13071 – Financial Management Fundamentals
Financial management is an important function in any organisation, business, or unit such that it is vital that every manager and all organizational employees should have at least a basic understanding of the key concepts if optimum levels of overall business performance are to be realized. All decisions that a firm makes – financial and otherwise – directly or indirectly impact on the firm’s financial performance, immediately or eventually, and the consequences of wrong decisions can be quite severe. Yet many managers and business owners, let alone their employees, have had any professional exposure and/or training in financial management. Having personnel trained in financial management will ensure the success and survival of an organisation by enabling it to manage its financial resources in such a way that it achieves its business objectives and remain on track in attaining its short-term and long-term goals, while maximizing value for its shareholders. Poor financial management, as reflected through the firm’s inability to maintain a certain minimum level of financial performance is the number one reason why most businesses fail. Instead of taking up opportunities that arise due to the firm’s changing external environment and minimising the risks presented, most firms fail to adapt and make the best of what the external environment presents. This Financial Management Fundamentals (FMF) course will equip the learner with sound financial management skills that are vital in ensuring the long-term survival of their organisations. On completion of the course, learners will be able to articulate their organisations’ goals and explain how they translate to shareholder wealth maximisation, identify the opportunities and risks presented by certain environmental, social and economic factors and their impact on their organisations’ business activities, assess the health and financial performance of their organisations and forecast it in the short to medium term, and determine the financial implications of their organisations’ growth strategies.[[
13104 – Risk and Return Analysis
One big mistake that most investors make is to pay more attention to investment returns than they do risk yet the two are inextricably intertwined. An investment that promises higher returns often comes with greater risk and the inverse is also true. A serious investor should understand risk in its different forms so as to better understand the opportunities, trade-offs and costs involved with each investment. Understanding the concept of diversification is also important in order to reduce portfolio risk without sacrificing potential returns. While we have all heard the idiom “Don’t put all your eggs in one basket”, this is often misinterpreted when it comes to investments. In this short Risk and Return Analysis course, will help delegates know how to assess risk and determine their risk appetite so as to have realistic return expectation. They will also learn how to construct a diversified portfolio and avoid bearing unnecessary risks by investing across different asset classes. This way the unexpected losses from one investment may be offset to some extent by the unexpected gains from another thus reducing the overall risk of the portfolio. The course is ideal for investment and portfolio managers, financial and investment analysts, financial planners, financial and investment advisors, investment bankers, risk managers, financial market traders, fund managers, proprietary dealers, back office analysts and managers, market makers and arbitrageurs, and anyone who wants to be proactive in securing their financial freedom.
13105 – Cost of Capital Analysis
The cost of the capital (a.k.a. Weighted Average Cost of Capital or WACC) is a metric of great significance in business decisions such as in capital budgeting, capital structure, management compensation, dividend, and working capital decisions. It is the hurdle rate or minimum rate of return a company must earn in order to create value for its investors. A firm will accept an investment opportunity whose return is at least equal to the cost of capital incurred for its financing. For investors, if the return offered by company is less than its WACC, it is destroying value and hence the investors may discontinue their investment in the company. WACC is used in project and business appraisals, in calculating the economic value added, and as an indicator of how the company is perceived by investors. A higher WACC indicates that the company is perceived in a bad light and a low WACC suggests otherwise. Given its importance, every manager, and most importantly every financial manager and investor, should know how to calculate WACC since an incorrectly calculated WACC will lead to erroneous decisions. AIFFA’s cost of capital course takes the learner step by step in calculating WACC. Such calculation is often complicated by the inclusion of hybrids and exotics in the firm’s capital structure such as callable, puttable or convertible instruments, and warrants. The learner will also be introduced to the calculation of WACC when floatation costs are taken into account.
12882 – Valuation Basics
The course coverage includes a concept that is integral to all parts of business, that is the time value of money (TVM). The concept suggests that a particular sum of money in your hand today is worth more than the same sum of money at some future date. This is because over time, the value of money changes due to outside factors such as inflation and interest. Thus a given amount of money tends to purchase a smaller basket of goods in the future than it does today. In addition, individuals generally prefer present to future consumption and can only forgo present consumption if more future consumption is offered. Then there is also the risk that future payment might never be received due to default or death. The TVM concept is used in capital budgeting to determine the net present value of projects; in securities investments to determine the value of securities such as bonds and shares; in financing decisions to calculate and compare the effective cost of the different sources of financing; in leasing versus buying decisions to calculate the cost of leasing versus the cost of buying; in evaluating proposed credit policies and the firm's efficiency in managing cash collection under current assets management. Given its importance, the TVM concept should not be applied blindly. Delegates will leave AIFFA’s Valuation Basics course with a deeper understanding of the concept and the ability to apply it prudently and diligently in various areas of business.
13106 – Capital Budgeting Analysis
The importance of capital budgeting in business cannot be overemphasised as it affects both the financial and investment decisions of firms. Capital budgeting helps firms make smart decisions by evaluating the merits and demerits of investment proposals to maximize the potential of the firm’s funding and thus avoid fatal mistakes and disastrous consequences for the business. Long-term projects need substantial amounts of capital outlay and the long-term commitment of funds leads to financial risk, which underlines the need for thoughtful, wise and correct decisions. Incorrect decisions would not only result in losses but would also prevent the firm from earning profits from other investments which could not be undertaken. Capital investment decisions are surrounded by a great number of uncertainties because the investment is in the present and the cash flows are in the future. The longer the period of the project, the greater may be the risk and uncertainty. If the investment turns out to be unsuccessful or to give less profit than expected, the company will have to bear the extra burden of fixed cost. Capital investment decisions are also not easily reversible without much financial loss to the firm because a market for second-hand plant and equipment may not exist and the conversion of such plant and equipment to other uses may not be financially viable. The only way out will be to scrap them and incur heavy losses. Thus poor decisions, such as taking value destroying projects, can result into executives losing their jobs since failure of any project can be a step towards liquidation. On the other hand, a lack of investment in assets would impair the competitive position of the firm. Thus shying away from capital investments altogether will equally do the firm more harm than good. With AIFFA’s capital budgeting course, delegates will learn the concepts and process of capital budgeting and how to apply these is making long-term financing and investment decisions in their organisations. They will learn how to carefully and effectively carry out capital investment decisions and thus avoid financial disaster and ruin for their firms and promote their long-term survival.
