Financial Analysis for Business Strategy

An Accounting and Finance Course

*This course can be tailored or customized to your specific needs.

Course Overview

Strategic business decisions are rooted in sound financial management principles. In this exploration of financial decisions, participants learn cost analysis, capital budgeting, and financial analysis, including cost behavior and cost drivers in organizations, Cost-Volume-Profit and Break-Even analyses, and What-If and Sensitivity analyses.

Objectives

  1. Identify strategic techniques for cost analysis
  2. Conduct a financial analysis utilizing multiple techniques
  3. Apply the Cost-Volume-Profit model to business strategy
  4. Complete break-even analysis calculations

Lesson 1: Cost Analysis

  • Strategic Cost Management Objectives
    • Cost decisions are made according to the value they add to both the business and the customer
  • Relevant Cost Strategy
    • Identifies and eliminates sunk and overhead costs
  • Evaluating Opportunity Costs
    • Comparing every monetary cost and consequence for two or more options
  • Balance Scorecard Strategy
    • Measures four key perspectives: financial, customer, internal business processes and employee growth and development

Lesson 2: Capital Budgeting

  • Upfront Investment
  • Benefits and Savings
  • Taxes and Depreciation
  • Loan Cost

Lesson 3: Financial Analysis

  • External analysis – Completed by stock holders, banks, creditors, and the general public
  • Internal analysis – Completed by financing and accounting departments
  • Short-term analysis – Involves current assets and current liabilities
  • Horizontal analysis – Involves financial statements over a number of years
  • Vertical analysis – Involves financial ratios for only one year

Lesson 4: Cost-Volume-Profit

  • Analyzing how Cost, Sales Volume, and Price affect Profit
  • Contribution Margin – Income Statement
  • Gross Margin vs. Contribution Margin
  • Contribution Margin Ratio
  • Calculating the break-even points in units

Lesson 5: Break-Even Analysis

  • Total sales/revenue = total expenses
  • Forecasting costs and sales
    • Identifying Fixed Costs
    • Identifying Variable Costs