FINANCE COACH
3 MONTH ACCOUNTING COURSE OVERVIEW
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Copyright & Disclaimer: The Finance Coach training programs are general advice that does not take into account your particular financial, personal or geographic position, and have been developed to teach you the basic principles of business accounting and business financial management. They are not a substitute for professional accounting or financial planning advice. Before taking actions that could have a negative effect on your financial situation, please discuss your plans with a suitably qualified and experienced advisor. The examples given in these courses are fictional (including the ‘Real-life Examples’), and are given to help you apply the theory to actual business situations. Any similarity with a real business or person is purely coincidental. This workbook, as all Finance Coach material, is covered by an exclusive copyright, with the master rights being held by UBT Accountants (‘UBTA’). No part of this material may be copied, distributed, loaned, rented, given away, etc. Any breach of this copyright will be viewed seriously, and will be pursued legally through the courts of law. Any suggestions should be sent to
[email protected]
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FINANCE COACH 3 MONTH ACCOUNTING COURSE OVERVIEW
Index INTRODUCTION 4 WEEKLY ASSIGNMENTS
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TRAINING VIDEO
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STUDY TIME
5
SUPPORTING WEBSITE
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SITTING THE FINAL EXAM
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OVERVIEW 8 DETAILED SUMMARY
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Profit & Loss
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Balance Sheet
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Other Topics
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Version 6.35
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FINANCE COACH 3 MONTH ACCOUNTING COURSE OVERVIEW
Introduction
• B usiness development focused – rather than just a study course, we are pointing out ways to become more financially secure.
Welcome to this UBT Accounting developed “accounting course for non-accountants”.
This course is broken up into 12 weeks; here is a summary:
The whole aim of this course is to enable anyone to better understand their business financial statements, in view of making educated decisions that will positively influence profits, cash flow and equity growth.
WEEK
ITEM
1
Introduction and Overview
2-4
Trading Performance (Profit & Loss)
5-7
Balance Sheet Management
8
Assets and Depreciation
9
Classification & Validation of Transactions
10
Budgets and Planning
11
Projecting Cash Flow
The differences between this course and other accounting courses are:
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• It has been written using the unique “topdown” approach, meaning you can study it using your own financial reports; ‘normal’ accountancy courses spend months (or even years) on theory, and it is only then that you would start to refer to a set of financial reports as part of your study. • E asy reading – we have made every attempt to make the course easy to understand, regardless of your level of education.
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12 EXAM!
Weekly Assignments
Study Time
At the end of each week there is an assignment. The idea is that each week you get to test yourself on the new skills and knowledge that you have learnt. Once you have completed the assignment, email this to UBTA Finance Coach (via Assignments.
[email protected]) for marking.
The time required to study each week and to complete the assignment will vary from person to person, however in approx. terms you should plan to set aside between 3 – 6 hours for each module. You will need to allow the following each week:
When you enrolled there were two options you needed to be aware of: a) If you were enrolled through a business your manager will be able to find out when you submitted each assignment and what mark you received. b) There was an option to do the course ‘at your own pace’, which means when each week’s work is done, and when you submit the assignments, is up to you. Alternatively you may have been enrolled in the option that keeps to strict timelines, so you must complete and submit each assignment as per your Study Plan. If you are unsure what options you were enrolled under, please contact UBTA Finance Coach.
Training Video Each chapter is supported by a ‘video’ lesson, delivered by internet - based ‘webinar’ recording. To access these webinars you will need to log onto the UBTA Finance Coach website. There are ‘Notes Pages’ provided on the website for each supporting video. Print these off PRIOR to viewing, for taking notes at the time. If you are having any difficulty understanding a topic, or would like to see some area covered in more detail, please send your questions / suggestions to UBTA Finance Coach.
