Understanding Financial Decision-Making for Managers

In today’s business environment, managers from all functional areas must grasp the financial implications of their decisions. Whether it’s a new project, cost-saving measure, or growth strategy, understanding the financial impact is essential. Additionally, managers must be equipped to analyze the broader corporate financial environment to navigate challenges effectively.

This workshop is designed to provide professionals with a comprehensive understanding of key financial principles in a clear and accessible manner. By the end of this workshop, participants will be able to make informed business decisions related to budgeting, cost management, investment evaluation, and more.

Key Topics Covered:

1. Basics of Financial Accounting and Understanding Financial Statements

• Balance Sheet:
  • Overview of assets, liabilities, and equity.
  • How to read and interpret a balance sheet.
• Profit and Loss Account:
  • Understanding revenue, expenses, and profitability.
• Cash Flow Statements:
  • Differentiating between cash flow and profit.
  • Analyzing operating, investing, and financing cash flows.
• Profit vs. Cash Flow Analysis:
  • Importance of cash flow in business sustainability.
  • How profit and cash flow impact decision-making.

2. Working Capital Management

• Types of Working Capital:
  • Understanding permanent and temporary working capital.
• Operating Cycle and Components:
  • The importance of the operating cycle in managing working capital.
  • Key components: inventory, receivables, and payables.
• Working Capital Management and Decision-Making:
  • Strategies for optimizing working capital.
  • Impact of working capital decisions on business operations.

3. Cost Information for Decision-Making and Budgeting

• Cost Concepts:
  • Introduction to cost concepts with a focus on marginal costing.
• Key Cost Definitions:
  • Important cost terms and their relevance in decision-making.
• Decision-Making Scenarios:
  • Make or Buy: When to outsource vs. in-house production.
  • Shut Down or Continue: Evaluating business unit viability.
  • Sell or Process Further: Deciding on additional processing.
  • Domestic vs. Export Sales: Assessing market profitability.
• Budgeting:
  • Importance of budgeting in financial planning.
  • Types of budgets commonly used in business.
  • Case studies and practical examples to illustrate budgeting concepts.

4. Evaluation of Investment Projects

• Capital Budgeting Approaches:
  • Understanding different methods of capital budgeting.
  • Focus on Net Present Value (NPV) and Internal Rate of Return (IRR).
• Features of Capital Budgeting Decisions:
  • Key considerations in evaluating long-term investments.
• Practical Application:
  • Hands-on case studies to apply capital budgeting techniques.
  • Illustrations to reinforce learning.

5. Interactive Q&A Session

• Open Discussion:
  • Addressing participant queries.
  • Practical advice and insights from real-world scenarios.