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Financial Analysis for Junior Associates

Designed for Junior Associates who are seeking to develop a stronger knowledge of finance and financial analysis techniques to apply to their everyday working lives in advising their clients.

Financial Analysis for Junior Associates Training Course

A 1.5 day course

This course is designed for Junior Associates employed who are seeking to develop a stronger knowledge of finance and financial analysis techniques to apply to their everyday working lives in advising their clients. This course is designed to help junior associates who are in daily contact with banks and financial institutions or who need to develop an understanding of finance in the context of the improving profitability through accounting and financial techniques. The course therefore strives to develop a general understanding of finance and the techniques used in financial analysis. The course focuses on a number of specific objectives, including the following:

  • Developing an understanding of core financial principles;
  • The differences between equity and debt and the core interests on investors and lenders;
  • Core financial drivers in business;
  • Review of the key interests of bankers and investors in finance;
  • A detailed review of the key financial statements to understand key drivers of profit, financial risk and liquidity and cash flow analysis;
  • Understanding the use and application of financial statements;
  • A detailed review of the content of each of the financial statements including a review of a limited number of key accounting principles;
  • The fundamental principles of ratio analysis and early warning signals for company development;
  • Review of the key measures of profitability and understanding the story behind the figures;
  • The differences between cash and profit and its importance in corporate
  • Development including the accruals concept in accounting;
  • Financial risk, gearing and the importance of liquidity for the going concern derived from the Balance Sheet;
  • The importance of cash flow generation in business as well as for debt repayment and company valuations from the cash flow statement;
  • How financiers and investors use cash flow forecasts and free cash flow to assess their financing decisions
  • The use of free cash flow in understanding how companies can honour their annual debt service

Given the intensity of the course and the broad range of materials that will be covered, the delegates will be required to undertake pre-course preparation work and will also be required to prepare exercises between course sessions. Delegates will therefore need to arrange their work schedules to accommodate these additional activities. 

Session 1 - Introduction to Finance

  • Introduction to key financial drivers in business
  • Shareholder value and how it is measured
  • What drives corporate performance and shareholder value
  • The concepts of debt and equity
  • Key differences between debt and equity and the appropriate circumstances of                  when to use either form of finance for investment purposes
  • Review of principle financial ratios used to measure return on equity and return on capital employed
  • Calculating the Weighted Average Cost of Capital and its importance in terms of measuring ROCE
  • Principles of risk in business
  • The risk / return trade-off in business 

Session 2 - Introduction to the Financial Statements

  • Introduction to the three principal financial statements
    • The profit & loss account
    • The balance sheet
    • The cash flow statement
  • In depth analysis of the client company’s Profit and Loss Account
  • Detailed discussion and analysis of the notes in the P&L.
  • The importance of different calculations of profit
  • Differences between EBIT, EBITDA and Net Profit
  • The importance of operating margin in assessing operating efficiency
  • Performance trend analysis using the Profit and Loss Account 

Workshop: In depth analysis of the company’s Profit and Loss Account including review and explanation of all entries in the P&L. Review of all notes linked to this financial statement. The delegates will calculate key ratios and profit margins to understand the performance trends. 

Overnight prep: The delegates will be required to review the financial statements (Income Statement) of a major Romanian company and calculate the key financial ratios covered during the day’s sessions for presentation the next day during the training workshop.

Session 3 - The Balance Sheet

  • Use and purpose of the Balance Sheet
  • The differences in presentation
  • Fixed assets, tangible & intangible assets
  • Goodwill and impairment
  • Depreciation & amortisation
  • Current assets, Stock / inventory, receivables and payables
  • Debtors & prepayments cash and other types, e.g. short term investments, assets for sale
  • Ratio analysis using the balance sheet
  • Gearing and its use in assessing financial risk in the business
  • Assessing the ability of different companies (and sectors) to carry varying levels of gearing dependent on their business models and revenue volatility.
  • Liabilities – current and long term
  • The company’s loan book – short term and long term facilities
  • Retained profits
  • Share capital and reserves 

Workshop: The delegates will review a corporate balance sheet in detail, assessing its different components and their relevance to the company’s continued success as a going concern. 

