Section outline

  • Module Homepage

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  • 1. Introduction

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    Welcome to "Financial Planning for Managers!" Financial planning is one of the key tools of financial management. This introductory section motivates the topic and provides an overview of the structure of the module.

      

      

    The main learning goals of this module are:
    • Determine a firm's cash flows from its balance sheets and income statement.
    • Get familiar with different types of cash flows, in particular operating, free (firm), and residual cash flow.
    • Learn how to forecast cash flows and compile a financial plan.
    • Use Monte Carlo Simulation to transform financial plans into powerful management tools.
    Activities: 4

  • 2. The Accounting Framework

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    This section takes a look at the fundamental accounting framework we need for financial planning. It shows how to simplify the available balance sheets and income statements to reflect the firm's operating, investment, and financing activities.

    Activities: 4

  • 3. The Cash Flow Statement

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    Now that we have the necessary accounting knowledge, we learn how to identify how much money a firm generates and, more generally, what the firm's sources and uses of funds are.

    Activities: 4

  • 4. Extensions and FAQ

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    The previous session has provided the most important tools to derive cash flow statements. In this section, we turn to some extensions and frequently asked questions when it comes to cash flow estimation.

    Activities: 3

  • 5. Financial Projections

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    This section of the course ventures a glimps into the financial future of a company. Building on the knowledge from the previous sections, we learn how to forecast a firm's balance sheets and income statements and how to derive the forecasted cash flow statements based on this information.

    Activities: 4

  • 6. A Comprehensive Case Study

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    Let's now apply the key considerations of this course in a real-life setting. The firm we consider is being sold to a new owner-manager. The purpose of the financial plan is to figure out whether the firm will generate sufficient cash in the future to repay the debt that was raised to finance the acquisition price. Note that this is a typical leveraged buyout transaction.

    Activities: 4

  • 7. What's next?

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    Now we are ready to compile financial plans. This constitutes a very powerful management tool. Financial planning typically appears together with its twin sister Financial Analysis, i.e., the ability to read financial statements and quickly assess important elements of financial health and performance. Financial planning is also one of the key ingredients of every serious Firm Valuation. Therefore, these two topics are logical extensions of this course.

    Activities: 2