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a) 1 to 3 hours to read the workbook b) 1 to 2 hours to complete and lodge the assignment c) ½ to 1 hour to watch the supporting webinar d) You may also like to further explore a topic (beyond what is covered in the course); an example of this would be to further investigate tax in your region. e) Make sure you also allow time to apply your new knowledge and ideas to your own financials. This will greatly accelerate your learning, and give you maximum benefit (and return on investment!) from this course. If you have had no ‘exposure’ to business financials before, and find that the course is taking longer than this, it would be better not to rush it, but rather to ensure that you understand each section before moving on. Each module is like a building block, and you will need to understand each one before studying the next module. If you have been involved in business finances and/or accounting before you may find that you can complete the course faster than the times suggested. SUGGESTION: Add a recurring appointment in your Weekly Schedule now to ensure you set time aside to complete this course; be a finisher!
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FINANCE COACH 3 MONTH ACCOUNTING COURSE OVERVIEW
Supporting Website The www.ubtfinancecoach.com website is the learning resource centre for 3MAC Students and Subscribers. As a 3MAC student, you will have access to: • 3MAC Workbooks 1 – 11 • 3MAC Assignments 1 – 11 • W ebinar recordings to assist you with your 3MAC studies Finance Coach Full Business Subscribers have access to a wealth of finance-related resource. In addition to the items offered to 3MAC Students, there are:
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© Copyright Universal Business Team Pty Ltd 2012
• Excel Tools, Calculators & Templates • A n Accounting Glossary of Terms used in the industry • F requently Asked Accountancy related questions to review • The ability to lodge your own question • Accounting Software Tips (Coming Soon) • Regional Information (Specific to your region) • Finance Seminar Packs & Recordings • White Papers on specific issues/topics The Finance Coach website has been built for YOU and YOUR Finance Team!
Sitting the Final Exam Once you have passed all of the 11 weekly assignments, you can apply to sit the final exam - however, this is optional, unless your employer insists on it. This exam takes place at a registered educational centre, such as a school. It is an OPEN BOOK exam, meaning you can bring reference material with you. Finance Coach is testing your ability to do work correctly, not just your ability to store
It does need to be completed in 3 hours. You cannot take the exam question booklet with you (after the exam), and as the questions may be reused in later exams you will not get your answer booklet returned to you. You cannot bring phones or electronic equipment into the exam ; you will need to bring a basic non - programmable calculator. You will receive a comprehensive report, showing any areas that you need to study further.
information in your memory.
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© Copyright Universal Business Team Pty Ltd 2012
FINANCE COACH 3 MONTH ACCOUNTING COURSE OVERVIEW
Overview This course has been written for NONACCOUNTANTS, including business owners and managers based on their requests to UBTA. It has been written using a practical approach (“top-down”). You will learn how to pick up a set of financial reports, analyse them, be intelligent as to cause & effect, and be able to plan events to result in improved financial performance and results.
INTRODUCTION: WEEK 1: THE FINANCIAL REPORTS PROFIT & LOSS: WEEK 2: TRADING PERFORMANCE WEEK 3: BREAK EVEN POINT WEEK 4: PROFIT & LOSS KPI’s & Key Ratios BALANCE SHEET: WEEK 5: EQUITY GROWTH WEEK 6: BALANCE SHEET KPI’s & Key Ratios
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If you know nothing about accounting, but you are prepared to sit down and look at your monthly figures and then look at a full set of figures every three months, within two years you can just about rate yourself as an accountant.
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WEEK 7: BALANCE SHEET – How to Manage it OTHER TOPICS: WEEK 8: ASSET REGISTER & DEPRECIATION WEEK 9: CLASSIFICATION & VALIDATION OF TRANSACTIONS WEEK 10: BUDGETING FOR GROWTH WEEK 11: PROJECTING CASH FLOW WEEK 12: EXAM WEEK!
Detailed Summary
WEEK 3: BREAK EVEN POINT 1.12
How to calculate your Break Even Point
INTRODUCTION:
1.13
Sustainable Business Model
WEEK 1: THE FINANCIAL REPORTS
1.14
Fixed and Variable COGS
1.15
Contribution Margin
1.16
ow to use the UBTA Sales & Equity H Tracker (SET)
1.17
Break Even Units
1.18
How to use this knowledge
1.19
How to increase Sales & Profits
1.1 Introduction 1.2 Generally Accepted Accounting Principles 1.3
Bookkeeping vs. Accounting
1.4
The suite of Financial Reports
1.5
How these Reports interact
1.5.1
Profit & Loss (Trading Statement)
1.5.2
Balance Sheet
1.5.3
Asset Register (Depreciation Schedule)
1.6
Double Entry Bookkeeping
PROFIT & LOSS:
HOW TO CREATE A SALES GRAPH WITH TREND LINE IN MS EXCEL: 1.
