Financial Skills for Non-Finance People (2-day class)
Overview:
Product Development, Project Management, Engineer and Marketing teams make key decisions every day that influence strategy, product features, technology direction, and time-to-market. All of these decisions have a major impact on the profitability of new products and the overall success of your firm.
- Can you make a compelling business case, including financials, for new technology of new products?
- Can you make trade-off decision for products and technology using sound financial criteria?
- Are you prepared to participate in the business planning of your company?
Managers and leads must understand how their program, project, and/or product affect short and long-term performance of the firm as measured by standard financial analysis techniques and definitions.
This two-day intensive workshop is specially developed to provide a solid foundation in financial analysis and decision-making, both from the perspective of the company and specific projects.
Financial Skills for Non-Finance People is an interactive workshop format including exercise, case studies, and real world projects to improve participants understanding and application of:
- Financial analysis tools and how to apply them to value new products and programs
- Basic and advanced techniques to make tradeoff and a portfolio decisions for product investments
- Financial techniques to communicate and sell advanced R&D, platform and architecture programs
How You Will Benefit:
By the end of this course, participates will have gained:
- An understating of how development programs impact key numbers valued by executives
- Key financial skills to justify product or technology programs
- A firm grasp of the three major financial reports: Income statement, balance sheet and statement of cash flows
- How to determine the ROI of platform and advanced R&D projects
- A working knowledge of risk and overall value of your product portfolio
Course Outline:
Day 1
Foundations of Finance
- The Language of Finance – A vocabulary
- Understanding Financial Statements
- The governing equation
- The Big 3 – Income statement, balance sheet, statement of cash flows
- What analyst’s and CFO’s look for in financial statements
- How R&D investments impact the bottom line
- Understanding P&L Statements
- What really is Revenue?
- How to calculate Cost of Goods Sold
- What really is the expense line?
- How to get to the bottom line
- Forecasting using current P&L statements
- Factors that affect short-term forecasting
Financial Analysis Toolbox
- How do I calculate the lifetime value of a project?
- Using Discounted Cash Flow Analysis
- Calculating the time value of money
- Hurdle rates and discount rates
- ROI, NPV, IRR Profitability Index
- How Assumptions impact Results
- Forecasting product costs, prices, and sales
- Accounting for other variables
- Impact of risk on project and portfolio valuation
- Different kinds of risk
- How to calculate risk into projections
- Case Study: Real world practice…developing NPV and financials
Day 2
Applying Financial Analysis
- How much is my project worth? – Techniques in valuing new programs.
- Cost reduction projects
- Incremental products
- New technologies and pure R&D
- Platform valuation
- Infrastructure and IT projects
- Making project trade-offs
- Understanding and managing risk
- Financial impact of market uncertainties
- Understanding business models
- Advanced modeling techniques
- Real options theory
- Simulation techniques
- Exercise: Looking at the financial performance and impact of specific projects
Putting It All Together
- Dangers to financial analysis
- Doing It – Building your case using financials
- Financials as part of your business case
- Matching corporate objectives to real projects
- How much financial analysis is enough?
- Using real-world decision criteria
- Presenting financials to executives
- What a successful project looks like
- Making your best pitch
- Questions to expect and how to respond
- Case study: Looking at the financial presentations. The good, the bad, and the ugly.
Who Should Attend:
Financial skills are critical for anyone who needs to influence decisions for new programs, projects, and/or products, including:
- Product Managers and Marketers who must build a strong case for new products and programs and know how to optimize return on investment.
- Engineering Managers and Leads who must justify the R&D investment in new products and technologies
- Project managers and others in product development who must create and support the business for new products