How to Prepare, Understand and Use Budgets

Introduction

This two days course is designed to enable participants to focus on:

  • Interpreting financial statements
  • Planning and budgeting
  • Cost control
  • Capital budgeting
  • Applying cost-volume-profit analysis
  • Utilizing breakeven analysis

How you will benefit

  • Defend the importance of linking an organization's budget with its strategic plan
  • Demonstrate how the budget relates to the key financial statements: balance sheet, income statement, and cash flow
  • Prepare the key elements of an operating and capital budget and evaluate the different budgeting approaches used
  • Apply cost control tools, analyze management variance reports and take proper corrective action
  • Calculate different capital budgeting evaluation techniques as included in a capital expenditure proposal
  • Utilize cost-volume-profit analysis in making budgeting decisions

Who should attend

People from small and large organizations will benefit equally

What you will cover

Module 1: Planning and the functions of management

  • The critical functions of management
  • Aligning the budget with the strategy of the organization
  • Road map to strategy
  • Budget as a planning tool
  • Control: the missing link
  • Planning pitfalls

Module 2: The key financial statements

  • The accounting system
  • The income statement
  • The balance sheet
  • The cash flow statement

Module 3: Budgeting - process and approaches

  • The advantages of budgeting
  • The budget process
  • Rolling budgets
  • The master budget
  • Operating and capital budgets
  • The budgeted financial statements
  • Approaches to budgeting:
    • Incremental budgeting
    • Zero based budgeting
    • Flexible budgeting
    • Kaizen budgeting and continuous improvement
    • Activity based budgeting
    • Tools of forecasting
    • Direct and indirect costs
    • Characteristics of an effective budget
    • Problems in budgeting

Module 4: Cost control

  • Budget as a control tool
  • The control process
  • Characteristics of an effective control system
  • Responsibility reporting
  • Variance analysis: identifying the components of variance
  • Variance analysis: taking the corrective action

Module 5: Capital expenditure budgeting and analysis

  • Time value of money
  • Simple versus compound interest
  • Identifying and analyzing cash flows
  • The discount rate: using cost of capital
  • Net Present Value (NPV)
  • Internal Rate of Return (IRR)
  • Profitability Index (PI)
  • Pay-Back Period (PBP)
  • Accounting Rate of Return (ARR)
  • Approval for Expenditure (AFE)
  • Sensitivity and risk analysis

Module 6: Cost-Volume-Profit analysis (CVP)

  • Identifying the fixed costs and variable costs
  • Computing breakeven point in units
  • Computing breakeven point in sales
  • Assumptions of CVP analysis
  • Using CVP in budgeting decisions

 

Study Time

This practical training program is designed with:

16 hours training - 2 days

Schedule

Vancouver
2,500 $
12 Jul & 13 Jul 2023