Financial Management

Introduction

The objective of this course is to introduce participants to the analysis and use of the financial statements (Balance Sheet, Income statement, Cash Flow statement) for the purpose of managing:

- the value creation during the financial period, and the financial situation at the end of the financial period, and
- the future cash-flow generating (earnings) capabilities.

However, the information needed for financial management does not automatically result from merely reading the financial statements: analysis and interpretation is necessary. The main proposition of this course is that meaningful interpretation and subsequent financial decisionmaking results from understanding and analysing the provided financial information.

The course is entirely taught online within Insendi and uses primarily digital means for course delivery.

Course content

The course consists of (guest) lectures, group-based casework, and an individual course paper. Lectures introduce the indicated topics conceptually and explore the application of these concepts in real-life cases. Course sessions are categorized into three topical areas:

• Introduction: purpose and need of financial statement analysis for financial management, reformulation of the income statement and the balance sheet for subsequent analysis and decision-making. 

• Profitability, growth, and sustainability of financial results: return on invested capital (ROIC) and drivers of ROIC, return on equity (ROE) and drivers of ROE, and the measurement of value-creating and sustainable growth.

• Statement of cash flows and liquidity analysis: understanding the statement of cash flows, identifying the free cash flow of the entity, and liquidity ratio analysis.

This course is the first course of a triplet called “Money Matters”. Nevertheless, each course can also be taken separately as a standalone course. The relationship with the second course in the triplet - Treasury Management - is the statement of cash flow and liquidity analysis (Topic 1 – Cash is Queen) while the relationship with the third course in the triplet - Management Control - is in the financial performance measures of profitability, growth, and sustainability (Conventional Management Control). Deliberate effort is made to close the Financial Management course with the initiating topic of the Treasury Management course, thus connecting the first and the second courses in the triplet.