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Budgeting Planning Management

Course Outline

Planning for Success

  • What are planning strategies?
  • Work with the planning cycle
  • Mission
  • Strategic analysis
  • Strategic choice
  • Strategic implementation
  • Corporate objectives
  • Corporate value and shareholder value
  • The agency problem and corporate governance
  • Planning requirements and working capital
  • Plan outline
  • Financial planning for growth
  • Financial modelling
  • Development of the key performance indicators (KPIs)
  • The balanced scorecard

 

The Forecasting Process

  • Determine the purpose and objective of the forecast
  • Analysing data
  • Statistical analytical tools
  • Quantitative analysis and forecasting
  • Forecasting techniques
  • Univariate analysis models: time series; moving averages; exponential smoothing; trend progression
  • Causal analysis models – regression analysis

 

The Nature and Behaviour of Costs

  • Cost behaviour
  • What is cost?
  • What is an activity?
  • Cost classification
  • Fixed costs and stepped fixed costs
  • Variable costs and semi-variable costs
  • Notional costs
  • Cost allocation
  • Product costs and period costs
  • Product costing for inventory valuations and profit ascertainment
  • Absorption costing
  • Cost / volume /profit (CVP) and ‘what-if’ analysis

 

The Budgeting Process

  • Why do we budget? – the purposes of budgeting
  • Planning and control
  • Budgeting for sales and costs
  • Stages in the budget process
  • Budget preparation process
  • Accounting for headcount and labour costs in the budget model
  • Accounting for depreciation in the budget model
  • Putting the budget together

 

Budgetary Control

  • Standard Costing
  • The purposes of standard costing
  • Flexed budgets
  • Variance analysis
  • The reasons for variances
  • Planning and operating variances

 

Projecting Expenses – Activity Based Costing (ABC) And Activity Based Budgeting (ABB)

  • The activities that cause costs
  • Processes and activities
  • Under- and over-costing – product cost cross subsidisation
  • Activity based costing (ABC)
  • Refinement of the costing system
  • ABC and cost management
  • Design of ABC systems
  • The cost hierarchy and cost drivers
  • Advantages and disadvantages of ABC systems
  • From traditional budgeting to activity based budgeting (ABB)
  • The ABB process
  • Motivation and the behavioural aspect of budgeting

 

The Time Value of Money

  • The impact time has on the value of money
  • Future values and compound interest
  • Present values
  • Discounted cash flow (DCF)

 

Evaluating Capital Project Proposals

  • Various types of capital projects
  • Capital project evaluation
  • Capital investment project appraisal
  • Accounting rate of return (ARR)
  • Payback method
  • Net present value (NPV)
  • Internal rate of return (IRR)
  • Discounted payback method
  • Choosing the right investment appraisal method
  • Equivalent annual cost (EAC) method
  • Modified internal rate of return (MIRR)
  • Capital budgeting methods
  • Capital rationing
  • Profitability index (PI)

 

Putting the Pieces Together – The Budget

  • Long- and short-term funding
  • Sources of finance
  • Capital cost models
  • Cost of equity
  • Cost of debt
  • Weighted average cost of capital (WACC)
  • Risk and the cost of capital
  • Capital asset pricing model (CAPM) and the beta factor
  • Optimal capital structure
  • Capital structure models

 

Budget Re-projection – Evaluating Risk And Uncertainty

  • Risk and uncertainty decision rules
  • Worst and best case scenarios
  • The value of perfect information (VOPI)
  • Analysing risk: expected values; standard deviation
  • Sensitivity analysis
  • Simulation model
  • Scenario analysis
  • NPV break-even