Financial Analysis and Decision-Making (4 Weeks)

WEEK 1: Foundations of Financial Statements and Financial Reporting

Day 1: Introduction to Financial Analysis

• Importance in managerial decision-making
• Role in performance monitoring, control, and strategic alignment
• Financial vs. managerial accounting
• Stakeholders and financial decision impact
• Case Study: Starbucks vs. McDonald’s – Financial statement purpose and stakeholder focus

Day 2: The Balance Sheet

• Structure: Assets, Liabilities, and Equity
• Current vs. non-current items
• Working capital cycle and liquidity signals
• Case Study: Walmart's balance sheet – working capital efficiency

Day 3: The Income Statement

• Revenue recognition and expense matching
• Gross profit, EBITDA, EBIT, net income
• Operating vs. non-operating income
• Case Study: Amazon income analysis – scalability vs. profitability

Day 4: The Cash Flow Statement

• Classification: Operating, Investing, Financing
• Direct vs. indirect method
• Depreciation, working capital adjustments
• Case Study: Apple cash flow breakdown – capital investment decisions

Day 5: Statement of Changes in Equity

• Components: capital, reserves, retained earnings
• Link with other statements
• Impact of dividends and retained earnings
• Case Study: Comparative equity analysis – growth firms vs. mature firms

WEEK 2: Financial Statement Analysis and Modelling

Day 1: Horizontal and Vertical Analysis

• Horizontal analysis: year-over-year changes
• Vertical analysis: common-size statements
• Patterns in growth, cost structure, and asset use
• Case Study: PepsiCo 5-year horizontal and vertical trends

Day 2: Ratio Analysis – Liquidity & Profitability

• Liquidity: Current, Quick, Cash Ratios
• Profitability: Gross margin, ROA, ROE, Net Profit Margin
• Case Study: Hospitality sector liquidity vs. tech sector profitability

Day 3: Ratio Analysis – Leverage & Performance

• Financial leverage and solvency ratios: D/E, Interest Coverage
• Efficiency: Inventory turnover, A/R turnover
• Case Study: Airline industry – impact of leverage on risk

Day 4: DuPont Analysis & Integrated Models

• Decomposing ROE
• Capital efficiency and leverage effects
• Case Study: DuPont dissection of General Motors vs. Toyota

Day 5: Predictive Models – Z-Score, Kida, Sherrod

• Altman Z-score – bankruptcy prediction
• Kida model (liquidity and leverage composite)
• Sherrod model (cash and net income warning indicators)
• Case Study: Assessing a distressed retail firm using Z and Kida models

WEEK 3: Cash Flow Preparation and Analysis

Day 1: Cash Flow Preparation from Financials

• Indirect method derivation from income and balance sheet
• Adjustments: depreciation, working capital changes
• Exercise: Prepare full cash flow for a manufacturing firm

Day 2: Operating, Investing, and Financing Activities

• Cash from core operations
• Capex, asset disposals, acquisitions
• Debt issuance, dividends, stock buybacks
• Case Study: Tesla’s investment activities and financing strategy

Day 3: Cash Flow Ratio Analysis

• Operating cash flow ratio
• Cash interest coverage
• Cash reinvestment ratio
• Free cash flow analysis
• Case Study: Telecom sector – cash flow risks and capex sustainability

Day 4: Scenario & Sensitivity Analysis

• Best/worst/expected case scenarios
• Stress testing operational cash flow
• Sensitivity to input assumptions (sales, costs, interest)
• Exercise: Build three scenario cash forecasts for a retail startup

Day 5: Linking Cash Flow to Decision-Making

• Liquidity management
• Dividend policies and reinvestment
• Signals to creditors and investors
• Case Study: Netflix’s negative cash flow – sustainable or risky?

WEEK 4: Financial Planning, Internal Controls, and Strategic Alignment

Day 1: Financial Planning Hierarchy

• Strategic, tactical, and operational plans
• Long-term plans vs. short-term budgets
• From vision to KPI to budget
• Case Study: Building a strategic financial plan for a logistics firm

Day 2: Budgeting and Variance Analysis

• Budget types: incremental, zero-based, rolling
• Variance analysis: price, volume, efficiency
• Budget responsibility centres
• Case Study: Variance investigation in an underperforming retail chain

Day 3: Internal Financial Control Systems

• Objectives: safeguarding assets, compliance, accuracy
• Preventive vs. detective controls
• Red flag indicators (fraud, insolvency, misreporting)
• Simulation: Map and evaluate internal control in a finance department

Day 4: Strategic Tools – Balanced Scorecard & Risk-Based Planning

• Financial perspective in BSC
• Linking financials with customer, internal process, and learning goals
• Risk-based budgeting and scenario planning
• Case Study: Balanced Scorecard for a healthcare provider

Day 5: Financial Strategy and Vision 2030 Alignment

• Role of financial sustainability in Vision 2030
• Strategic financial reforms and private sector growth in KSA
• Embedding red flags and financial discipline in public and private firms
• Final Project: Group presentations – develop a financial decision model aligned with Vision 2030 and BSC

Deliverables (Per Week):

• Real-life case study discussion
• Group financial model or ratio analysis
• Hands-on Excel or software-based exercise
• Presentation and peer feedback
• End-of-week quiz or simulation assessment