Financial Analysis and Financial Planning

Syllabus

Thematic definition of lectures: 1. Content of financial analysis and financial planning. Definition of the financial plan as an important tool of financial decision-making in the company, its importance and place within the company's comprehensive plan and within the management functions. Basic and additional components of the financial plan. Basic goal and current trends in the process of financial planning. Determination and description of requirements for the selection of a company for the practical creation of a financial plan. Determination of content and formal criteria for the processing of seminar work. 2. Time and material schedule of creating a financial plan. Financial - economic retrospective analysis, the method of ratio indicators, the method of vertical and horizontal analysis. Predictive analysis by Altman Z-score method, rapid test, creditworthiness index, HGN model and other methods. Possibilities of using non-financial analysis of the company using SWOT analysis and PEST analysis. 3. A description of the methods, methods and information sources for quantifying the expected reality of the current year as a basis for creating a short-term and long-term financial plan. Analysis of individual financial areas of the company. Brief outlook and intentions for the future. 4. Objectives for the creation of the financial plan resulting from the mission and strategic intentions of the company and based on the results of financial and non-financial analysis. Characteristics of goals for long-term and short-term financial plan and methods of their implementation. Elimination of duplicate and mutually exclusive objectives. 5. Categories and types of investment projects of the company and their characteristics and selection. Basic financial and economic parameters of investment projects. Quantification of capital expenditures of an investment project. Quantification of cash flows - income and expenses from an investment project. Quantification of capital costs for an investment project, foreign and own capital costs, average cost of capital, methods of determining own and foreign capital costs. Evaluation of investment project efficiency, static and dynamic evaluation methods - payback period, net present value, internal rate of return, sensitivity analysis. The impact of financial decisions on the adoption of the optimal variant of the investment project. Justification of the adoption of the optimal variant of the investment project. 6. Creation of a long-term financial plan and its basic features, time horizon, sliding method of creation. Variant solutions - at constant and current prices. The company's investment plan and its material and financial aspects. Distribution of investments from different perspectives. Procedures for creating an investment plan as a basis for drawing up a long-term financial plan., Depreciation plans for future investments and existing non-current assets, calculation of the residual value of non-current assets for individual years. 7. Long-term profit plan, methods of its creation. Long-term financial balance plan and methods of its creation. Revenue percentage method. Planning the financial and capital structure of the company based on previous developments, optimization methods. Calculation of individual components of capital and average cost of capital of the company. Planning of current assets in the long term. Dividend policy plan, resp. profit shares. Deciding on the acceptance of debt for the financial balance plan. Incorporation into the financial plan of the leasing form of financing and financing by a bank loan. 8. Procedures in creating a short-term financial full for the current season. Rules of links between individual basic parts of the financial plan - profit plan, financial balance, cash flows and profit distribution. Requirements for concretization of set goals based on past development, ways of their achievement and implementation into individual items and impacts on other absolute and relative indicators. 9. Procedure in the application of the three-balance system in the creation of a financial plan according to the accounting standards of the Slovak Republic and IFRS. Basic information sources for drawing data for the creation of an annual plan of revenues - revenues from the sale of own products, services and goods. Information sources for creating a plan of individual items of type costs. 10. The procedure for creating budgets as a basis for the plan of revenues and costs depending on the organizational structure of the company. Creating a budget for the cost of buying and selling goods, consumption of materials and energy, services. Description of general and specific internal and external factors influencing the creation of the annual cost plan. Procedures for creating a plan of wage costs, contributions to health insurance and social insurance, social costs. The impact of raising the minimum wage, ways of reflecting the valorisation of wages and incapacity for work in the financial plan. Implementation of a depreciation plan into a cost plan. 11. Procedure for creating an annual financial balance plan while maintaining the principles of balance sheet rules and taking into account the set objectives. Creating an annual plan of inventories, receivables and payables. Planned financial balance in terms of net working capital and liquidity. Procedure for creating a direct and indirect method of cash flow planning. Relationship between the financial balance plan and the cash flow plan. Creation of a plan for the distribution of economic results, i. generated current profit and retained earnings from previous periods for the development of the company, corporate funds, social funds and other needs. 12. Procedures for evaluating the creation, level and quality of the developed financial plan. Control of the implementation of the set goals in the financial plan, evaluation of the planned financial ratios and their comparison with comparable companies. Checking the developed financial plan using predictive methods from the planned indicators and comparing them with the actual results of previous periods, t. Altman's Z-score and HGN model. Possibilities of evaluation using economic standards. Evaluation of frequent shortcomings in creating a financial plan in the practice of Slovak companies. 