Overview of the concepts of capital budgeting, and the process to analyze cash flows, develop net present value and IRR and assess and mitigate risk.
Several factors make investment decisions using capital budgeting one of the most important functions financial managers are involved with: • Capital used to fund investment projects is limited and must be carefully allocated across the entire business. • Investments require the use of a large amount of cash, limiting future financial flexibility. • If a firm invests too much into a capital project, it could have high depreciation on an asset with limited value. • If a firm invests too little into a capital project, it may have limited capacity, putting it at a disadvantage versus competitors. • Timing is important, ideally investment projects are completed as close to when they are needed.
This course provides an overview of the concepts of capital budgeting for investment decision-making from the perspective of a finance and accounting organization, emphasizing the integration of cash flows, net present value analysis, risk assessment, and risk management.
The course starts with an overview of the capital budgeting process and then reviews the analysis of cash flows during the development, operating and end of project phases. An explanation of the
This course covers the “Investment Decisions” material covered in the Certified Management Accountant (CMA) Part 2 examination.
Topics include: • Capital Budgeting Process • Cash Flow Analysis • Payback and Discounted Payback • Net Present Value (NPV) and Internal Rate of Return (IRR) • Risk Analysis in Capital Budgeting • Evaluating and Ranking Capital Projects • Risk Mitigation Using Real Options
Field of Study: Finance
Managing Director of CPE University, LLC
Tom Coghlan, CMA, MBA has worked at the intersection of accounting, information technology and decision making for over 30 years. His diverse set of experiences and roles include serving as: Founder of CPE University, LLC, a provider of online and in-person CPE programs in operational analysis, managerial accounting, decision making, and ethics. He is one of the top CMA exam review instructors in North America, and has helped hundreds of people prepare to take the CMA examination Founder of Appitur® Co., the developer of a mobile platform that provides exam prep companies with a branded app/web solution for their students to access study materials Business Fellow and Instructor at Villanova University, where he taught graduate and undergraduate courses in Accounting and Analytics, and was the Director of the Center for Business Analytics CFO and Director of Information Technology for a multi-national business unit of Imperial Chemical Industries Partner and Vice President of Client Services for FirstQuarter, Inc., where he led projects that helped clients including Cordis (division of Johnson & Johnson), Del Monte Foods, Alcon, Analog Devices, and Stantec maximize their technology investments Tom earned a BS degree in Business Administration from Drexel University, and an MBA from LaSalle University. Tom is a Certified Managerial Accountant (CMA), and passed the Certified Public Accounting (CPA) exam in Pennsylvania.
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