Reporting and Budgeting – Level 1

Concepts and Principles

• Bookkeeping versus accounting
• Cash accounting versus accrual accounting and use in private and public sectors.
• Types of accounts in the General Ledger, their purpose and the chart of accounts
• Double-entry bookkeeping concepts and implications
• Depreciation and amortisation

Interpreting Financial Statements

• The income statement (PandL) statement format content and key concepts
• Interpretation of key ratios derived from the income statement; P/E ratio Profit margin
• The language and major components of the balance sheet
• Business ratios derived from the balance sheet and PandL together liquidity debt profitability etc

Investment Appraisal

• Defining the value generated and the required return – the hurdle rate
• Return on capital employed – calculation methodology and interpretation
• Payback period calculations
• NPV and IRR calculations
• Non-financial aspects of investment appraisal and decision making

Essential Budgeting Process

• Purpose and benefits problems and limitations of capital and operational budgets and the important differences
• Budget processes in the private sector
• Budget processes in the public sector
• Identification of risks to the budget and actions to mitigate them

Measuring Financial Statements

• What is financial performance?
• Financial performance in the public sector
• The importance of cash flow – how to measure and improve it
• Gross profit operating profit net profit margin
• Key performance ratios