Do you need to understand and interpret financial statements? You will learn your way around Income Statements, Cash Flows and Balance Sheets. You will gain an insight into operational and financial gearing. Case studies will highlight profitability and liquidity ratios that will reveal the financial health of any company.

What’s in it for you?

The common language of business is finance. One of the goals of this presentation is to remove the obscurity and complexity of finance to make this subject available to all those who work in a business environment.

After attending, you will have the skills to:

• Understand the key differences between the Income Statement and the Cash flow Statement.
• Calculate and interpret the main accounting ratios: There are four main groups of ratios:

1. those which measure profitability;
2. those which measure liquidity;
3. those which measure business efficiency;
4. those which relate to the business’ financial structure.

• Understand the different components of the Balance Sheet.
• Identify companies with the following characteristics:

1. A weak or strong Balance Sheet
2. Those that might have potential liquidity or solvency problems
3. Working Capital problems (overtrading)
4. Under-utilisation of assets employed (sweat the assets)
5. Inefficient capital structure (equity vs debt)
6. Business / Financial risk due to excess debt

• The MAGIC FOUR – the financial health of a business can effectively be tracked by using four KEY FINANCIAL MEASURES. By tracking these ratios and implementing strategies to improve them, other performance measures will also improve.

• Understanding the Income Statement.

1. 1. Gross profit
   2. Trading profit
   3. Operating profit
   4. Net Profit
   5. Breakeven sales
   6. Margin of safety

• Understanding the Cash flow Statement.

1. 1. Profit is an opinion; cash is a fact!
   2. Is the company capable of generating cash, as opposed to profit?
   3. What was done with the loan that was taken out during the year?
   4. Why has the overdraft increased, despite the company having a profitable year?
   5. Case study: A step-by-step process with three cash flow scenarios.

• Understanding the Balance Sheet.

1. 1. Non-current assets
   2. Current Assets
   3. Shareholder Funds
   4. Non-current liabilities
   5. Current Liabilities

• Case Study

1. 1. Delegates will be guided through a comprehensive case study by the course leader. The case study will identify the important ratios required to analyse the performance of a company.