Understanding Project Financials for SDLC Professionals

3 Days

Description

Minimize Risk in Financial Decision Making!

As an experienced project manager, you're faced with making tough decisions - many involving money that ultimately affects the bottom line of your organization. Without a sound understanding of finance and accounting principles, it can be risky. What is the purpose of this project? How do you make sense of the constraints under which you are asked to operate? When are the assumptions of the project no longer valid? How should a project manager make sense of conflicting priorities? When should a project be terminated? A lot may ride on your ability to understand the language and logic of accounting and finance. This two day program is offered to give you the confidence to understand just these sorts of issues.

The Financial Concepts and Principles, Step By Step, in Easy to Understand Terms

This workshop will demystify terms and financial practices that are most used in business today. You will examine and experience in detail the financial information and practices you need, presented in easy to understand terms and concepts. Step by step, you will be exposed to the framework of the finance and accounting principles that make a organization run, measure results and make profit. You'll also know how to "speak the language" of your Finance and Accounting staff and more clearly plan your financial goals. After two days, you can confidently make better informed financial decisions that will affect your project, your organization, and your career.

A Clear Understanding of Financial Resources and Financial Goals

Gain a clear understanding of how each department or resource within your firm operates from a financial standpoint. Understand how your project was evaluated for selection based upon characteristics of risk and return. From balance sheets and financial statements to annual reports  you'll examine and interpret with ease. You'll understand the terminology of finance, how to read the major accounting reports, and how to put everything into perspective. You'll know what questions you need to be asking and the financial objectives and financial results you need to achieve.

Key skills you can begin using immediately:

  • 1.Understand the fundamental concepts and terms of corporate finance
  • 2.Better understand the financial risks and benefits of your financial decision-making
  • 3.Utilize all of the important sources of financial information
  • 4.Better determine financial weaknesses and opportunities for growth and profit
  • 5.Understand the complete accounting life cycle and how each part affects your department or division
  • 6.Know the intricacies of a Master Budget - how department budgets interact
  • 7.Know how financial ratios are key to an Annual Report in determining liquidity, solvency, asset utilization and profitability
  • 8.Discover how the time value of money influences project selection, capital budgeting, stock and bond valuation and valuation models
  • 9.Learn to quickly analyze financial forecasting models to determine profit and breakeven production and sales levels
  • 10.Understand the use of trade credit in financing the cash needs of your department
  • 11.Monitor your firm's organizational performance through the financial statement analysis of annual reports
  • 12.Gain a thorough understanding of the complete accounting life cycle  income statement, statement of shareholders equity and the balance sheet
  • 13.Develop better financial tracking skills to help you achieve financial objectives
  • 14.Understand how industry and Governmental Reporting standards affect financial reporting
  • 15.Quickly interpret and understand the terminology of any Financial Statement
  • 16.Know what questions you should be asking of the Accounting and Finance Professionals in your organization
  • 17.Understand business valuation techniques and the concepts and mathematics involved
  • 18.Know the Finance and Accounting principles that make a business run
  • 19.Be able to see your firm the way an investor would view it, from a financial perspective
  • 20.Understand the financial components of project reporting

No Upcoming Public Classes

There are currently no public events available for this course. However, you can submit a request for a new date and we will try our best to get you into a Understanding Project Financials for SDLC Professionals class.

Private Training Available
No date scheduled, don’t see a date that works for you or looking for a private training event, please call 651-905-3729 or submit a request for further information here.
request a private session or new date

Course Overview

1. The Economic Foundation of Finance

Firms are economic units. Economic units use economic principles to drive economic activity. Accounting is the language of that activity. Ultimately, understanding Accounting and Finance comes down to first understanding the underlying concepts of economics.

Supply and Demand

Average Costs

Marginal Costs

Cost Benefit Analysis

Exercise  Marginal and Average Cost Behavior

2. Accounting Fundamentals

The first section of the course presents the essential concepts and terminology of the accounting profession. The accounting equation is introduced as the foundation for both the analysis of financial transactions and for the General Journal and General Ledger as the means of recording those transactions.

  • The Role of Accounting
  • Types of Accounting
  • Management Accounting
  • Financial Accounting
  • The Accounting Equation
  • Accounts
  • Self-Checking Property
  • Debits and Credits
  • Accounting Books
  • The General Journal
  • General Journal Rules
  • Accounts

3. Reporting with Financial Statements

Once the financial transactions have been analyzed and recorded, the accounting cycle is not complete until those transactions have been summarized and reduced to forms that can be read and interpreted by financial analysts and the firm's management.

