Budgeting, Forecasting and the Planning Process

Overview:

Introduction:

This leading-edge  Budgeting, Forecasting, and the Planning Process training seminar provide the theoretical basis and necessary skills to develop world-class strategic planning, forecasting, and budgeting processes. A strategy is a long-term plan of what an organization is going to do to achieve its overall policy. This  training course will enable delegates to develop a framework that links strategies to annual budget and targets and aims for world-class levels of management and organizational performance.

A budget is a short-term plan of how an organization quantifies the operational activities required to achieve its long-term strategy. This Budgeting, Forecasting, and the Planning Process training course will provide delegates with the skills and forecasting techniques to develop a budget as a plan, and use control budgets and analysis of variances to actual to identify areas in which financial performance may be improved.

Course Objectives:

At the end of this course the participants will be able to:

• Improve their ability to think strategically and participate in the integration of the organization’s strategic management and budgeting processes
• Use forecasting techniques most appropriate to their organization’s strategic planning and budgeting
• Apply the techniques that relate to the key principles of financial management: shareholder wealth maximization; cash flow; time value of money; risk
• Appreciate the behavior of costs and identify the costing methods that may best be used in financial planning, budgeting, and budgetary control
• Use best practice to develop operating budgets, capital expenditure budgets, and cash flow budgets and forecasts in line with organizational strategic objectives

Targeted Audience:

• Line Managers
• Project Managers
• Professional Advisers and consultants who would like to further develop their strategic thinking and decision-making, and refresh and update their skill-sets relating to planning, forecasting, and budgeting, and their linkages

Course Outlines:

Unit 1: Strategic Management and Financing:

• Strategic Analysis, Strategic choices, and evaluation, and strategic implementation
• The Links between Strategy, Forecasting, Planning, Budgeting, Performance Measurement
• Strategic capability and avoiding the Spiral of Death
• Shareholder Wealth maximization, Corporate and Shareholder value creation
• Financial Strategy, Dividend Policy, the Agency Problem, and Corporate Governance
• Long-term Financing
  • Debt and Equity; Cost of Equity using Dividend Growth and Capital Asset Pricing Model (CAPM); Cost of Debt; Weighted Average Cost of Capital (WACC)
• Capital Structure Optimisation Models to minimize WACC
• Using Strategy Maps to link strategies to Performance Measurement: The Balanced Scorecard

Unit 2: Financial Planning, Forecasting, and Risk Analysis:

• The Financial Planning Process and Modelling using Excel
• Statistical Forecasting Tools and Techniques
  • Time series; moving averages; exponential smoothing; Pareto Analysis; trend progression; linear regression; correlation
• Forecasting long- and short-term sales revenues, and sales pricing
  • Porter’s generic strategy of cost leadership and differentiation; Bowman’s strategy clock; full cost pricing; marginal cost pricing; target cost pricing; life-cycle costing; kaizen costing; value-based pricing
• Using Excel for Optimum Product mix decisions
• Short-term Financing, Working Capital, and the Cash Operating Cycle
• Direct and Indirect Cash Flow Analysis and Cash Flow Forecasting using Excel
• Uncertainty and Risk
  • Business Risk
  • Financial Risk
  • Systematic Risk
  • Unsystematic Risk
• The Choices available to minimize and mitigate risk

Unit 3: Cost Analysis Techniques:

• Cost Behaviour and Activities
• Fixed and Variable Costs, Direct and Indirect Costs
• Product Costs and Period Costs
• Cost Allocation and Absorption of Overheads
• Absorption or Full Costing
• Marginal Costing
• Cost-Volume-Profit (CVP) and ‘what-if’ analysis using Excel
• Activity-Based Costing (ABC) and Activity-Based Management (ABM)

Unit 4: Budgeting, Budgetary Control, and Performance Improvement:

• To Budget or Not – Purposes and Reasons for Budgets
• Stages in the Budget Preparation Process
• Preparation of the Master Budget
• Activity-Based Budgeting (ABB)
• Responsibility Accounting and Variance Analysis
  • Standard costing; flexed budgets; budgetary control to measure organizational and management performance
• Advantages, Disadvantages, and Behavioural Aspects of Budgeting
• The Conflict between Performance Improvement and the Costing System
• Lean thinking and integrating continuous performance improvement into the Budget Process

Unit 5: Project Appraisal and Capital Budgeting:

• The Time Value of Money
• Future Values
• Present Values
• Discounted Cash Flow (DCF)
• Capital investment Project Appraisal
  • Accounting Rate of Return (ARR); payback; Net Present Value (NPV); Internal Rate of Return (IRR); Modified Internal Rate of Return (MIRR); Discounted Payback; Equivalent Annual Cost (EAC)
• Project Risk
  • Sensitivity Analysis; simulation; scenario analysis; NPV break-even
• Capital Rationing
• Capital Budgeting and the Profitability Index (PI)