Finance for the Supply Management Professional: Supplier Financial Analysis
- To learn what is important to look for in financial statements
- Identifying potential financial misstatements
- Recognizing the "Red-Flags" on financial statements
- Using ratios for quick analysis
- Using a range of Excel® models to analyze a supplier with little information.
MWHAT YOU WILL LEARN
- A proven set of decision-making tools and financial analysis techniques
- How to effectively evaluate suppliers’ financial status
- How to apply best-practice financial practices to SMP.
- How to build a convincing case study for decision-making
WHO SHOULD ATTEND?
Supply Management professionals who want to learn about the relationship between finance and procurement while learning and/or revisiting the advanced concepts of the financial side of the business.
- Financial professionals
- Operational managers
- Process owners
- Project managers
- Everyone tasked with the effective and efficient evaluation of potential investments, acquisitions, outsourcing agreements, or long-term contracts
- Those responsible for the making or evaluating management of a decision-making process and want to use Excel® more effectively and an analytical tool
Each participant will receive an Excel® workbook of the case study templates to be worked through during the program so please bring your laptops loaded with Excel® 2010 or later.
Course Outline –
I. Finance and Accounting introduction
- a) Basic financial statement understanding
- i) Balance Sheet
- ii) Income Statement
- iii) Cash Flow Statement
Case study: Find the Links between the 3 financial statements
- b) Non-Cash Deductions & its Impact
- i) Depreciation vs. Amortization vs. Depletion (with Excel examples)
- c) Financial vs. Management Accounting (with Excel examples)
II. Key Ratios for Analysis
- a) What are Ratios & why are they important
- i) Liquidity; Turnover; Leverage & Profitability (Excel Ratio model)
Case study: ROE, ROA & Equity Multiplier calculations using the DuPont Model
- b) Suppliers Benchmarking model
Case study: Compare Supplier Ratios to Peer group
- c) Operating Cycle vs. Cash Cycle
Case study: Calculate the Cash & Operating cycles of a Supplier
III. Financial Analysis
- a) Altman Z-Score to measure financial Solvency – 3 approaches
Case study: Calculate the Z Score model; predict bankruptcy
- b) Beneish M-Score model & what it tells us about earnings manipulation
Case study: Apply the Beneish model to determine if earnings are real
- c) The F-Score & how is reveals potential fraud
Case study: Calculate a supplier’s F-Score to determine accuracy of financials
- d) The Sloan Index to compare cash flow to profits
Case study: Calculate this index to see how solid their cash flow is
IV. Supplier Analysis
- a) Sourcing analysis (Excel model)
- b) Sourcing alternative analysis (Excel model)
- c) The value of taking/passing on a Discount
Case study of a Supplier Discount
- d) What is the value of the Economic Order Quantity (EOQ) (Excel model)?
- e) Target Costing Model (Excel example)
- f) How do you know how much External Funding is Needed by a Supplier?
Case study: Calculate EFN to make sure they have enough