Stepping into a role which requires business finance knowledge? Here is a short guide offering advice, tools, and expertise that you will need to equip yourself with to be successful. Check out our Diploma in Business Finance for more.

1. ESSENTIALS
2015
BUSINESS
FINANCE

2. KNOWTHE
LANDSCAPE
1
Stepping into a role which requires business finance
knowledge?
Here is what we are hearing from our network to give you an insight into what you might need
to know in 2015.
SPEAKTHE
LANGUAGE
TRANSFORM
THEBUSINESS
2 3

3. KNOWTHE
LANDSCAPE
TOPTrendsfor 2015
1

4. SURVIVAL TO GROWTH
EQUITY BUBBLE?
Transitioning from survival to growth mode in 2015. If the firm is creating value, then companies can realistically
think about growth. Firms need to be alert because any growth that dissipates value will merely destroy your
company at an accelerated pace!
Are we in an equity bubble – could exuberant company valuations get even more exuberant?
CREATING VALUE
Creating value for your business will continue to remain top of mind for all businesses in 2015. In
other words, is the company and its activities generating a sufficient rate of return to compensate
their shareholders for the risks they are taking by investing in the firm?

5. INTEREST OVER TIME
KEY STAT
Based on Google Search, this graph shows how often a ‘business finance’ and ‘finance management’ as search-terms
were entered relative to the total search-volume across various regions of the world, and in various languages.
Forecast
Google Trends Graph

6. VOICE OF THE EXPERTS
Economists comment on the state of Finance!
“Economics Gave Us the Wrong Model”
http://sloanreview.mit.edu/article/overheard-at-mit-nobel-laureates-on-the-state-of-finance/
“Structural Risks are Inherent”
GEORGE AKERLOF
ROBERT MERTON
Today, no major financial institution in the world — and this includes all the central banks — can function without
the computer-based mathematical models of modern financial science. But as I need hardly say, the global
financial crisis of 2008-2009 brought about by financial innovations — particularly those involving derivatives
and mathematical models.
Without the right economics, we’re going to get the wrong economic policy.…Three times in the United States in
the last 125 years, we’ve had major, major downturns. So I see this as a tell-tale — a telltale that the system’s
not generating the right economics.

7. SPEAK THE
LANGUAGE
Water cooler terms
2

8. WATERCOOLER TERMS
WACC
The WACC is essentially the minimum return that should be earned by a
company to gratify its owners, creditors, as well as other capital providers
Valuation multiple
The quickest way to value a company, and are useful in comparing similar
companies (comparable company analysis). They attempt to capture many of
a firm's operating and financial characteristics
http://www.investopedia.com/
Robust
A characteristic describing a model's, test's or system's ability to effectively perform
while its variables or assumptions are altered. A robust concept can operate without
failure under a variety of conditions.
Monetise to convert an asset into or establish something as money or legal tender.

9. IN WARREN’S WORDS
"It's far better to buy a wonderful
company at a fair price than a fair
company at a wonderful price."
“You only find out
who is swimming
naked when the
tide goes out."
"Investors should remember that
excitement and expenses are their
enemies. And if they insist on trying
to time their participation in
equities, they should try to be
fearful when others are greedy
and greedy only when others are
fearful."
"I try to buy stock in
businesses that are so
wonderful that an idiot
can run them. Because
sooner or later, one will."
Insights from “the most successful investor” of our times – Warren Buffett

10. TRANSFORM
THEBUSINESSManager’schecklist toassessingreadinessfor growth?
3

11. • Review statistics and historic growth data of competitors
• Compare their initial size to current size to calculate their growth rate
• Do several such calculations to arrive at an overall average annual growth rate for the industry to
benchmark your business against
• Assess how many of your competitors have gone out of business
• What is your current market share?
Researchcompetitors
• Compare your actual results to your projections
• Compare your results to competitors results- this will show you growth potential
• Are you making a profit? (remember that your Net Operating Cash Flow should
always be higher than Profit After Tax) . If not, then why? Do you have a plan in
place and people responsible to implement this plan?
• Does the business have any debts/liens against it? Is there a plan to overcome this?
• How much does the business write off for bad debts every year?
Assessyour finances– analyse your Balance sheet, P&LandCashFlow statements
Run through this checklist to assess your businesses readiness for growth