Session 4 – Liquidity and Working capital management

  • The importance of liquidity for the going concern
  • The importance of liquidity preservation in a post Covid environment
  • Different measures of liquidity and differences in measures depending on the company’s business model
  • A review of short and long term liquidity from the balance sheet
  • Assessing a company’s liquidity and working investment needs through the Cash Conversion Cycle
  • The importance of effective working capital management for the going concern
  • The risks and impact of poor working capital management for the going 

Workshop: The delegates will assess the liquidity of a major corporate and interpret the liquidity ratios in terms of the health of the going concern. We will also review a case study exercise in the health industry to assess changes in the company’s working capital needs and liquidity.

Overnight prep: The delegates will be required to assess the liquidity position of a case study by calculating the liquidity ratios for the company, discussed during the day’s sessions.

Session 5 - The Cash Flow Statement

  • The importance and role of the cash flow statement in financial management
  • The primacy of the cash flow statement and the measure of Net Operating Cash Flows in finance. on cash items
  • The composition of the Cash flow statement under IFRS
  • Measuring movements in Investment and Financing cash flows
  • The importance and role of the Debt Service Coverage Ratio in debt structuring
  • Additional financial ratios derived from the Cash flow statement
  • The use and application of the cash flow in financing and in company valuations (introduction).
  • Review of the content of the construction of the cash flow statement 

Exercises: Full and detailed review of the client company’s cash flow statement to understand the use and application of the cash flow statement.

Creation of cash flow statement using the profit and loss account and balance sheet. 

Session 6 – Cash flow forecasting in financial analysis

  • The primacy of the cash flow statement and the measure of Net Operating Cash Flows in finance. on cash items
  • How bankers assess and create cash flow assumptions with clients
  • The importance of proper due diligence and holistic financial and economic assessment in creating cash flow forecasts
  • The importance of creating realistic and achievable cash flow forecasts
  • Using cash flow forecasts as part of risk analysis and mitigation
  • The importance and application of the risk table in mitigating risk – the role of the lawyer in assisting in credit risk mitigation
  • Introduction to Company Valuation techniques including Discounted Cash Flow forecast valuations
  • Review of the Discount rate and WACC, and the cash flow growth rate

Work shop: Review of a financial model used by bankers to assess credit risk and the debt capacity of a client company. The delegates will review the assumptions of the cash flow forecasts to assess their impact on the company’s debt service. 

Conclusion, Course Evaluation and Feedback

 

This trainer is a professional banking and finance trainer who for 16 years has been training students in banking, finance, credit analysis, debt restructuring and loan workout, risk management, strategic management and corporate governance compliance. Cooperating with some of the world’s leading training companies, he has trained delegates from some of the largest industrial and financial institutions across Europe and the Middle East. In parallel to his lecturing career, the trainer has a 25-year career in banking and finance, initiated in the City of London. A core element of his work through Capital Advisers is helping companies to restructure their debt and equity position with a view to strengthening company viability through their restructured Balance Sheets. It is this practical hands-on experience of balance sheet restructuring that he brings to the courses and workshops that he develops for clients.

In 1993 he joined Hill Samuel Bank, the London based merchant bank in, covering International Project Finance and later became a credit analyst in Asset Based Finance, lending directly to international shipping companies. He briefly joined N M Rothschild in London as a member of the bank’s LBO credit team analysing clients and providing leveraged debt facilities to UK corporate, before joining Charterhouse Bank in 1997, where he began his Corporate Finance career. Assisting companies to strengthen their balance sheets through debt and equity restructuring has been part of his professional work since he started in banking.

In late 1999 he joined EBRD as the bank’s acting deputy director for Romania. In this role he led teams of credit analysts in identifying and completing a significant number of credit facilities for Romanian and international companies. During his last year in the post in 2002, EBRD financed a total of €500million in debt and equity financing for projects in the country.

In 2003 your trainer established his own investment banking advisory firm which focuses on credit arrangement, capital restructuring, M&A, private placements and IPO’s. He and his team work with regional and international clients in firstly restructuring client company balance sheets. Central to this role is identifying companies with good potential credit ratings that will be become attractive clients for international banks and financiers. In 2006 his advisory became the exclusive representatives of HSBC Investment Bank in Romania.

In parallel, the trainer initiated his career as a professional lecturer in 2003 applying much of the knowledge that he has built up over his extensive banking career to training and developing banking delegates. He is currently developing a number of tailored courses for leading banking and financial institutions across China, Europe, the Middle East and the Far East. He trains in both English and Spanish.

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