12950 – Business Valuation
Business valuation is used to set the fair market value of the shares of a business, in other words to know how much the business is worth in one easy-to-understand number. It is the single most important concept in finance that every business owner should know something about. The importance of business valuation has been emphasised by top investors and business people like Warren Buffet who suggested that it may as well be the only course that business schools teach. Knowing the business’s value is important in any business transfer situation – small or large. It is important in the buying and selling of a business allowing the parties concerned to be more informed in negotiating the deal, especially when there is no active market to set the price. Sellers would be more realistic in their price expectations and will avoid leaving money on the table while buyers will know exactly what premium they will be paying in the transaction. When one shareholder decides to exit the business by selling his/her shares to the remaining shareholders, knowing the business’s value will result into the price of the shares being determined amicably and thus avoid disputes. It also assists in business succession planning & future decision-making, determining tax obligations, for litigation purposes (including divorce), to access external sources of funding, and to determine the effectiveness of your strategic decision-making process. Despite its importance, many business owners have a vague idea of what their companies are worth, and most are merely guessing. AIFFA’s Business Valuation course will introduce the learner to the different methods and approaches used to calculate the value of a business. You should leave the course equipped with knowledge and skills to better understand how companies are valued and to make capital allocation decisions that lead to long-run value maximization for your corporation. For anyone involved in the field of corporate finance, understanding the mechanism of company valuation is indispensable.
117156 – Interpreting Basic Financial Statements
Many nonfinancial managers find the world of financial terminology and financial statements unclear, confusing and even downright frustrating. But the truth is most of the answers they need to make smart business decisions are buried within those numbers. Because the absolute numbers in financial statements are of little value for investment analysis, they must be transformed into meaningful relationships to judge a company's financial performance and condition. The resulting ratios and indicators must be viewed over extended periods to reflect trends, taking into account the industry, company size and stage of development. AIFFA’s Interpreting Basic Financial Statement (IBFS) course introduces the learner to the skills and techniques required to comprehensively read the balance sheet, income and expenditure statement, and cash-flow statement. They will learn how to calculate critical ratios and other essential financial measurements and precisely interpret what the numbers mean. The course is tailored to the mid- to senior-level nonfinancial decision-makers who want to attain a greater functional understanding of finance and financial statements.
12896 – Analysis of Financial Markets
Financial freedom is appealing to everyone and in this regard many people are tempted to dump their financial advisors and manage their own investments. However, investing in financial markets is no child’s play. It takes guts and require someone with the right skills and technical know-how, stable emotional make-up and stamina to crack it. Learning how to trade in financial markets is vital if you are to beat the pros or simply to save your own skin even if you trade or invest as a hobby. Attending AIFFA’s Analysis of Financial Markets (ARM) course, will equip you with the knowledge, skills and strategies that professionals use to trade or invest in stocks and other financial assets. Delegates will learn how to use technical and fundamental analysis to come up with coherent strategies for short-term or longer-term investments and to take positions in markets, whether to buy, sell or hold. They will be able to apply charting theories and techniques correctly and confidently in the markets, search for patterns across multiple time-horizons, use fundamental analysis to determine the intrinsic value of assets of interest and identify those that are over or under valued, forecast market direction for currencies, equities and commodities and improve their trading performance while minimising risk over time. While the course is appealing and useful to individuals who have an interest in trading and want to manage their own personal investments, it is even more vital to those working or pursuingcareers as financial and investment analysts, financial planners, financial and investment advisors, investment bankers, investment and portfolio managers, risk managers, financial market traders, fund managers, proprietary dealers, back office analysts and managers, market makers and arbitrageurs.
12893 – Financial Risk Management
The increasing instability in global markets resulting from rapid information flows, rising volatility, and regulatory concerns and oversighthave rendered financial risk management a necessity for all financial market role players from individuals and businesses to governments. Financial risk management is essential in mitigating and minimising unforeseen losses, which, if not managed, can cause huge uncertainties in an organisation. Knowledge of the potential risks and the ability to manage them give companies various options to deal with the potential problems that may arise and to make business decisions more confidently. AIFFA’s Financial Risk Management (FRM) course examines modern techniques for managing the different forms of financial risks, from market risks, arising due to movement in financial prices or volatilities; credit risks, arising due counterparties’ unwillingness or inability to fulfil their contractual obligations; liquidity risks, resulting when transactions cannot be conducted at prevailing market prices; operational risks, which arise from human or technical problems; as well as interest rate risk, foreign exchange risk, and country risk. Risk measurement tools and techniques that can be used for active management of the risk/return profile of financial institutions are also discussed. The course is ideal for professionals involved in risk management, auditors, financial market traders, hedge funds, portfolio managers, treasury managers, financial corporate strategists, bankers, securities dealers, insurance companies, industrial firms with significant financing operations, risk technology system developers, academic and industry researchers, risk consultants, as well as regulatory supervisors of financial institutions. Recent graduates with little or no work experience and individuals interested in switching career paths to risk management would also benefit from this course.