Highlight your data in Excel:
Understanding your P&L
1.8
What is EBIT?
1.9
Calculating your Cost of Goods Sold
1.10 Inventory 1.10.1 Periodic 1.10.2 Perpetual 1.11
Introduction to Tax
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Based on actual results, the accountant can then identify what direction the finances are heading in.
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This could be as simple as comparing the Sales for the last 12 Months, and commenting on the general movement (increase or decrease) of Sales. Better still, the business owner or manager can learn how to read the reports and make appropriate decisions that will have a positive impact on the PERFORMANCE of the business, as well as continue to improve the health of the Balance Sheet. 2.
On the tool bar at the top click the ‘Insert’ menu, and then in the ‘Charts’ section, select ‘Line’ and the preferred graph:
Furthermore, as he makes these decisions he can continue to monitor and interpret the results to ensure that they have the desired result.
Because you’ll learn by watching the figures, you’ll see trends.
WEEK 2: TRADING PERFORMANCE – The Profit & Loss Statement 1.7
Why trend analysis is important:
...if there is a trend that shows deterioration you can correct it quickly. 3.
Once you have your graph, right click on the data line and select ‘Add Trendline…’
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FINANCE COACH 3 MONTH ACCOUNTING COURSE OVERVIEW
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Profit & Loss
1.30
Net Profit
1.31
Net Profit Percentage
WEEK 4: PROFIT & LOSS KPI’s & Key Ratios
1.32
Interest Cover
1.33
Trend Analysis
1.20
Analysis & Management Decisions
1.34
Business Overhead Expenses Check
1.21
What are Ratios?
1.35
Monitoring Expenses by Percentage
1.22
Gross Profit
1.36
Trend Analysis - Supply of Goods
1.23
Gross Profit Percentage
1.37
Part - year Figures
1.24
Cost of Goods Sold
1.38
Markup vs. Margin
1.25
Management Decisions
1.26
‘Spoilage’
1.27
Work in Progress (WIP)
1.28
Productivity Factor
1.29
Expense Ratio
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Balance Sheet WEEK 5: EQUITY GROWTH 1.39
Main Entity Structures
1.40
Assets vs. Liabilities
1.41
Owner’s Equity
1.42
The Accounting Equation (A - L = E)
1.43
Understanding your Balance Sheet
1.44 The Balancing Act! 1.45
Current vs. Non-current
1.46
Managing by Net Worth
1.47
Realisable Value
WEEK 7: BALANCE SHEET – How to Manage it 1.62
Financial Management Pathway
1.63
Balance Sheet Audit
1.64
Cycle of Continual Improvement
1.65
Need for Planning
1.66
Financial Operating Cycle
1.67
Sustainable Growth
1.68
Strategic Financial Plan (SFPTM)
FINANCE COACH 3 MONTH ACCOUNTING COURSE | TRADING PERFORMANCE
WEEK 6: BALANCE SHEET KPI’s & Key Ratios 1.48
The need for Analysis
1.49
Under or Over Trading
1.50
Balance Sheet Ratios
1.51
Equity Ratio
1.52
Furniture Manufacturer Sale = $3,000 + 300 GST
GST = $300
GST RECEIVED: $300
Furniture Retail Store Sale = $5,000 + 500 GST
GST = $200
$200 ===== TOTAL $500
Customer (End user) Price paid $5,500
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“What’s next?” Here is what is coming up in the next two weeks: 3.
this week we look at ways management can use this knowledge to maximise the performance and financial security of their business. 4.
