, and cash operating cycle
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Direct vs. indirect cash flow analysis
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Cash flow forecasting using Excel
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Risk and uncertainty: business, financial, systematic, and unsystematic risks
Day 3 :Cost Analysis Techniques
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Cost behavior: fixed, variable, direct, and indirect costs
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Product vs. period costs
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Cost allocation and absorption of overheads
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Absorption costing vs. marginal costing
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Cost-volume-profit (CVP) analysis and Excel “what-if” modeling
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Activity-Based Costing (ABC) and Activity-Based Management (ABM)
Day 4 :Budgeting, Control, and Performance Improvement
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Purposes and reasons for budgets
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Stages of budget preparation and the master budget
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Activity-Based Budgeting (ABB)
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Responsibility accounting and variance analysis
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Behavioral aspects and challenges of budgeting
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Conflict between performance improvement and costing system
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Lean thinking and integrating continuous improvement into the budget process
Day 5 :Project Appraisal and Capital Budgeting
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Time Value of Money (Future and Present Values)
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Discounted Cash Flow (DCF) principles
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Capital investment appraisal methods
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Project risk assessment: sensitivity analysis, simulation, scenario analysis, NPV break-even
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Capital rationing and profitability index (PI)
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Integrated case study: applying valuation, budgeting, and risk tools to a project decision