Introduction to Financial Statements

An Introduction to Financial Statements and Concepts for Non-Financial Managers

To be successful in business, be it Private, Public or Third Sector, requires a robust understanding of a wide range of financial concepts and skills. It is essential that everyone from junior and first line managers to directors, board members and chief executives are able to read and understand key financial reports such as Balance Sheets and Profit & Loss Accounts. A good grasp of financial terminology and the key elements of financial management are important equally important for success, both corporate and personal.

This one-day workshop provides an introduction to and overview of, the basic pillars of accounting and finance. It then uses this information to help delegates understand better the financial reasoning for and financial effect of decisions made in their organisations.

In simple terms this workshop is about teaching delegates to be able to understand the principles of finance and accountancy without becoming accountants, -In doing so they will be able to talk to accountants, managers and peers about financial issues with eloquence, and a strong basic knowledge.

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For whom

This one day workshop is for non financial managers working at all levels and from all business sectors, including private, public, charitable, social and education, who are looking to develop a robust understanding of the key business reports and data sets that define company and organisational performance.

This workshop will be of benefit to non financial managers and staff who need to understand finance data better. It is especially suited to those new to business finance and accountancy but need to comment or make decisions based on it. This may include for example newly appointed or promoted managers, directors and senior managers who have never benefited from financial management training or junior members of the finance department that need to develop a broader grasp of business finance than their day to day role provides.

We recommend those participating in this course bring with them a laptop with MS Excel installed. This workshop involves working with trading accounts and whilst these exercises can be completed on paper it is far easier to use an excel spreadsheet.

Aims and Objectives

Delegates will understand the basic principles of finance and accounting; they will understand the financial implications of managerial decisions and be able to construct a set of financial statements. Delegates will have the tools to help them assess organisation and department effectiveness based on the financial reports they produce. These assessment skills will enable them, over time, to make better decisions and improve the performance of the organisations they work for.

Content
The workshop is split into 5 sessions:

1 Introduction to Finance and Accounting

The first session introduces the basic concepts, used across all finance divisions and the different names, terms and concepts delegates may encounter.

  • What is financial management and accounting
  • Introduction to Jargon Financial experts use
  • The general principles of finance and accounting
  • Types of organisations and the reporting systems they use
  • Sources and Uses of Finance
  • What will you need to know about finance in your organisation

2. Guide to Financial Statements

Session two explores the profit and loss, balance sheet and cash. It considers understanding the underlying impact of the generally accepted accounting principles and policies on any Balance Sheet and Profit & Loss Account. It explains what they look like, what they tell us about the organisation, how they are connected and the impact managerial decisions make on them.

  • Profit and Loss Sheets/Income and Expenditure
  • Balance Sheets/Financial Statements
  • Cash Flow
  • What do the key documents above tell us and how they link together
  • Calculating and Using Ratios including
  • The differences between simple statutory accounts, consolidated accounts and internal management accounts

This session also clarifies the small differences in concept, including names and content, between not for profit organisations and business entities.

3. Building your own financial Statements

Session three is a highly practical and participative session where delegates work with a simple case study to re-enforce their learning. They practice applying the theories they have covered in sessions one and two in doing so any gaps in their knowledge can be addressed before the workshop progresses. We recommend delegates bring a laptop with them with MS Excel pre-loaded

  • Delegates are presented with a simple case study and asked to build a set of financial statements from a basic data set.
  • Delegates are then presented with a set of modified situations and asked to explain the effects on each of the key financial statements

4. Analysing Financial Reports

Having now learned the basics about how money flows through an organisation and is accounted for delegates explores how key ratios are used, what they tell us and how they help people make better decisions. Delegates then explore and assess an organisation’s or department’s performance in terms of the following.

  • Horizontal analysis
  • Trend assessment
  • Liquidity
  • Profitability
  • ROCE/ROE/Investment return/Value for money
  • Efficiency
  • Cover

5. Action Planning for Return to Work

This final short session considers what financial data delegates have access to on their return to work and what analysis they can do on this to help re-enforce their learning further but also and most importantly gain a better understanding of how their department, division or business is performing in financial terms