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Budgeting, Forecasting and the Planning Process



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)

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