Budgeting Essentials: Planning, Forecasting, Scenario Analysis, and Reporting (10 Days)

Introduction:

In today’s dynamic business environment, robust financial management, budgeting, and forecasting are vital for success. Effective planning starts with realistic forecasting, which guides the creation of a practical and adaptable budget. Strategic planning involves long-term goals and objectives, while budgeting focuses on short-term actionable plans. Quantifying these plans ensures that strategic objectives are achievable.

Objectives:

By the end of this Financial Planning, Budgeting, and Forecasting course, participants will be able to:

• Develop strategic thinking and apply the strategic management process to create missions and objectives.
• Understand the integration of financial planning, budgeting, and forecasting with the strategic management process.
• Analyze cost behavior and perform cost/volume/profit (CVP) analysis to develop an operating budget.
• Utilize Excel models for forecasting, financial growth planning, and enhancing budget accuracy.
• Implement budgetary control techniques, such as flexed budgets, variance analysis, and performance improvement strategies.
• Calculate a company’s cost of capital and use discounted cash flow (DCF) methods for capital budgeting and risk analysis.
• Gain insights into effective forecasting and budgeting for improved strategic management decisions.
• Apply strategic management principles to enhance decision-making and management effectiveness.
• Develop operational plans, project budgets, and cash flow management techniques.
• Forecast sales revenues and cash flows to support both short-term and long-term management.

Training Methodology:

• Case Studies
• Group Discussions
• Interactive Workshops
• Simulation Exercises
• Excel Modeling
• Role Playing

Course Outline:

Unit 1: Planning for Success

• What are planning strategies?
• The planning cycle
• Mission and strategic analysis
• Strategic choice and implementation
• Corporate objectives and value
• Agency problem and corporate governance
• Planning requirements and working capital
• Plan outline and fund generation
• Financial planning for growth and financial modeling
• Key performance indicators (KPIs)
• Balanced scorecard

Unit 2: The Forecasting Process

• Establishing forecasting aims
• Analyzing data and statistical tools
• Quantitative analysis and forecasting techniques
• Univariate models: time series, moving averages, exponential smoothing, trend progression
• Causal analysis models: regression analysis

Unit 3: Projecting Revenues – The Sales Budget

• Sales forecasting and prediction
• Short-term trends and revenue assumptions
• Adding value to products and services
• Pricing strategies and cost estimation

Unit 4: The Nature and Behavior of Costs

• Cost behavior, allocation, and classification
• Fixed, variable, and marginal costs
• Capitalized and expensed costs
• Valuation of inventory and product costing
• Full costing and cost accounting
• C/V/P Analysis

Unit 5: The Budgeting Process

• Aims of budgeting
• Budgeting as planning and control
• Sales and cost budgets
• Budget drafting and inclusion of headcount and depreciation
• Meeting budgeting requirements

Unit 6: Budgetary Control

• Standard costs and budget variance
• Error factors and target execution

Unit 7: Projecting Expenses

• Activity-Based Costing (ABC) and Activity-Based Budgeting (ABB)
• Cost drivers and cost hierarchy
• Transition from traditional to ABB

Unit 8: The Time Value of Money

• Concept of time and its impact on money value
• Future values and compound interest
• Present values and discounted cash flow (DCF)

Unit 9: Evaluating Capital Project Proposals

• Categories of capital projects
• Evaluation methods: ARR, pay-back period, NPV, IRR, DPP
• Capital budgeting methods and capital rationing
• Profitability Index (PI) and revised IRR (MIRR)

Unit 10: Putting the Pieces Together

• Long-term and short-term funding
• Sources of finance
• Capital cost models and Weighted Average Cost of Capital (WACC)
• Risk and capital costs
• Capital Asset Pricing Model (CAPM) and beta factor
• Optimal capital structure

Unit 11: Budget Re-Projection – Evaluating Risk and Uncertainty

• Risk and uncertainty decision rules
• Scenario analysis and simulation models
• Sensitivity analysis and NPV break-even

This comprehensive course is designed for those looking to enhance their skills in financial reporting, budgeting, and forecasting. Participants will gain practical knowledge to integrate planning, budgeting, and forecasting into their strategic initiatives and produce detailed performance reports for their organizations.