Finance On-Line Curriculum
Operational Analysis: Introduction to Financial Analysis
Operational Analysis explains how static, documented company information can be turned into practical financial ratios that are invaluable when making business decisions. These ratios can be used to measure past performance and to project future performance, leading to more effective business decisions. This training course is suitable for managers and business professionals in any company and presents the information needed in a clear, concise and logical manner.
After this course the student should be able to:
- Define the term "financial analysis".
- Briefly explain its application.
- Discuss what financial analysis achieves in practice .
- Describe the process in broad terms, with examples.
- Explain the use of ratios for comparisons and trends.
- Identify the key costs that the cash inflows from a project must be able to cover.
- Determine whether certain costs are relevant to a given situation.
- Describe the Payback method and its limitations.
- Use the payback method to compare simple projects .
- Explain the concept of present value and show how discount factors are calculated.
- Apply the present value concept to business decision-making.
- Describe the three methods of discounted cash flow evaluation.
- Define sensitivity.
- Calculate the discounted cumulative cash flow and DCF yield and hence identify the most sensitive areas of a project.
- Define the profit margin ratio.
- Use the profit margin ratio as a basis for comparing business performance within the same industry and between different industries.
- Present the components of profit margin in a flow chart and make practical use of this format.
- Define asset turnover and use an asset turnover flowchart.
- Explain the importance of using the asset turnover ratio in improving business performance.
- Identify and use the key working capital ratios .
- Define fixed asset turnover as a ratio and as a percentage and understand the limitations of its use in isolation.
- Explain some key methods by which asset turnover can be managed.
- Define RONA and explain its purpose.
- Explain the links between RONA, Profitability and Asset turnover.
- Use RONA to analyze financial performance.
This course is designed for managers, prospective managers, and anyone else within an organization involved in making business decisions.