FINANCIAL MANAGEMENT

Defining the function and value of finance and the CFO in an organisation

• The importance of corporate finance in business
• Types of corporate finance activities: successful and outdated practices
• How corporate financial decisions are made and how finance drives value
• The Value Chain and how the CFO should view it
• The objectives of the emerging CFO

In-class Task: Research 2-3 CFO jobs on the internet to understand the required qualifications. Develop a comprehensive list of objectives for the position and discover the emerging role of the CFO.

Analysing sheets and statements, liquidity, leverage and different types of value

• Analysing and deriving insights from the balance sheet
• Income sheet vs. balance sheet
• Liquidity and financial leverage
• Accounting value vs. market value
• Balance sheet’s primary formula: Assets = Liabilities + Equity
• Financial concepts such as economic profit, EBIT, capital, equity, and leverage.

In-class Task: Pick a public company and analyse the accounting value and market cap by the defined criteria.

Interpreting a Cash Flow Statement and identifying the business needs accurately.

• Reasons for funding
  • Why would a company need cash?
  • Why would an investor (bank) lend cash?
• How companies access funding via capital markets
• Company credit ratings and the limitations
• Ratio analysis and key metrics from Financial Statements

Assignment: Analyse a Cash Flow Statement and identify the business needs. Calculate and compare ratios for analytical and evaluative purposes.

Evaluating investment options and making the right and timely decisions

• Calculating TMV
• Factoring for input/assumption bias
• Discount rates: Required rate of return (RRR), Risk
• How to calculate WACC
• WACC and evaluating investments
• Review: PV, IRR, time-to-break-even
• Scenario testing: How different assumptions impact the business case NPV, IRR, etc.

Assignment: Determining a company’s WACC or valuation case study.

Exploring investment strategies and methodologies

• Investment methodologies
  • Debt investments (loans)
  • Equity investments (company ownership)
  • Hybrid investments (convertible securities, mezzanine capital, preferred shares)
• Making decisions on investment or divestment based on a business case.
• Make the right strategic decisions at the right time.
• What to include in a business case
• Decision-making on the investment (class discussion)

In-class Task:An investment opportunity will be analysed, using 2 or 3 valuation methodologies, and compared against industry benchmarks. Participants do the calculations and then make a recommendation for or against the investment.

How to develop realistic budgets and performance plans

• Sample budgeting processes: Who is it for? Who is involved?
• Setting growth targets, other financial targets and a long term financial model
• Performance Management process
• Balance profit, growth, and control in dynamic environments
• Ground-up vs. top-down builds
• Explore novel approaches to budgeting
• Forecasting: what, why, and how?

In-class Task: Using your current or previous company as an example, determine how the company budgets, evaluate the effectiveness of their budgeting for Performance Management and identify any changes you would make.

Exploring connections between finance and performance and establishing development areas

• Measuring and monitoring financial and non-financial performance
• Risk and opportunity-adjusted forecasts
• Impact of revenue and expenses cadence for managing quarterly earnings
• Communicating forecast uncertainty
• Accounting treatment for recognising revenue and expenses
• Emerging topics in predictive forecasting, such as rolling forecasting and machine learning (AI).

Assignment: Variance analysis of a financial situation testing rate, volume and mix variances, including a commentary with recommendations for the next period.

How to work with bonds and increase perceived value

• Real vs. nominal interest rates
• Investment grade bonds vs. junk bonds
• The average credit rating of a corporate bond
• Increasing vs. reducing a company’s dividend & its effect on Wall Street
• The impact of corporate share repurchases on dividends and overall total cash returned to shareholders
• Introduction to Hedging

In-class Discussion: If you had $1M to invest and you were limited to investing in bonds, where would you invest your money and why?

High-level review of the Bond Market

• Features of stock markets
• The major players in the stock market
• How to utilise capital markets for profitable outcome
• Stock market crashes and what happened in 2020
• Key equity metrics and how they moved during the above periods
• Efficient markets vs. exploiting market inefficiencies
  • Introduction of S&P 500 and other indexes
• Insider trading
• The impact of technology on the market

Assignment: Pick a company that once thrived in the market in 2020 and now has taken a sharp decline. Run comparisons against the relevant index and comment on why the market reacted as it did.

Why they happen and what to do next

• Definition of M&A, traditional transactions
• Reasons to explore M&A
• How to acquire: steps 1-10
• Alternatives to M&A

Developing, reading and interpreting reports for valuable insights

• Understanding reporting needs, dimensions and data governance
• Interpretation of financial data and decision-making based on data analytics to generate actionable strategies to improve performance
• Financial and non-financial data
• Optimisation of distinct product and geographic segments

Assignment: Analyse and interpret financial data and develop a performance improvement plan.

What’s new in the branch and what’s awaiting us

• Crowdfunding
• Crypto-finance
  • Blockchain technology: What it is and uses beyond crypto
  • Cryptocurrency: Commodity or currency?
  • NFTs
  • Sovereign-backed coins
• Fintechs
• ESG
• Artificial Intelligence
• Mobile banking, open banking
• Robinhood and other disruptive players in the equity markets
• Financial Risk Management