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Course Outline

  Introduction – reviewing the fundamentals of forecasts & budgets Download Course Brochure
  • Budgeting and forecasting continue to be the mainstay of business
  • planning tools but for many, it remains the domain of management
  • accountants and is often not fully understood, even by those who
  • are measured against them
  This session lays the foundation to understanding
  • What a forecast and budget are and what role they play in business
  • The difference between a forecast and a budget
  • The scope of forecasts and budgets
  • The link between budgets and business strategy
  • The structure of a typical forecast and budget
  Forecasting & budgeting techniques
  There are many different ways of approaching a new forecast or budget. This session outlines the common methods of forecasting/budgeting together with their advantages and disadvantages:
  • Historical
  • Zero based
  • Activity based
  • Top down/bottom up

Considerations when planning a forecast or budget

  The integrity and accuracy of a forecast or budget benefits from careful planning – plan the plan. Resolving key considerations at the outset may prevent a complete rework later on. Factors to consider are:
  • The main objectives
  • Large scale factors:
    • Economy
    • Seasonality
    • Competition
    • Foreign markets
  • Who owns it and who needs to “buy-in”
  • The information required and its availability
  Accounting terms & theory
  A forecast or budget is fundamentally a financial tool that requires some level of accounting knowledge. This session provides the basic theory required to gain an understanding of the accounting concepts and terminology used.
  • The components of a typical forecast or budget:
    • Profit & loss
    • Cash flow
    • Balance sheet
    • Capital expenditure
  • Accrual vs. cash concept
  • Variable and fixed costs
  • Standard costs
  • Overheads – absorption, allocation, apportionment
  • Activity based costing
  • Measurements:
    • Key performance indicators
    • Financial ratios
  • Analysis:
    • Sensitivity
    • Break even
    • Variance
  Further forecasting techniques
  Forecasting often requires the analysis of trends and historical information. This session introduces forecasting theory and uses Microsoft Excel to illustrate how to apply theory to practice, including:
  • Trend analysis
  • Product pricing
  • Forecasting demand for related products
  • Scenarios and “what if” analysis
  Project assessment
  Forecasting techniques are often employed to assess the viability of a project. This session introduces 3 decision making tools together with their advantages and disadvantages:
  • Return on capital employed (ROCE)
  • Payback period
  • Discounted cash flow
  Building a forecast or budget
  Now armed with the basic knowledge required, this session sets out the practical steps required to build, present and amend a forecast or budget. Worked examples are provided to illustrate these steps:
  • Mapping the processes
  • Gathering the information
  • Designing and creating templates
  • Planning for flexibility
  • Establishing the numbers
  • Checking and reviewing
  • Keeping notes

Case Study

  The course concludes with an example for participants to work through which encompasses many of the topics covered. This helps to consolidate knowledge of the various topics by applying them to a practical scenario and demonstrating how they combine to create an effective forecast.

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