Understanding profit, cash flow and the accounts
It isn’t the Finance department that make your company financially successful, it’s you and your colleagues. It’s what you do, and how you do it.
This highly practical and pragmatic one-day workshop gives you the tools and knowledge you need to understand how to make your business more successful financially.
It starts from a base point of zero, with a simple exercise that builds up into a set of company accounts. Then it looks at what those accounts tell us, and – most importantly – how we can improve the profitability and cash flow of our business. Throughout the workshop there are a series of practical exercises to illustrate each issue, and opportunities to discuss how they apply to your own business.
The course is for all those who wish to understand what makes their company tick. It is suitable for representatives from any organisation (or subdivision within an organisation) that has to be profitable, and that has cash constraints.
It is for those who have management responsibility and are looking for formal training in the subject. They may have overall responsibility, or specific responsibility for sales; purchasing; production; etc.
The workshop is also suitable for those who simply want to expand their business expertise.
Aims and objectives
This is a highly practical and interactive workshop. It aims to help participants understand how to improve the financial performance of their business.
Specifically, it provides participants with an understanding of profit, working capital, and cash flow. It enables participants to read and interpret the financial accounts. It builds a toolbox of practical techniques to help participants improve profitability and cash flow.
By attending this workshop, participants will be comfortable with reading financial reports; able to participate in financial discussions in management meetings; and clear about the practical solutions to many day to day business financial problems.
The course divides into 5 related sections.
- Setting the context
This section uses a simple production exercise to set the scene for the rest of the workshop
- production exercise
- accounting for profit
- accounting for cash flow
- closing the loop: reconciling profit and cash flow
- The accounts
Here we build up the accounts from the production exercise
- the Profit & Loss account and its jargon
- the Balance Sheet and its jargon
- closing the loop: the Cash flow Statement
- Interpreting the accounts
Understanding the contents of the accounts is fine, but we need to be able to interpret the story they are telling us
- case study: how is the business doing
- moving the needle: what is profitability most sensitive to?
- Improving profitability
Having understood the relationships within the Profit & Loss account, and what profit is sensitive to, we need to know how to improve profitability
- procurement prices (the cheapest may not be the best!)
- the staffing structure
- pricing the product
- project change control
- the product mix
- managing overheads
- Working capital and cash flow
Cash flow is often the least understood element of business finance in the UK
- the cash flow cycle
- managing working capital…
- … and sabotaging working capital!
- the impact of working capital on the bank account