Accounting Fundamentals

The aim of this session is to provide participants (particularly those who have no prior knowledge of finance) with an introduction to financial statement analysis. The income statement, balance sheet, and cash flow statement are introduced, and the key interactions between the income statement and balance sheet are explained. Participants will build simple financial statements using a list of transactions.

Income Statement

Throughout this module, participants analyze a group of companies in the food manufacturing industry in order to calculate several income statement metrics. The matching/accruals concept and its impact on the income statement are covered in detail and the link between the income statement and the retained earnings account is investigated. Profitability is analyzed in various ways, using real companies’ financials to calculate key indicators of operating and financial performance. Participants complete a full profitability comparison for the peer group.

Working Capital

This module provides participants with an understanding of the importance of working capital in the context of a company’s financing structure and cash flows. The difference between working capital and operating working capital is analyzed using several ratios. Participants complete a working capital analysis for the peer group.

Non-Current Assets

This session illustrates the difference between tangible and intangible assets and their use in a business. Participants learn about purchasing, depreciating/amortizing, and selling tangible and intangible assets, and how these transactions are reflected in the financial statements.

Debt and Equity

In this session, participants learn how companies finance their operations. The characteristics of debt and equity are analyzed, including how to account for new debt and equity issues. Various kinds of debt instruments are identified, and the main equity accounts are examined. Finally, some of the most important ratios are covered.

Cash Flow Statements

Participants learn how to build cash flow statements using historical and forecast balance sheets. The relationship between cash and changes in assets, liabilities and equity accounts is analyzed in detail, allowing participants to understand the full integration of the income statement, balance sheet, and cash flow statement. The cash flow session is particularly relevant as a foundation for modeling skills.