Liquidity Ratios
1.54
The Working Capital Cycle
1.55
Current Ratio
1.56
Quick Ratio
1.57
Debtor Days
1.58
Creditor Days
1.59
Stock Turn days
1.60
Return on Investment
1.61
Return on Equity
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In Week Three we focus on understanding “Break Even”, how to calculate what your minimum sales are to cover owners remuneration, loan repayments plus all the overheads. The differences between ‘Survival Break Even Sales’ and ‘Incentive Break Even Sales’ are discussed and options calculated. We explore the UBTA Sales & Equity Tracker (‘SET’) tool, and learn how to use this tool for calculating these targets, and trialling different scenarios and options. Finally in
Debt to Equity Ratio
1.53
($500 – 300)
In Week Four we are analysing the Profit & Loss statement, looking at Gross Profit and Net Profit, how to calculate and monitor trends and methods of increasing trading performance. We also look at ‘Contribution Margin’, a method of calculating how much profit an item can contribute, after removing the fixed costs of production and sale.
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FINANCE COACH 3 MONTH ACCOUNTING COURSE OVERVIEW
Other Topics
WEEK 10: BUDGETING FOR GROWTH 1.89
What is your financial target?
WEEK 8: ASSET REGISTER
1.90
Survival vs. Incentive Break Even
1.91
Fixed & Variable COGS
1.92
Analysing your Costs
1.93
Fixed & Variable Overheads
1.94
Economic cycle
1.95
Effects of Inflation
1.96
Business Planning
1.97
Divisional Budgets & Analysis
1.98
Budget vs. Actual Comparison & Analysis
1.99
Business Mathematics
1.69
Asset Control
1.70
Asset (Capital Item) or Expense?
1.71
Depreciation: what is it?
1.72
Depreciation Schedule (Asset Register)
1.73
Asset Cost
1.74
Calculating Depreciation
1.74.1 Straight Line 1.74.2 Diminishing Value 1.74.3 Units of Use
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1.75
Accounting for Depreciation
1.76
Gain or Loss on Disposal
1.77
Log books
1.78
Low Value Pool
WEEK 11: PROJECTING CASH FLOW 2.00
What is Cash Flow?
2.01
Profit does not Equal Cash
2.02
Working Capital Cycle - Revisited
2.03
Cash Affecting Activities
WEEK 9: CLASSIFICATION & VALIDATION OF TRANSACTIONS
2.04
Source and Application of Funds
2.05
Statement of Cash Flows
1.79
Your Chart of Accounts
2.06
1.80
Tax Codes
ash Effect from the Sale of Non - current C Assets
1.81
How to correctly classify Transactions
2.07
How to Estimate Cash Requirements
1.82
Expense…or Capital Purchase?
2.08
Cash Flow Projections
1.83
Work Expense…or Private?
2.09
Monitoring Results
1.84
Verification & Auditing
2.10
Budgeting for Tax
1.85
Only Valid Transactions!
1.86
Bank Reconciliation
1.87
End of Period Adjustments
1.88
Office Procedures for Accurate Financials
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WEEK 12: EXAM WEEK! 2.11
Total Course Overview
• Frequently Asked Questions (FAQ’s) - if you are a subscriber, the answers are available to you and your team. Examples include:
> What is the difference between the current and non-current areas of my Balance Sheet? > Why does my Accountant say that I need to show a partner’s salary in my Profit & Loss Statement? It makes my performance look much worse!
> Could you recommend a way to get my Key Staff intelligent as to the financial side of the business without completing a full Accounting Course?
> To grow this business we will need to borrow extra funds; how can we work out a suitable level of borrowings that is manageable?
> How can I stop my sales team over discounting product to customers?
> Why do I need to know my current ratio? And how do I calculate this?
> What is the correct way to obtain accurate costings on items we import?
> What is the difference between cashbased and accruals-based accounting?
> How can I predict what a sustainable growth rate for my business is?
> We have identified that we have excess stock, a lot has been here over two years. What do you suggest we do?
> Is there any suggested formulas for staff incentive bonuses?
> My business has been operating profitably but I seem to be short on Cash in the business. What are some areas I could look at to free up Cash?
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Visit: www.ubtfinancecoach.com - it’s free to register!
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FINANCE COACH 3 MONTH ACCOUNTING COURSE OVERVIEW
Notes:
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© Copyright Universal Business Team Pty Ltd 2012
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