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Financial Management for Engineers

  • Overview

    Cost10% Discount
    $2,100
    Three Day training program
    When you register five or more. Restrictions apply.

    For many, the terms and procedures of accounting and finance seem like a foreign language. This program will enable you to understand these terms and how they relate to your role in the organization. It will show you how your decisions affect your organization's profitability and how you can utilize these concepts to become a greater asset to your company.

    The topics are interrelated. As one is mastered, the program moves on to the next. Illustrations of how the concepts are applied come to life through case studies. These cases are approached as a team event with time for group work. The financial conclusions of each group are presented after which the instructor will reveal and discuss the solution.

    On the first day, the case describes a firm that is apparently doing well. Students take the tools they have learned, apply them, and see that this paints a very different picture of how fragile the firm really is.

    On the second day, a number of cases address the replacement of an assembly line, lease or buy decisions, and decisions to relocate headquarters.

    The third day features a Super Project Case that lets students take everything they have learned in the program and bring it together by applying it to the many issues that need to be considered in starting a new product.

    Knowledge of statistics is not a requirement. Algebra will be used. Students need to be familiar with Excel to some extent and can bring a laptop with Excel if available.

     
  • Schedule

    DAY ONE

    Analyze the Health of the Firm

    Financial statements are the source of all financial information. The program begins by examining the balance sheet and income statement and understanding the links between them. Next, three important tools to analyze the health of the firm are introduced: ratio analysis, sources and uses of funds statement, and pro forma income and balance sheets. Ratio analysis covers primary and secondary ratios (which show both causes and effects of managerial decisions) and allows us to compare our firm with strong industry competitors as well as against historical trends.

    The sources and uses of funds statement shows the evolution of the firm between two points in time and shows where the funds came from, how they were spent, and whether the firm grew in a healthy, balanced way. Pro forma statements show the expected future state of the financial statements. They are useful in understanding whether a firm is creating value, establishing good banking relationships, as well as financial planning and control. Applications will be done to ensure full understanding of these ideas.

    Time Value of Money

    The basics of investment are established. These include present values, net present value, future values, discounting, compounding, cost of capital, annuities, perpetuities, growing annuities, growing perpetuities, capital recovery factors, loan amortization, savings for retirement problems, compounding intervals and stated and effective interest rates, bond pricing, and nominal and real interest rates.

    Applications of Time Value of Money

    Group work with problems involving time value of money such as saving for retirement, paying for college, choosing the optimal retirement package, and home mortgage loan refinancing.

    DAY TWO

    Investment Decision Rules

    In this session, we compare and contrast different investment decision rules and discuss their strengths and weaknesses. The NPV (net present value) rule is introduced, followed by the IRR (internal rate of return) rule, the ARR (accounting rate of return), ROI (return on investment), the payback period rule and the profitability index. We also discuss why many of these investment decisions can be quite misleading, although they are extremely popular.

    Analysis of Cash Flows

    In this session, we study incremental cash flow, sunk costs, sunk benefits, incidental effects, net cash flow, salvage value, taxation of salvage value, net working capital, and capital budgeting applications involving asset acquisition, replacement of aging assets, valuing subsidies, lease versus buy decision, optimal timing of investment decisions, and determining the optimal life of capital assets.

    Case Analysis

    Group work with a number of cases involving replacement of an assembly line, lease or buy decisions, and decision relocate headquarters. Participants will be divided into groups and asked to analyze the cases and present their findings.

    DAY THREE

    Financing Decisions and Cost of Capital

    Topics include risk, business and financial risk, diversification, unique risk, market risk, beta risk, capital asset pricing model, cost of equity, cost of debt, and weighted average cost of capital.

    Super Project Case

    Group work with a case involving the introduction of a new product. Critical issues involve estimation of the cash flows from the new product, estimating the cost of capital, estimating the cost of excess capacity, cannibalization of existing products as a result of the introduction of the new product. Once again, the participants will be divided into groups and asked to analyze the case and present their findings.

     
  • Instructors

    Nejat Seyhun

    Nejat Seyhun

    Nejat Seyhun is Jerome B. and Eilene M. York Professor of Business Administration and Professor of Finance, Stephen M. Ross School of Business, University of Michigan.

    He has taught in MBA and Ph.D. programs as well as Executive Education programs all over the world. He is currently the director of the Financial Engineering program at the University of Michigan.

    His current teaching interests are in the areas of commercial and investment banking, corporate finance and investments. His current research interests include time series behaviour of asset prices, insider trading, managerial motivation in corporate takeovers, taxes and trading strategies, and corporate bankruptcies.

    Professor Seyhun received his Ph.D. and M.S. degrees from the University of Rochester and his BSEE from Northwestern University.

     
  • Learning Objectives

    Upon the completion of this program, you will be able to:

    • Improve communications with people in financial areas
    • Understand the general concepts of finance and accounting and how they relate to daily decision-making
    • Understand financial statements
    • Identify and evaluate critical assumptions
    • Develop financial policy for your department, unit, or organization
    • Better understand and analyze the financial impact of both strategic and operational decisions on profitability
    • Master the financial tools necessary to evaluate proposed projects such as acquisition of new equipment, lease versus buy decisions, replacement of aging equipment, hiring, firing, and training new personnel

    Program Fee

    $2,100* Covers the Three-Day Program

    Fee includes tuition, instructional materials, continental breakfast, lunch and a coffee break each day. Fee is payable in advance.* Upon registration, you will receive email confirmation including directions to the program site and recommended lodging.

    * Fee subject to change. Pricing not valid for onsite or custom programs.
    Please review our Professional Programs Payment and Cancellation Policy.

    Who Should Attend

    This interactive, hands-on seminar will primarily benefit middle to upper management and decision-makers (in both private and public sector organizations across a variety of functions and industries) including, but not limited to:

    • Engineering and other non-financial managers (from such additional areas as marketing, manufacturing, human resources, sales, administration, legal advisors, as well as general managers who have been promoted through these routes) who wish to better understand the interface between finance and their roles in their organizations
    • Senior decision-makers, such as directors, chief executive officers and presidents, whose jobs require a more in-depth knowledge of the role of finance in executive decision-making
    • Executives whose main expertise lies outside the accounting and financial management fields including operations managers, corporate development officers, directors of customer services, directors of quality, private business owners, and others with cross-functional team responsibilities

    Even though there will be intensive treatment of several topics, this program assumes that you have little or no knowledge of financial concepts.