  • The Accounting Cycle
  • The Three Financial Statements
  • Income Statement
  • Statement of Shareholder Equity
  • Balance Sheet
  • Retail Firms
  • Gross Margin
  • Income Statement
  • Manufacturing Firm
  • Three Types of Inventory
  • Materials
  • Work-in-Process
  • Finished Goods
  • Cost Flows for a Manufacturing Company
  • Corporate Financial Statements - Contributed Capital
  • The Corporate Balance Sheet
  • Exercise  Creating a set of Financial Statements

4. Reading Financial Statements

Once the accountants have produced the financial statements, analysts utilize financial ratio analysis as a first step in analyzing these statements. In preparation for this analysis, a fourth financial statement, the statement of cash flows, is introduced.

Purposes and Methods of Financial Statement Analysis

  • The Statement of Cash Flows
  • Liquidity Ratios
  • Current Ratio
  • Quick Ratio
  • Cash Ratio
  • Solvency Ratios
  • Total Debt Ratio
  • Times Interest Earned
  • Asset-Utilization Ratios
  • Inventory Turnover
  • Days' Sales in Inventory
  • Receivables Turnover
  • Days' Sales in Receivables
  • Profitability Ratios
  • Profit Margin
  • Return on Assets
  • Return on Equity
  • Du Pont Chart
  • Annual Reports
  • Governmental Requirements
  • Auditor's Opinion
  • Footnotes
  • Exercise  Evaluating a Corporation's Annual Report

5. A More Sophisticated Look  Return on Invested Capital

Return on Invested Capital (ROIC) is a means often used by both managers and investors to visualize the quality of the firm's earnings. Specifically it calculates the efficiency of the firm in allocating its capital to profitable investments. It is a useful tool for assessing the overall performance of the firm and is a useful addition to financial ratio analysis.

  • Purpose of ROIC
  • Relation to Du Pont Analysis
  • ROIC versus ROE
  • ROIC Calculations
  • ROIC Formula
  • Exercise  Evaluate the Quality of a Corporation's Earnings

6. Forecasting the Organization's Growth

A firm's financial statements provide the preliminary information necessary to help determine the financial needs for the coming fiscal year. The pro forma income and balance sheets are introduced as tools used to forecast the increase in assets required to meet various levels of financial growth.

  • Pro Forma Balance Sheet and Income Statement
  • External Financing Requirements
  • Internal Growth Rate
  • External Growth Rate
  • The Financial Forecasting Model
  • Percentage of Sales Approach: The Pro Forma Income Statement
  • Dividend Policy
  • Retained Earnings
  • Percentage of Sales Approach - The Pro Forma Balance Sheet
  • External Financing Requirements - Formula Approach
  • Sustainable Growth Rate
  • Exercise  Determining your Project's true Funding Needs

7. What is the Role of Risk

The financial decisions of the firm are made against a backdrop of uncertainty, thus it is necessary that risk be factored into financial analysis. The risk analysis model is based upon a differentiation between business and market risks that relates only appropriate risk to the return on an investment.

  • Risk versus Return
  • Risk versus Return Using T-Bills
  • Security Market Line
  • Required Rate of Return Formula
  • Exercise  Determining Risk for a Portfolio of Projects

8. A Dollar Today vs. a Dollar Tomorrow

The Time Value of Money model recognizes that, because of the opportunity costs involved, a dollar in the future is not worth as much as a dollar in the present. Present value concepts are developed from the familiar compound interest formula, and the use of net present value as a means of comparing cash flows is illustrated.

  • Time Value of Money
  • Compound Interest Formula
  • Future Value
  • Future Value - Rule of 72
  • Present Value
  • Net Present Value
  • Annuities
  • Present Value of an Annuity
  • Internal Rate of Return (IRR)
  • Analyzing Project Investments
  • Exercise  looking at the true return on a Project

9. From Where Does the Money Come?

Raising money for the operation and growth of the firm has a cost. Decisions about what projects to fund, how fast the firm should grow, and where capital should be raised all depend upon the cost of that capital. The sources of capital are discussed along with the characteristics, advantages, and disadvantages of each.

