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Unformatted text preview: Course 2: Financial Planning Course 2: Financial Planning Course 2: Financial Planning Course 2: Financial Planning and Forecasting and Forecasting and Forecasting and Forecasting Prepared by: Matt H. Evans, CPA, CMA, CFM This course provides a basic understanding of how to prepare a financial plan (budgeted financial statements). This course will also discuss some of the problems associated with budgeting along with "best practices" in budgeting. This course is recommended for 2 hours of Continuing Professional Education. In order to receive credit, you will need to pass a multiple choice exam which is administered over the internet at www.exinfm.com/training Revised March 2000 Excellence in Financial Management The First Steps Introduction Financial planning is a continuous process of directing and allocating financial resources to meet strategic goals and objectives. The output from financial planning takes the form of budgets. The most widely used form of budgets is Pro Forma or Budgeted Financial Statements. The foundation for Budgeted Financial Statements is Detail Budgets. Detail Budgets include sales forecasts, production forecasts, and other estimates in support of the Financial Plan. Collectively, all of these budgets are referred to as the Master Budget. We can also break financial planning down into planning for operations and planning for financing. Operating people focus on sales and production while financial planners are interested in how to finance the operations. Therefore, we can have an Operating Plan and a Financial Plan. However, to keep things simple and to make sure we integrate the process fully, we will consider financial planning as one single process that encompasses both operations and financing. Start with Strategic Planning Financial Planning starts at the top of the organization with strategic planning. Since strategic decisions have financial implications, you must start your budgeting process within the strategic planning process. Failure to link and connect budgeting with strategic planning can result in budgets that are "dead on arrival." Strategic planning is a formal process for establishing goals and objectives over the long run. Strategic planning involves developing a mission statement that captures why the organization exists and plans for how the organization will thrive in the future. Strategic objectives and corresponding goals are developed based on a very thorough assessment of the organization and the external environment. Finally, strategic plans are implemented by developing an Operating or Action Plan. Within this Operating Plan, we will include a complete set of financial plans or budgets. Financial Plans (Budgets) ⇒ Operating Plan ⇒ Strategic Plan NOTE: Short Course 10 describes how to prepare a Strategic Plan....
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This note was uploaded on 06/02/2011 for the course AK 3920 taught by Professor Jonkerr during the Winter '10 term at York University.
- Winter '10