Introduction
This course is the second level of budgeting after Effective Budgeting and Cost Control' course. It goes beyond the theory of budgeting as a concept to cover specific steps to make the budget a value-added process in the organization. By building user-friendly models and applying scenario analysis, participants can spend less time gathering data and more time analyzing this data for decision-making. Several Microsoft Excel tools are used throughout this course for practicality and to provide participants with the skills they need to apply in their organization immediately. Such tools include 'what-if' analysis and the 'solver', among many others.
The course also highlights some of the leading forecasting models and provides a detailed evaluation of capital budgeting techniques, all of which are applied in Microsoft Excel and put into practice.
Goals
Participants will learn:
- Budgeting.
- Forecasting.
- Evaluating proposals.
- Applying Microsoft Excel functions and tools.
- Assessing budgeting process.
TRAINING OBJECTIVES
- Evaluate the financial impact on their organization's strategies and plans.
- Build effective budgets for their departments or organizations.
- Apply several forecasting techniques to manage uncertainties in budgeting better.
- Assess capital budgeting decisions using several methods and recommend proper action.
- Utilize Microsoft Excel functions and tools in the budgeting process, including breakeven analysis and optimization.
Training Methodology
The course is a hands-on application on how to use MS Excel in budgeting and forecasting. Participants will be involved in exercises, individual and group presentations, and will work on several case studies.
Target Groups
Finance directors, managers, controllers, accountants, budget analysts, budget owners and professionals who wish to expand their budgeting knowledge.
Program Content
Budgeting and Planning
Strategy development framework
The three horizons of growth model
Strategic budgeting and resource allocation
Growth-share matrix
Nine-box matrix
Budgets and the key financial statements
Budget cycle, process, and approaches
- The budget cycle.
- Characteristics of successful budgeting.
- Making the budget a value-adding activity.
- Top ten problems with budgeting.
- Choosing the proper budgeting approach:
- Incremental budgeting.
- Zero-based budgeting.
- Flexible budgeting.
- Kaizen budgeting.
- Activity-based budgeting.
- Rolling (continuous) budgets and forecasts.
- The master budget and its components.
- Operating and capital budgets.
- Best practices in budgeting.
Forecasting Techniques
- Forecasting models.
- Qualitative and quantitative methods.
- Steps in developing forecasting models.
- Time series and trend analysis.
- Data conditioning techniques.
- Exponential smoothing and moving averages.
- Simple and multiple regression analysis.
- Forecasting components of financial statements.
Advanced Capital Budgeting Evaluation Techniques
- Business risk and cost of capital.
- Classifying investment projects.
- Cash flow estimation
- Analyzing investment and operating cash flows.
- The time value of money concept.
- The required rate of return.
- Net Present Value (NPV).
- Internal Rate of Return (IRR).
- Multiple internal rates of return.
- Modified Internal Rate of Return (MIRR).
- Profitability Index (PI).
- Payback period and discounted payback period.
- Capital rationing.
- Comparing and evaluating techniques.
- Sensitivity and risk analysis.
Breakeven Analysis and Optimization Techniques
- Cost Volume Profit (CVP) analysis.
- Using CVP to reach a target income.
- Single product and multiple products breakeven analysis.
- Working with budget constraints.
- Building optimization models.