  • External Financing Sources
  • Types of Bonds
  • Mortgage Bonds
  • Debentures
  • Bond Terminology
  • Characteristics of Preferred Stock
  • Characteristics of Common Stock
  • Target Capital Structure
  • The Weighted Average Cost of Capital (WACC)
  • Determining the Capital Budget
  • The Security Market Line and the WACC
  • Raising Capital
  • Financial Leverage
  • Leverage and the Capital Structure
  • Corporate Taxes and Capital Structure
  • Exercise  Determining an organization's Capital Budget

10. Ranking and Selecting Projects

Net present values and internal rate of return methodologies can be used to evaluate the economic viability of a project and to select between alternative projects. This section of the course applies these methods to the various cash flows that are important in analyzing potential projects (changes in depreciation methodologies, increases/decreases and returns of working capital, salvage value, etc.)

  • Project Cash Flows
  • Incremental Cash Flows
  • Evaluating Net Present Value Estimates
  • Ranking the Project Portfolio
  • Scoring Models
  • Total Cost of Ownership
  • Determining Project Value
  • Exercise  Ranking your Project

11. Using Accounting Information to Manage

Financial information can be used for managerial decision making as well as for financial analysis. Management accounting begins with the development of the relationship between cost, volume, and profit. The cost-volume-profit formula can be utilized as the basis for profit planning and breakeven analysis.

Cost Behavior

  • CVP Equation
  • Profit Planning
  • Breakeven Analysis
  • Exercise  Will your Project breakeven?

12. Cash is King  Basics of Cash Management

Inventories, payables, receivables, revenues, cost-of-goods sold; ultimately, it all comes down to cash. Whether it is being able to pay bills, reimburse creditors, or distribute funds to owners, cash flow dominates. Companies that grow too fast (profitable companies) can be forced into bankruptcy by a lack of cash. Tracking the sources and uses of cash is at the top of our tasks.

  • Sources of Cash
  • Uses of Cash
  • The Cash Flow Statement
  • Integrating Cash Flow with the other three financial statements
  • Exercise  Reconciling the Financial Statements

13. Introduction to Budgeting

The budgeting process is built around the master budget. The master budget integrates the many subsidiary budgets to produce not only budgetary figures but also a set of pro forma financial statements. These forms can be analyzed to determine the value of the financial decisions and assumptions underlying the budget.

  • Purposes/Benefits of Budgeting
  • Master Budget
  • Subsidiary Budgets
  • Sales Budget
  • Selling Budget
  • Production Budget
  • General and Administrative Budget
  • Capital Budget
  • Cash Budget
  • Pro Forma Statements
  • Pro Forma Income Statement
  • Balance Sheet (Beginning)
  • Pro Forma Balance Sheet

14. Variance Accounting

In comparing actual versus budgeted numbers, total figures can be misleading if the components of those totals are not considered separately. Variance accounting was developed to allow managers to analyze budget performance in just such a manner. Using variance accounting to evaluate project performance (schedule and cost) presents a special set of issues that must be considered.

  • Responsibility Accounting
  • Variance Accounting
  • Flexible Budget
  • Flexible Budget in Graphical Form
  • Earned Value Analysis
  • Planned Value (PV)
  • Actual Cost (AC)
  • Earned Value (EV)
  • Variances
  • Schedule Variance
  • Cost Variance
  • Performance Indexes
  • Cost Performance Index
  • Schedule Performance Index
  • Estimate at Completion
  • Exercise  Calculating Variances

 

No Upcoming Public Classes

There are currently no public events available for this course. However, you can submit a request for a new date and we will try our best to get you into a Understanding Project Financials for SDLC Professionals class.

Private Training Available
No date scheduled, don’t see a date that works for you or looking for a private training event, please call 651-905-3729 or submit a request for further information here.
request a private session or new date

Prerequisites

Who Should Attend Project Financials Training

Anyone involved with the selection, management, or execution of a project will benefit from this course, including:

  • Project Managers
  • Business Analysts
  • Program Managers
  • Technical Leads
  • Systems Architects
  • Developers
  • Quality Assurance

 

 

No Upcoming Public Classes

There are currently no public events available for this course. However, you can submit a request for a new date and we will try our best to get you into a Understanding Project Financials for SDLC Professionals class.

Private Training Available
No date scheduled, don’t see a date that works for you or looking for a private training event, please call 651-905-3729 or submit a request for further information here.
request a private session or new date