Day 2 - Non-Current Assets, Cash Flow Statements and Debt & Equity

Day 2 - Non-Current Assets

This session illustrates the difference between tangible and intangible assets and their use in a business. Participants learn about purchasing, depreciating/amortizing and selling tangible and intangible assets, and how these transactions are reflected in the financial statements.

Key topics:

• Difference between tangible and intangible assets
• Difference between identifiable intangibles and goodwill
• Finite life vs. indefinite life intangibles
• Capital expenditure and asset sales
• Depreciation, amortization and impairments
• Impairment testing
• Finding information in the financials
• Account analysis - inflows and outflows (B-A-S-E)
• Asset efficiency ratios

Day 2 - Cash Flow Statements

Participants learn how to build cash flow statements using historical and forecast balance sheets. The relationship between cash and changes in assets, liabilities and equity accounts is analyzed in detail, allowing participants to understand the full integration of the income statement, balance sheet and cash flow statement. The cash flow session is particularly relevant as a foundation for modeling skills.

Key topics:

• The components of the cash flow statement
• Why the cash flow statement is a reconciliation of two balance sheets
• How to divide a company's balance sheet into operating, investing and financing activities
• Calculate a cash flow statement from two balance sheets and an income statement
• Asset sales and impairments/restructuring
• EBITDA as proxy of operating cash flow and potential pitfalls

Day 2 - Debt and Equity

In this session participants learn how companies finance their operations. The characteristics of debt and equity are analyzed, including how to account for new debt and equity issues. Various kinds of debt instruments are identified, and the main equity accounts are examined. Finally some of the most important ratios are covered.

Key topics:

• Debt disclosure in published financial data
• Bank debt and bond issues
• Net debt
• The difference between authorized, issued, and outstanding shares
• Common Stock and Additional Paid-in Capital accounts
• Share issues and repurchases
• Dividends and interest payments
• Coverage and leverage ratios