12. • Compare actual product/service levels with your predetermined ‘best-case’ levels
• Calculate the financial loss associated with each product/service
• How many customers does your business serve on a regular basis? Who/where is the market?
• Is there a client that accounts for a large portion of the sales revenue? (if so, this indicates business risk)
• Is the business seasonal?
• Are your products/services in danger of becoming obsolete? Ie. Is it a “fad” business?
Assessyouproduct /service levels. Assesscustomers/clients
• Compare total labour costs to gross revenue
• Assess if turnover justifies number of employees, wages and benefits
• Do any of the employees belong to unions?
Assessyour HumanResources
Assessyour Marketing
• How does the business market its products/services? Is this different from how the competitors do it?
• Does the business have any exclusive marketing rights and patents?
• Does marketing lead generation convert into sales?
• Compare gross revenue to total cost of marketing each product/service.
• Does the marketing function have SMART goals?
Run through this checklist to assess your businesses readiness for growth

13. 2. Management discussion and analysis (MD&A)
1. Start with the five year summary
FROM THE CLASSROOM
• Look for things that jump put- big picture trends
• Sales growth
• Change in net income – tells you about margins
• Inventory – inventory growth, inventory turn and is it affecting cash?
• Dividend policy – consistent one indicates a good signal to the market
• Borrowings, investments in assets and tax
• look for price and volume changes
• Where are the risks in the business?
4. Earnings per share
3. Tax
• Current and deferred - can tell u about the age of the assets, maturity of the company ie low deferred tax
indicates that they are likely to invest in new fixed assets
• Basic and diluted- measure possible dilution and see by how much shareholder returns may be diluted by
executive share options.
10 steps to de-coding financial statements for any company

14. 5. Cost structure
• Fixed and variable split
• Look at it in relation to sales
• Contribution analysis and breakeven
• Calculate operating leverage
6. Calculate ROE (return on equity) drivers
• Profit margin
• Asset turnover
• Leverage analysis
8. Look at the Balance Sheet
7. Look at the income statement
• Calculate relationship between profit and sales and cost and sales
• Costs control and effect on profitability
• Where is they money invested? And Who is putting up the money in this business?
• Keep any eye on Goodwill and intangibles
• Development costs – are costs being capitalised?

15. 9. Look at the cash flow statement
• Where is cash coming from? How is it being used?
• Calculate cash flow from operations/net income- indicates ability of a business to convert profit into cash ,
high indicates cash generative business
10. Look at the notes
• Segment analysis, Costs, Assets, Receivables and payables- you are looking for any anomalies and irregularities
• Impairment
• Pension

16. IMI DIPLOMA
INBUSINESSFINANCE
___
Click here
Your first step to earning a flexible Masters degree. Click here for details on IMI Masters of Business Framework
For more information, contact the team:
Freephone: 1800 22 33 88
Email: programmeadvisors@imi.ie

17. The IMI Diploma in Business Finance will give you the confidence and skills required to participate in
decision-making at the highest level, and to work effectively with your finance colleagues. On the
programme you will work with experienced finance specialists and business practitioners to develop
knowledge and competence in the key areas of finance.
Talk to our programme advisors today programmeadvisors@imi.ie 1800 22 33 88
Meet the Programme Director
Cormac Lucey
Visit www.imi.ie to watch an introductory video for the IMI
Diploma in Business Finance.
Programme Duration:
The programme runs over 6 x 3 day
and 1 x 2 day modules. Classes run
from 9.00am to 5.00pm each day.
All teaching is held in the IMI’s
National Management Centre in
Sandyford.
Programme Dates:
26, 27, 28 April 2016
31 May, 01, 02 June 2016
21, 22, 23 June 2016
23, 24, 25 August 2016
20, 21, 22 September 2016
18, 19, 20 October 2016
22, 23 November 2016

18. © IMI 2015 programmeadvisors@imi.iewww.imi.ie 1800 22 33 88
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