MFC

Masterclass in Financial Control

Certificate in Accounting and Financial Control

→ Delegate introductions and course objectives
→ High level overview of course content

→ Disciplines of financial accounting, management accounting and tax accounting
→ Current challenges and issues in financial accounting
• High level overview of recent standards (revenue, leases, financial instruments)
• Problems facing the profession
→ The evolution of management accounting
• Role of information and data analytics
• New trends and the future of management accounting
→ International tax professionals
• BEPS and the global crackdown on corporate taxation

→ The working capital cycle
• Components of working capital
• Review of working capital ratios
• Interpreting the working capital ratios and what action should be taken
Case Study: Numerical exercises on the working capital cycle with discussion of the “how” to monitor and practical solutions to improve working capital efficiency.
→ Receivables management
• Cash and credit options
• How to assess credit policy alternatives
• Leveraging receivables with factoring or invoice discounting
Case Study: Calculating and determining an optimal credit policy, calculations on costing of asset backed financing with factoring or invoice discounting.
→ Inventory management
• Determining optimal order points
→ The balancing act – having the right amount of working capital and the costs / benefit analysis of extra or not enough
→ Risk of working capital deficiencies
• Meaning and risks of overtrading
• Conditions under which negative working capital can be sustainable
Case Study: Calculations and discussion to ascertain if a company is at risk of overtrading coupled with solutions / alternatives to tackle this risk.

→ Examination of financial ratios and their use as a control tool
• Review of key ratios: profitability, solvency, liquidity, stability
• Information through comparison: competitive benchmarking
• Trend analysis: identification of problems and corrective actions

Case Study: Complex team-based case study requiring in depth team discussion and analysis that challenges the understanding of expectations of financial ratios where each team is tasked with objective to match a set of ratios with the ten companies. This has been an excellent tool used in many training programs for the delegates to gain a more practical understanding of ratio analysis.
→ Structured approach on gearing (leverage) distinguishing between financial and operational gearing
• Establishing the link between performance and risk taking
• Controlling operational gearing: understanding the risks of high fixed costs
• Controlling financial gearing: risk implications and compliance issues
Case Study: Calculations and discussion on financial and operating gearing and how to effectively use these ratios as a control tool.

→ Linking financial ratios and business realities – identifying internal problems
• Discussion of the three levers in the DuPont analysis
• Earnings and efficiency in earnings
• Ability to turn assets into profit
• Financial leverage
• Linking the DuPont analysis to benchmarking exercises; finding the red flags
• Internal reporting: preparing briefings for board/ senior executives
Case Study: An examination of the comparative performance of three companies in the same industry (pharmaceuticals) from a DuPont perspective, allowing management to identify strengths and weaknesses of their chosen business strategies, while making explicit the risk implications and consequences of those strategies. The case highlights the benefits of competitive benchmarking.

→ How your bank prepares their credit memo to assess lending risk
• What is included in the banker’s credit memorandum
− The 5 C’s of credit
• Using guarantees to strengthen your loan
− Cross guarantees in a “diversified” company
− Loan covenants, collateral and contractual assurances
− Debt subordination structuring
− Third party guarantees
• How to demonstrate repayment to your bank
− A banker’s “way out” analysis and how best to present it

→ How cost behavior impacts our analysis
• Fixed, variable, stepped and semi-variable cost behavior
→ Approaches to deal with fixed costs
• Absorption costing concepts
− Using an overhead absorption rate
− Allocation of cost from support / service cost centers
• Marginal costing concepts
Case Study: Participants will complete an exercise to reinforce differences between full absorption and marginal costing followed by a discussion of the different choices to tackle fixed and corporate overhead allocations.

→ Determining relevant costs determined
• Tackling fixed and committed costs
• What to do with opportunity and sunk costs
→ How to use relevant costs to make financial decisions
Case Study: Group exercise analyzing a list of costs to determine which ones are relevant and how they should be used in the decision-making process.