Corporate E-Learning

Welcome to the Understanding Budgets and Financial Reports workshop. Everyday businesses deal with budgets and financial reports in some form or fashion. At minimum, business managers review budget numbers and run financial reports for decision-making and reporting to shareholders and Federal regulators once a month. Many companies devote the last few months of the calendar year to creating budgets for the next calendar year. In addition, organizations create and disseminate year-end financial reports to investors. The goal of this workshop is to give the participant a basic understanding of budgets and financial reports so they can hold relevant discussions and render decisions based on financial data. This course will define key terms like ROI, EBIT, GAAP, and extrapolation. Furthermore, this one-day course will discuss commonly used financial terms, financial statements, budgets, forecasting, purchasing decisions, and laws that regulate the handling of financial information.

In order to understand the concepts of budgets and financial reports, it is best to get to know essential terminology. Understanding basic financial terms and concepts will serve as the foundation for the rest of this course. In addition, having a foundation of financial terminology will help you understand discussions and other financial communication at both the individual and organizational level. In this module, you will learn key financial terminology and concepts that will help you build your financial vocabulary and knowledge. You will learn the following terms and concepts: • What is finance • Commonly used terms • Key players • Important finance organizations • Generally Accepted Accounting Principles (GAAP)

Financial statements are the communication tools for the organization. There are many aspects of a business’s financial dealings reported in financial statements. Revenues coming in and expenses going out are key data that require reporting. Tangible items like equipment, property, and cash reserves are also reported in financial statements. Understanding these financial statements opens the door to analyzing finance data for budgeting, controlling, and making decisions. This module will discuss the following topics: • Balance sheets • Income statements • Statement of retained earnings • Statement of cash flows • Annual reports The two most widely known statements are the balance sheet and income statement.

While financial statements report the financial status of the business, it does not automatically give the condition or financial health of the business. Ratios are calculations that help to simplify the many numbers on the various financial statements into a number that is easier to understand. Understanding the various ratios that can be calculated will help you examine and analyze financial statements, giving a clear picture of the financial health of the business. This module discusses five basic ratios that will help you analyze the financial statements of your organization. The following are the topics discussed in this module: • Income ratios • Profitability ratios • Liquidity ratios • Working capital ratios • Bankruptcy ratios

In this module, we are going to learn more ratios and calculations for analyzing financial statements. Here are the topics for this module: • Long-term analysis ratios • Coverage ratios • Leverage ratios • Calculating return on investment (ROI)

Budgets are critical for businesses. Many stakeholders within the organization require that budgets be submitted for review every year. The budget sets spending limits and usually is broken down to the individual departments or business units. Typically, budget numbers are reviewed every month to determine how well the company is keeping within the budget. Understanding budgets will help you create and manage one for your areas or departments. Furthermore, knowing how a budget is formed will give you working knowledge that will increase your value to the organization. In this module, you will learn the following on budgets: • Common types of budgets • What information do I need? • Who should be involved? • What should a budget look like?

Budgeting does not have to be a difficult task. Knowing what information you should use and how to put it all together ahead of time will make budget making a painless process. Having a systematic approach to making a budget will reduce the time you need to spend on creating a budget. In this module, you will learn the following techniques that will make budgeting easier: • Factoring in historical data • Gathering related information • Adjusting for special circumstances • Putting it all together • Computer based methods

Forecasting is essential to assessing how much the budget should be. Various techniques and tools can be used to help forecast costs. While no technique is a guarantee, using a standard tool will help you be more consistent in forecasting. In this module, the following forecasting techniques will be discussed: • Using the average • Regression analysis • Extrapolation • Forma financial models

Once the budget is determined, it is essential to manage it to ensure that the organization or department is adhering to the allotted costs. Sometimes things may happen that could cause necessary changes to the budget. In any case, knowing how to monitor the budget and make approved changes is essential in managing the budget. This module will discuss the following: • How to tell if you’re on track • Should your budget be updated • Keeping a diary of lessons learned • When to panic

Sometimes, you may be asked to purchase something on behalf of the organization. When purchasing, it is always a good practice to determine if the expense is worth the investment. There are factors that you should determine before making the purchasing decision. Being able to make purchasing proposals by showing the cost and benefit to the organization will help you save money for your company and make you more valuable to the management staff. This module will discuss four tools in making smart purchasing decisions. Here are the topics for discussion: • 10 questions you must ask • Determining the payback period • Deciding whether to lease or buy • Thinking outside the box

When dealing with corporate finances, there are strict regulations that shape the way financial information is gathered, stored, and reported. As a manager, you must understand why the laws exist, what they require, and how you factor into the situation. There are severe consequences when these laws are not followed. There may be controls already in place at your company, but if you intend on being involved with the financial activities in your company it is best to be familiar with some of the legal requirements business must follow. In this module, you will learn the following topics: • A brief history • The Sarbanes-Oxley Act • CEO/CFO certification • 8th Company Law Directive

Although this workshop is ending, we hope that your journey to improve your understanding of budgets and financial reports is just beginning. Please take a moment to review and update your action plan. This will be a key tool to guide your progress in the days, weeks, months, and years to come. We wish you the best of luck on the rest of your travels!