The aim of this session is to provide participants (particularly those who have no prior knowledge of finance) with an introduction to financial statement analysis. The income statement, balance sheet and cash flow statement are introduced, and the key interactions between the income statement and balance sheet are explained. Participants will build simple financial statements using a list of transactions.
Throughout this module participants analyze a group of companies in the food manufacturing industry in order to calculate several income statement metrics. The matching / accruals concept and its impact on the income statement is covered in detail and the link between the income statement and the retained earnings account is investigated. Profitability is analyzed in various ways, using real companies’ financials to calculate key indicators of operating and financial performance. Participants complete a full profitability comparison for the peer group.
This module provides participants with an understanding of the importance of working capital in the context of a company's financing structure and cash flows. The difference between working capital and operating working capital is analyzed using several ratios. Participants complete a working capital analysis for the peer group.
This session illustrates the difference between tangible and intangible assets and their use in a business. Participants learn about purchasing, depreciating / amortizing and selling tangible and intangible assets, and how these transactions are reflected in the financial statements.
Debt and Equity
In this session participants learn how companies finance their operations. The characteristics of debt and equity are analyzed, including how to account for new debt and equity issues. Various kinds of debt instruments are identified, and the main equity accounts are examined. Finally some of the most important ratios are covered.
Cash Flow Statements
Participants learn how to build cash flow statements using historical and forecast balance sheets. The relationship between cash and changes in assets, liabilities and equity accounts is analyzed in detail, allowing participants to understand the full integration of the income statement, balance sheet and cash flow statement. The cash flow session is particularly relevant as a foundation for modeling skills.
Suitability - Who should attend?
- New hires who have joined the firm late and missed the in-house program
- Individuals looking to fill a knowledge gap
- Experienced bankers looking to refresh their technical skills
- Teams employed in financial strategy roles from non-banking corporations
- Graduates preparing to interview for a role in the finance sector
- Students at business school and looking for a career in finance
Outcome / Qualification etc.
Accounting Fundamentals Learning Outcomes
- The structure of financial statements
- The income statement
- Balance sheet
- Cash flow statement
- Key links between the financial statements
- How business transactions are reflected in the financial statements
Income Statement Learning Outcomes
- Sales recognition
- Fixed and variable costs
- Accrual accounting and link between earnings and cash flow
- Expenses or assets – key concepts explained
- Adjusting cost of goods sold and selling, general & administrative expenses for depreciation and amortization
- Adjusting earnings for non-recurring items to produce normalized earnings estimates
- EBITDA, EBIT, net income and EPS
- Margin calculations
Working Capital Learning Outcomes
- Inventories, receivables, payables, prepaid items and accruals
- Definition of working capital and operating working capital
- Operating working capital and the cash cycle
- Working capital ratios and day calculations
Non-Current Assets Learning Outcomes
- Difference between tangible and intangible assets
- Difference between identifiable intangibles and goodwill
- Finite life vs. indefinite life intangibles
- Capital expenditure and asset sales
- Depreciation, amortization and impairments
- Impairment testing
- Finding information in the financials
- Account analysis - inflows and outflows (B-A-S-E)
- Asset efficiency ratios
Debt and Equity Learning Outcomes
- Debt disclosure in published financial data
- Bank debt and bond issues
- Net debt
- The difference between authorized, issued and outstanding shares
- Common stock and additional paid-in capital accounts
- Share issues and repurchases
- Dividends and interest payments
- Coverage and leverage ratios
Cash Flows Statement Learning Outcomes
- The components of the cash flow statement
- Why the cash flow statement is a reconciliation of two balance sheets
- How to divide a company's balance sheet into operating, investing and financing activities
- Calculate a cash flow statement from two balance sheets and an income statement
- Asset sales and impairments/restructuring
- EBITDA as proxy of operating cash flow and potential pitfalls
AMT Training - Financial Modeling Courses
For over 20 years we have been equipping analysts and associates with core skills for banking and finance. Our clients include the top ten investment banks and some of the biggest private equity firms in the world. With offices in...
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