Advanced Financial Analysis

Transcription

1 Advanced Financial Analysis A Practical 3-day Workshop This course can also be presented in-house for your company or via live on-line webinar The Banking and Corporate Finance Training Specialist

2 Course Overview Understanding financial statements and forecasts used to analyse and value businesses is fundamental to the role of any analyst or investor. Unfortunately companies at times have incentives to manipulate their reported results (for better or worse) that are not aligned with investors in the business. This course helps the participants to understand firstly, the main types of manipulation that take place in practice (including recent public company examples), then looks at how these types of manipulation Course can Overview be identified and an assessment of the quality of a company s financial reporting arrived at through the use of analytical techniques. The course deals with numerous accounting issues and provides the latest state of accounting under IFRS and US GAAP. This course is run in an interactive, participative format, where participants learn by doing. The key concepts covered in the main teaching sessions are punctuated and illustrated by detailed case and modelling work. The approach has been designed to equip participants to put key concepts into practical use immediately. By the end of this course participants will understand: The key methods used to manipulate financial statement and forecasts How to analyse historic financial statements using advanced ratio analysis to assess the quality of the financial reporting and the financial health of the business How to analyse and assess financial forecasts using different accounting issues Much of the course work involves Excel modelling and analysis, equipping participants with the tools to analyse financial models: Building up from partially-complete models Working with integrated financial statements Running scenarios, iterating and optimising Each participant should bring a lap top with USB port to the course to facilitate modelling work Course Content Day 1 Accounting overview where manipulation and fraud commonly take place Conditions that may result in accounting manipulation Incentives and pressures to manipulate Opportunity Attitude of management Case study Analysing the conditions for fraud Enron Common forms of manipulation and fraud income statement Revenue recognition issues When is a sale not a sale Accounting rules governing revenues Earning revenue principal or agent? The problems with long term contracts Abnormal sales growth, the Symbol effect Revenue recognition red flags Case study The participants analyse a case company s accounting for revenue and suggest adjustments to correct manipulation

3 Case study Symbol Inc From revenue to EBIT Increasing income from one off events Misleading classifications Capitalising interest Manipulation of cost of goods sold Cost deferral and impairments Inventories, growth vs sales and valuation issues EBIT manipulation red flags Case study Enron red flags Other income statement issues Shifting current expenses to a later period Identifying capitalisation issues Case study Thomson Research Techniques to hide expenses or losses Shifting current income to a later period Shifting future expenses to an earlier period Case study Xerox Day 2 Evaluating the quality of financial reporting ratio analysis Quantitative tools used to assess financial reporting quality Dupont analysis ROE and ROCE analysis Extended Dupont analysis Further ratio analysis Working capital and asset based analysis Assessing divisional performance Credit based analysis Altman z scores Accruals based analysis Case study The participants analyse the case study company and produce the first set of ratios to assess the quality of the financial reporting to identify where the accounts may have been manipulated Case study The participants analyse a case company s accounting for further income statement issues and suggest adjustments to produce a clean set of historic numbers Common forms of manipulation and fraud balance sheet Long life assets What does an asset cost? Amortisation and depreciation issues Asset lives and depreciation rates Case study The participants analyse a case company s accounting for PPE and Intangibles for manipulation

4 Off balance sheet financing Accounting for leases the operating lease disappears Treatment of leases for valuation purposes Liability calculation Balance sheet adjustments Pension accounting income statement and balance sheet issues Accounting for pensions Correct allocation of costs EBIT or not Which liability and effect on valuation Day 3 Common forms of manipulation and fraud balance sheet (continued) Financial instruments recognition and valuation The after effects of the financial crisis new accounting rules for financial instruments Fair vs historic cost assessment and effects on valuation balance sheet items and suggest adjustments to correct manipulation Foreign currency issues translation and transaction effects Which currency to use Calculation of translation effect Implications for valuation balance sheet items and suggest adjustments to correct manipulation Common forms of manipulation and fraud cash flow Picking up the trail earnings vs cash Operating vs other cash flows improving cash conversion Manipulating working capital for cash flow Receivables Payables Accounting for cash and the quality of cash holdings Does the cash exist? Polly Peck and Cyprus cash flow statement items and suggest adjustments to correct manipulation

5 Tailored Learning All of our training courses can be tailored to suit your company s exact training needs. We will work closely with you to help develop a training programme with content that is unique for your organisation. Please us on enquiries@redcliffetraining.co.uk for more information E-Learning This course can also be presented as a bespoke e-learning programme created by you to fit your exact requirements. enquiries@redcliffetraining.co.uk +44 (0)