Financial Tools for Operations

Managers in non-financial areas are routinely measured by criteria relevant to their functions – productivity, scrap, on-time shipment, downtime, customer returns, etc. – some without a clear understanding of how their functional performance links to the company’s financial performance. This course has two objectives: the first is to provide an understanding of financial terms, reporting formats and analysis, and the second is to provide an understanding of cost as it applies to the creation of goods and services. Participants will learn about assets and liabilities return on investment, budgeting and the need for cash planning. Building on the financial basics, the course then examines the elements of cost related both to products and to departmental operations, linking the operational performance results to their corresponding financial impact, which is often not obvious. The course covers overhead allocation methods, followed by a discussion of activity- based costing as a means of seeing the true cost of an indirect activity. Finally, the course presents the Statement of Performance, a tool for linking operational performance with financial performance.

Upon completion of this course participants will be able to see the business and their area of responsibility in financial terms through an understanding of the P & L report, balance sheet, cash flow statement, and budget variance reports. They will understand the contributing factors for direct, indirect and overhead product cost structure and they will be able to relate financial strategy to its implications in their area and understand and predict the financial impact of operational improvements and decisions.

The budget is the yardstick that management uses to measure Company’s performance. And in today’s tight economy, budgeting is key to effective planning and control. This course is designed to give non-financial executives practical guidelines for knowing “when” and “how” to use budgets to achieve their objectives. Major topics include: Key Elements of the Budgeting Process; Working with Operating Costs and Expense; Controlling Cash; Structuring a Capital Budget; Analyzing Variances and Taking Actions; and Making Budgets Work.

Upon completion of this course participants will have learned how to prepare and use various budgets, translate managerial decisions into dollars, and measure performance.

Job order costing is a method of cost accumulation and distribution used by companies that manufacture products according to customer specifications. This course teaches participants practical tools essential to developing consistent reliable cost estimates to make sure that job pricing is competitive and profitable as it can be. It also discusses the importance of effective costing procedures and their proper implementation. The major topics include: Job order cost system defined; issuance of materials; labor cost; role of fixed and variable overhead; overhead- related deficiencies; accounting for waste; collecting accurate data; and real-world problems in job cost estimating. The course also provides the basic information on activity-based costing.

Upon completion of this course participants will have learned the procedures and methodology necessary to collect data, allocate costs, and develop an accurate estimate. Participants will have gained experience in applying these techniques in company-specific situations.

Lean manufacturing is about operating the most efficient and effective organization possible, with the least cost and zero waste. The objective of the course is to provide a practical approach to defining financial benefits of an organization implementing lean manufacturing concepts. The course provides working approaches on converting operational improvements into tangible financial results; examines operational performance in relation to assets employed; provides guidance on how to restructure financial statements to determine the real effect of lean manufacturing on profitability of the organization; reviews and quantifies production levels and waste elimination opportunities; reviews financial incentives for employees practicing lean manufacturing.

Upon completion of this course participants will be able to determine financial benefits of lean manufacturing in various operational areas. Company’s operational performance criteria and objectives will be used in the course to provide a practical application of the acquired knowledge.