13. The procedure for creating a financial plan for natural persons of entrepreneurs and its specifics based on the type of accounting. Plan of income and expenses, assets and liabilities. Planning of lump sums, wages, levies, calculation of the basis for calculating the tax as the difference between actual income and expenses. Thematic definition of exercises: 1. Reviewing and approving the selection of the business for the development of the financial plan according to the criteria set. Preparation of the characteristics of the selected enterprise, i.e. legal form, subject of activity, history, basic economic data and results, organisational structure. Assignment of tasks for processing the next part of the seminar work. 2. Review and consultation on the time and material schedule for the development of the financial plan. Processing of financial - economic retrospective analysis, method of ratio indicators, method of vertical and horizontal analysis. Processing of predictive analysis by Altman's Z-score method, quick test, creditworthiness index, HGN model and other methods. Developing a draft non-financial analysis of the company using SWOT analysis - i.e. strengths, weaknesses, threats and opportunities and PEST analysis. Assignment of tasks to process the next part of the seminar work. 3. Consultation on quantification of the expected reality of the current year as a basis for the development of short- and long-term financial plans of selected enterprises. Checking the reality of calculations. Analysis of individual financial areas of the enterprise. Brief outlook and intentions for the future. Assignment of tasks for the preparation of the next part of the seminar work. 4. Checking the proposed general and specific objectives for the development of the financial plan resulting from the mission and strategic objectives of the enterprise and based on the results of the financial and non-financial analysis. Assessment of the objectives for the long-term and short-term financial plan and the ways of their implementation, taking into account the nature and problems of the selected enterprise. Elimination of duplicate and mutually exclusive objectives. Assignment of tasks for the preparation of the next part of the seminar work. 5. Assessing the appropriateness of the selection of investment projects and their variants corresponding to the nature and subject of activity of the selected enterprises. Quantification of capital expenditures of the investment project. Quantification of income and expenses from the investment project. Quantification of the cost of capital of an investment project, foreign and own cost of capital, average cost of capital, methods of determining own and foreign cost of capital, determination of the discount rate for the purpose of calculations. Evaluating the efficiency of an investment project, static and dynamic evaluation methods - payback period, net present value, internal rate of return, sensitivity analysis. Evaluation and recommendations for the adoption of the optimal variant of the investment project. Assignment of tasks for the preparation of the next part of the seminar work. 6. Review of the elaborated draft long-term financial plan in the basic items. Formation of the investment plan, depreciation plans for future investments and existing non-current assets, calculation of the residual value of non-current assets for each year. Assignment of tasks for the preparation of the next part of the seminar work. 7. Formation of long-term profit plan using professional estimation and index method. Formation of a long-term financial balance plan using the percentage of sales method. Formation of the financial and capital structure plan of the enterprise based on the past development and its optimization for the long-term plan period. Checking the calculation of the individual components of capital and the average cost of capital of the enterprise. Reviewing the design of the current assets plan over the long term. Planning the dividend policy or profit-sharing policy of the company. Deciding on the incurrence of debt to complete the financial balance sheet plan. Assignment of tasks for the preparation of the next part of the seminar paper. 8. Checking that the procedures for drawing up the short-term financial plan for the current annual period have been followed. Checking that the rules are followed in relation to the links between the various basic parts of the financial plan - the profit plan, the financial balance sheet, cash flow and profit distribution. Checking compliance with the requirements to specify the objectives set on the basis of past developments, the means of achieving them. Implementation of individual items resulting from the objectives, evaluation of the impact on other absolute and ratio indicators. Assignment of tasks to the processing of the next part of the seminar work. 9. Examination of the procedures in the application of the three-balance system in the development of the financial plan according to the accounting standards of the Slovak Republic and IFRS in selected enterprises, taking into account their specifics. Use of information data sources and calculation of individual items of the annual plan of sales of own products, services and goods and items of generic costs. 10. Preparation of budgets for the revenue and cost plan depending on the specific organizational structure of the selected enterprises. Creation of cost budgets for the purchase and sale of goods, consumption of materials and energy, services. Incorporation of general and specific internal and external factors influencing the development of the annual cost plan. Quantification of labour costs, contributions to health insurance and social insurance companies, social costs and their incorporation into the cost plan. Translating the impact of minimum wage increases, wage indexation and sick leave into the financial plan. Implementation of the depreciation plan in the cost plan. 11. Checking the draft annual financial balance plan drawn up, taking into account the principles of the balance sheet rules, checking that the objectives set have been incorporated. Implementation of the procedure for drawing up the annual plan for stocks, receivables and payables. Planning net working capital and liquidity. Procedure for developing net direct and modified direct and indirect (balance sheet) methods of planning cash flow, operating, investing and financing activities. Checking that the financial balance sheet and cash flow plan are linked. 12. Assessment of the procedures for the development, level and quality of the financial plan developed. Checking the implementation of the objectives set out in the financial plan, assessing the planned financial ratios and evaluating comparisons with comparable undertakings. Checking the financial plan developed using forecasting methods from the planned ratios and comparing them with the actual results achieved in previous periods, i.e. Altman's Z-score and HGN model. Evaluation using economic norms. Elimination of deficiencies in the financial plan. Evaluation and discussion of common deficiencies in the development of financial plans in the practice of Slovak enterprises. 13. Presentation of the final version of the processed financial plan in order to evaluate the required criteria in terms of content and formality, complexity and continuous implementation of the work and defense of the evaluated work in the oral examination.