Mastering Capital Budgeting, Project Evaluation and Investment Analysis:

Make effective investment decisions on long-term projects to increase shareholder value

Kuala Lumpur (19-20 August 2019)
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Workshop Overview

Effective managers make investment decisions that allocate limited capital resources to achieve organizational goal, while minimizing risk. Great managers stand out not because they have access to particularly rich information, but because they seek the most useful information and accurately evaluate both the risk and potential return.

Capital budgeting is a key strategic skillset that managers must possess to ensure that capital resources are strategically implemented to generate maximum return. This course aims to equip business managers with the terminology, skillset, and the strategic mindset required to navigate a complex business environment, evaluate competing investment options, execute budgeting decisions that achieve goals, and effectively communicate their decisions and impact.

Many talented individuals come to a point in their careers when future success depends on understanding both the language and fundamental applications of capital budgeting. During this course, you will learn through a combination of interactive lecture and engaging exercises how to determine how much financing needs to be in place and where the capital can come from; master basic financial math such as present values and internal rates of return; evaluate capital investment projects.

Equipped with these skills, you will be able to actively participate in financial meetings that previously seemed impenetrable to you and make informed and effective decisions for your organization.

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Key Takeaways

By the end of the course, participants will:

  • Learn how to structure and evaluate capital investment projects
  • Determine how much financing needs to be in place and where the capital can come from
  • Master NPV and IRR computations
  • Help your organization make smart operating, investing, and financing decisions
  • Appreciate where, when, how, and why shareholder value is created or destroyed
  • Recognize the alterations available for improving an investment proposal, why sunk costs are excluded from proposals, and the alternatives for capital rationing.
  • Identify the market conditions in which different types of investments and investment decisions will be made.
  • Cite the basis for discounted cash flow analysis, and how net present value can be used.
  • Identify the elements of the cost of capital, and note how the cost of capital is calculated.
  • Recognize the uses to which payback, real option, and complex environment analysis can be used to review investment proposals.
  • Note the concepts involved in the lease or buy decision process, and the information to include in or exclude from the decision.
  • Identify the issues to be verified as part of the analysis of a capital budgeting request form.
Methodologies

Clear explanation of theories coupled with hands-on exercises for a firm grasp of the financials through:

  • Practical Examples
  • Case Studies
  • Short Exercises
  • Group Discussions
  • Investment Analysis

Participant may bring division or company project plans for discussion and analysis

Who Should Attend

Mid-level managers all the way through to senior executives who:

  • Have little or no prior training in capital budgeting and investment analysis
  • Have accounting or finance background but want to deepen their appreciation of the language and fundamental
    applications of capital budgeting and investment analysis
  • Enjoy learning in an energetic and interactive setting
Program Agenda

Session 1: INTRODUCTION

  • Overview of training aim, objectives and agenda

Session 2: MAKING INVESTMENT DECISIONS

  • The investment problem and capital budgeting
  • Cash flow estimation
  • Integrative examples and cash flow estimation in practice

Session 3: SOURCES OF FINANCE

  • Sources of finance – long term & short term
  • Evaluation of the types of finance – equity vs debt finance
  • Hybrid finance & financial engineering

Session 4: COST OF CAPITAL

  • What is cost of capital?
  • The importance of cost of capital
  • Cost of Debt
  • Cost of Equity
  • Weighted Average Cost of Capital (WACC) and how to calculate WACC

Session 5: COST OF EQUITY

  • Calculation of cost of equity
  • What is beta (β)
  • Capital Asset Pricing Model (CAPM)
  • Dividend Capitalization Model
  • Cost of equity for unlisted company

Session 6: TIME VALUE OF MONEY

  • Time value of money
  • Present value (PV) and future value (FV)
  • Interest rates, discount rates and discounted values

Session 7: NET PRESENT VALUE (NPV)

  • How to calculate NPV?
  • NPV considerations in practice
Session 8: CASH FLOW
  • Difference between Cash and Profit. Why Cash is King?
  • How transactions impact profit and cash differently
  • Cash Operating Cycle, Cash Conversion Cycle
  • Working Capital and its critical components, Liquidity Ratios
  • Cash flow Forecasting – increasing headcount, purchasing, cost-cutting

Session 9: DISCOUNT RATES CONSIDERATIONS

  • Should you use the same discount rate within the company?
  • Discount rates across divisions or countries
  • Discount rates over time

Session 10: OTHER CAPITAL BUDGETING EVALUATION TECHNIQUES

  • Hurdle rate
  • Payback and discounted payback period
  • Profitability Index
  • Internal rate of return (IRR)
  • Modified internal rate of return (IRR)
  • Return on investment (ROI)

Session 11: LEASE OR BUY BACK DECISIONS

  • Lease or buy back
  • Calculation and considerations

Session 12: CAPITAL BUDGETING AND RISK

  • Measurement of project risk
  • Incorporating risk in the capital budgeting decision

Session 12: PROJECT EVALUATION AND INVESTMENT DECISIONS CASE STUDIES

  • Case studies
  • Exercises

Session 12: CAPITAL BUDGETING SUMMARY

  • Action plans