Advanced Financial Analysis


Course Calendar


Outline PDF



  • Accounting Finance

Course Description

 
Why Attend
 
This course brings together the key elements of financial statement analysis to help participants improve their financial analysis skills, enable them to ask the right questions, see the real risks facing businesses and investors, feel more confident in their ability to comment on business activities and performance and analyze financial health for management. These skills and the required technical knowledge will be put into practice throughout the course using interactive examples and case studies, putting theory and technique into context.
 
Course Methodology
 
The course uses a mix of interactive techniques, such as brief presentations by the consultant, group exercises and case studies using Excel to apply knowledge acquired throughout the course, followed by  participants' presentations of the results.
 
Course Objectives
 
By the end of the course, participants will be able to:
 
  • List and differentiate between the important components of basic financial statements
  • Explain financial statements' ratios and formulate Excel sheets and graphs for financial statements analysis
  • Illustrate creative accounting schemes and critique the validity of accounting rules used
  • Assess the quality of financial reports and evaluate quality of earnings and cash flows reported
  • Analyze the financial position and performance of a company over a period of time and draw conclusions regarding its sustainability
 
Target Audience
 
Chief accountants, accounting managers, senior accountants, finance directors, finance managers, financial analysts, financial controllers, financial accounts managers, heads of finance departments, credit controllers, corporate financiers, credit risk analysts, bankers, and relationship managers.
 
Target Competencies
 
Understanding financial statements
Reading annual reports
Processing financial data
Financial analysis
Credit analysis
Risk management
Criticizing financial reporting standards used
Applying professional skepticism
Identifying financial fraud
 
Course Outline
 
  • Introduction to advanced financial analysis
  • Users of financial data
  • Types of available financial information and the annual financial report
  • Content of the annual financial report and ways to read it
  • Non-financial elements of the annual financial report and their importance
  • Understanding the income statement, balance sheet and cash flow statement
  • Other comprehensive income components
  • How to access data from Tadawul, ADX, DFM, Bloomberg and Yahoo! Finance
 
Basics of industry analysis and analyzing ratios using Excel
 
  • Industry analysis: understanding Michael Porter's five forces shaping industry's long term profitability
  • Common size analysis to improve comparability
  • Calculating trends and growth patterns
  • Ratio analysis to assess key aspects of company performance:
  • Profitability
  • Liquidity
  • Efficiency and working capital management
  • Financing structure and risk
  • Altman Z-score to assess potential bankruptcy
  • Using graphical representation
 
Financial cosmetics and creative accounting
 
  • Last In First Out (LIFO) versus First In First Out (FIFO) and the effect on profits and taxes
  • Explaining LIFO reserve and LIFO liquidation
  • Converting reported inventory from LIFO to LIFO for purposes of comparison
  • Valuing inventory at net realizable value: looking for signals of obsolete inventory
  • Analyst's consideration when examining inventory
  • Evaluating how capitalizing versus expensing costs affect financial statements and ratios
  • Effect of different depreciation methods on financial statements
  • Impairment and revaluation of property, plant and equipment
  • The choice of operating lease or finance lease
  • Using special purpose vehicles for balance sheet manipulation
  • Joint ventures: using equity method
  • Consolidation: inflating goodwill by using full goodwill instead of partial goodwill method
  • Employees' compensation: completeness of end-of-service indemnity obligation
  • Stock options and stock grants instead of bonuses
  • Case study: creative accounting scandals of Enron, Worldcom, Parmalat
 
Assessing quality of financial reports
 
  • Framework for assessing company's quality of financial reports
  • Potential problems that affect quality of financial reports
  • Defining concept of sustainable and persistent earnings
  • Beneish model: M-score to describe degree to which earnings are manipulated
  • Evaluating the earnings quality of a company
  • Evaluating the cash flow quality of a company
  • Indicators of balance sheet quality
  • Sources of information about risk
  • Case study: analysis and interpretation of company performance
 
Integration of financial statements analysis techniques
 
  • Using a framework for financial statements analysis
  • Evaluating quality of a company's financial data
  • Recommending adjustments to improve quality and comparability
  • Case study: investment decision at Nestle

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