About
COURSE OBJECTIVE
To develop an understanding and proficiency in applying the various economic principles, corporate finance ideas and concepts of financial management in analysing alternative investment decisions in a business operation.
As businesses become increasingly competitive, executives across the board are required to improve decision-making and understanding of investments and project proposals. In other words, executives need to have an in-depth understanding of financial analysis before they make any investment decisions for their businesses.
Financial Analysis of Investment is designed for finance executives and management in corporates and is also relevant to professionals in advisory firms. This course will benefit:
• Financial Controllers
• Finance Managers
• Financial Planners
• General Managers
• Managing Directors
• Directors of Strategic Planning
• Financial Directors
• Professional Advisors
This course will also benefit executives who have basic but limited financial background, who feel that they could do better with renewed knowledge and understanding of the essentials of financial analysis, investment planning, credit analysis, assessing the value of various investment assets etc. Through the trainer’s expertise and industry experience, you will emerge from this course with the ability to apply analytical techniques to investment decision-making for your business.
KEY LEARNING OUTCOMES
• Develop an understanding of how to gain maximum benefit from various aspects of investment appraisal
• Appreciate the broader economic, political and organisational factors and how they can be integrated with financial decision-making for investments
• Be able to mitigate risks by defining and measuring risks
• Develop your skills on a range of investment analysis techniques
• Learn to conduct diversification reviews and establish efficient portfolios
Outline
Day One
Introduction
This session revises the basics of financial analysis through (re)examining fundamental concepts. These concepts underlie all advanced techniques and even for seasoned professionals are worth re-visiting.
• Revising security pricing principles
• Efficient markets and pricing
• Thinking in terms of options
• References and resources
Investment Planning
This session looks at typical applications and where the need for financial analysis arises. Typically, executives miss important areas where financial analysis could be of assistance.
• Strategy analysis and profitability studies
• Investment and capital rationing
• Capital budgeting under uncertainty
• Valuation and its place
• Time value of money among various investment decisions/ options - compounding and discounting
Tools for alternative investment decisions and capital budgeting strategies
This session explores and examines the virtues and vices of several commonly employed “rules”. As there are advantages and disadvantages to each of these commonly employed “rules”, knowing their limitations is critical.
• Net present value
• Annuity equivalent
• Payback methods
• Internal rate of return
Financial ratio analyses and their impact on investment debt, serviceability and liquidity
This session provides an introduction to credit analysis to enable you to understand the criteria you need to meet to obtain a loan from banks.
• Solvency
• Profitability
• Security
• Interest cover
• Documentation
• Capital use efficiency
Day Two
Which Discount Rate?
Numerous techniques use discount rates of one type or another. This session looks at ways to estimate a defensible discount rate.
• The capital asset pricing model
• The cost of capital
• Equity vs. debt and Weighted Average Cost of Capital
• Discount rates for projects
Different methods to assess the value of various investment assets
• Comparable company ratios
- earnings
- cash flow
- sales
- others
• Discounted cash flow
Creating effective investment portfolios through financial diagnostics
• Risk tolerance of various investors
• Estimate the after-tax cash outflow for various alternatives
• Calculate the effective interest rates or real cost of borrowing under various repayment conditions
Risk and return dimensions of financial investments
• Measuring returns
• Meaning of risk
• Measuring risk
• Portfolio risk
Pulling all areas together
• Diversification review
• Asset allocation
• Efficient portfolios
Specialist topics
Dealing With Intellectual Property
• How does the law help?
• How does economics help?
• How do we account for IP financially?
• Valuation issues with IP
Hi Tech Companies and Finance
• Are hi tech companies different?
• Options vs. bonds in valuing companies
• What the dotcom boom taught us
