Budgeting, Forecasting, and Planning Procedures (10 Days)

Introduction:

Balancing the three financial processes effectively requires in-depth knowledge in budgeting, forecasting, and planning.

This comprehensive course will immerse participants in the key issues related to these processes, providing them with a deep understanding.

Upon completion, participants will have gained competence in essential financial planning processes, including budgeting and forecasting, and will have developed the ability to conduct in-depth analysis of the budgeting process.

Objectives:

After successfully completing this Budgeting and Forecasting Certification course, participants will:

• Develop strategic thinking and use the strategic management process to establish missions, objectives, and strategies for their organization, enabling informed decision-making based on strategic planning.
• Understand the connection between financial, budgetary, and forecasting processes, and realign budgetary processes with strategic management.
• Gain insight into different types of cost behaviors and costing systems, and conduct cost/volume/profit analysis.
• Learn to create and compose an operational budget and explore alternative funding methods such as venture capital.
• Analyze and utilize various sales pricing and product mix forecasting models in Excel, and forecast sales levels for both the long and short term.
• Construct financial growth forecasting models and activity-based budgeting models, enhancing budget accuracy.
• Master the use of standard costing, flexed budgets, and variance analysis, and apply variance analysis results to management for optimal outcomes.
• Estimate the company’s cost of capital, utilize DCF methods for project evaluation and capital budgeting, assess project investments, and apply risk management techniques such as sensitivity analysis, simulation, and scenario analysis.
• Apply strategic tools to create financial models, budgets, and forecasts using Excel.
• Understand the cause-and-effect relationship between strategy, forecasting, and budgeting, and address the challenges of the budgeting process to improve organizational effectiveness.

Training Methodology:

• Interactive lectures
• Case studies
• Hands-on Excel exercises
• Group discussions
• Real-world scenario analysis
• Budgeting simulations
• Peer learning sessions

Course Outline:

Unit 1: Planning for Success

• Planning strategies and their purposes
• The planning cycle
• Corporate mission and strategic analysis
• Strategic choice and implementation
• Corporate objectives and value creation
• The agency problem and corporate governance
• Cost estimation and working capital requirements
• Financial planning for growth and financial modeling
• Developing Key Performance Indicators (KPIs)
• The balanced scorecard approach

Unit 2: The Forecasting Process

• Defining forecasting objectives
• Data analysis and statistical tools
• Quantitative analysis and forecasting techniques
• Univariate analysis models: time series, moving averages, exponential smoothing, trend progression
• Causal analysis models: regression analysis

Unit 3: Projections of Revenue Income – Sales Budget

• Forecasting sales: long-term and short-term trends
• Basis of revenue assumptions
• Sales pricing: full cost and marginal cost pricing
• Projections of optimal product mix using Excel

Unit 4: Nature and Behavior of Cost

• Understanding cost behavior and structure
• Fixed, variable, and stepped costs
• Costing for product age and net income
• Cost/volume/profit (CVP) analysis and what-if scenarios

Unit 5: The Budget Process

• Demand and constraints in budgeting
• Planning and controlling operations
• Budget preparation and accuracy in budgeting
• Compilation of the budget

Unit 6: Budgetary Control

• Standard costing and its purpose
• Flexed budgets and variance analysis
• Factors leading to variances
• Planning and performance variance

Unit 7: Projecting Expenses – Activity-Based Costing (ABC) and Activity-Based Budgeting (ABB)

• Cost-incurring activities and processes
• Cross-subsidization and costing refinement
• Constructing ABC systems and understanding cost drivers
• Transitioning from traditional budgeting to ABB

Unit 8: The Time Value of Money

• Impact of time on the value of money
• Compound interest, future values, and discounted cash flows

Unit 9: Evaluating Capital Project Proposals

• Evaluation of different capital projects
• ROI, payback methods, and NPV
• Investment appraisal techniques
• Capital budgeting and profitability index

Unit 10: Bringing it All Together – The Budget

• Short-term and long-term funding sources
• Cost of capital models
• Weighted average cost of capital (WACC) and risk assessment
• Capital asset pricing model (CAPM) and capital structure theory

Unit 11: Managing the Re-Projection of the Budget – Understanding Risk and Uncertainty

• Decision-making under risk and uncertainty
• Scenario analysis and simulated models
• Breakeven analysis for NPV