Budgeting: Planning, Forecasting, What If Analysis & Reporting
Overview
A comprehensive approach to financial planning, budgeting, and forecasting is essential for any business that aims to succeed in the modern landscape. A good plan should begin with an accurate forecast, which then informs the creation of a pragmatic yet flexible budget. Strategy refers to the long-term blueprint of what the company intends to achieve in pursuit of its goal. At the same time, budgeting represents the short-term practical steps necessary to achieve those strategies. It is crucial to quantify these activities to ensure strategies are executed effectively. Understanding Financial Planning, Budgeting, and Forecasting This financial planning, budgeting, and forecasting course offers a deep understanding of the interrelated nature of financial planning, budgeting, and forecasting processes. Attendees in the financial planning, budgeting, and forecasting course will discover how strategic planning feeds into developing budgets and forecasts, guiding a company's economic and financial trajectory, and enabling practical what-if analysis and scenario planning.
Objectives
At the end of this financial planning, budgeting, and forecasting course, the participants will be able to: Develop strategic thinking and use the strategic management process to develop missions and objectives. Understand the relationship between financial planning, budgeting, and forecasting and the integration of the strategic management process with the budgeting cycle. Appreciate cost behavior, cost/volume/profit (CVP) analysis, and develop an operating budget. Use various Excel models for forecasting, financial growth planning models, and budget accuracy improvements. Implement techniques of budgetary control, flexed budgets, variance analysis, and operational performance enhancement. Determine a company's cost of capital and use discounted cash flow (DCF) for capital budgeting and risk analysis. Increase awareness of effective forecasting and budgeting for better strategic management decisions. Strategic management techniques will help managers make more informed and, therefore, better management decisions. Foster techniques for effective planning, operations budgeting, capital investment projects, and cash flow. Develop techniques to forecast sales revenues and cash flows to aid day-to-day and long-term management.
Audience
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Methodology
This training course will combine the presentation of analytical techniques, examples and case studies. Relevant worked examples will illustrate the learning points and tools and techniques in a real-world environment. Group discussion will promote exchange of experiences and ideas. The interactive team case studies and exercises will reinforce the application of topics covered. These are supported with the help and advice of your Instructor and his extensive practical experience and knowledge of strategic planning, forecasting and budgeting. Difficult mathematical concepts are minimised wherever possible and handled in a visual way that is easy to understand – our aim is for this to be an enjoyable learning experience.
Outline
Day 1 – Strategic and Financial Planning Planning for Success: Strategies and the Planning Cycle Mission, Strategic Analysis, Choice, and Implementation Corporate Objectives, Corporate Value, and Shareholder Value The Agency Problem and Corporate Governance Planning Requirements and Working Capital Financial Planning for Growth and Financial Modeling Developing Key Performance Indicators (KPIs) The Balanced Scorecard Day 2 – Forecasting and Revenue Projections The Forecasting Process: Purpose, Objectives, and Data Analysis Statistical and Quantitative Forecasting Techniques Time Series, Moving Averages, Exponential Smoothing, and Trend Progression Regression and Causal Analysis Models Projecting Revenues through the Sales Budget Long-term and Short-term Sales Forecasts Revenue Assumptions and Pricing Approaches (Full Cost vs. Marginal Cost Pricing) Using Excel for Optimum Product Mix Projections Day 3 – Cost Analysis and Budgeting The Nature and Behavior of Costs: Allocation and Classification Fixed, Variable, Semi-variable, and Stepped Fixed Costs Product vs. Period Costs, Absorption Costing, and Inventory Valuation Cost/Volume/Profit (CVP) Analysis and “What-if” Scenarios The Budgeting Process: Purpose, Stages, and Preparation Accounting for Labor, Depreciation, and Headcount in Budgets Putting the Budget Together Day 4 – Control, Expenses, and Investment Appraisal Budgetary Control: Standard Costing, Flexed Budgets, and Variance Analysis Reasons for Variances and Differentiating Planning vs. Operating Variances Projecting Expenses with Activity-Based Costing (ABC) and Activity-Based Budgeting (ABB) Cost Drivers, Process-Based Costing, and the ABB Process The Time Value of Money: Future Value, Present Value, and Discounted Cash Flow (DCF) Evaluating Capital Project Proposals: ARR, Payback, NPV, IRR, MIRR, PI, and Capital Rationing Day 5 – Integrating Budgets, Capital Structure, and Risk Putting the Pieces Together: Long-term vs. Short-term Funding Sources of Finance and Capital Cost Models Cost of Equity, Cost of Debt, and Weighted Average Cost of Capital (WACC) Risk and the Cost of Capital: CAPM and Beta Factor Optimal Capital Structure and Capital Structure Models Budget Re-Projection under Risk and Uncertainty Decision Rules, Scenario Analysis, Sensitivity Analysis, and Simulation NPV Break-even and Value of Perfect Information (VOPI)