Only On-Site Seminars Conducted: Standard or Customized

We have conducted this seminar on-site for major companies including IBM, Sony, Sharp Electronics, Mentor Graphics, BMC Software and many other companies, both large and small. Consequently, we would be happy to discuss an in-house seminar, either standard or customized, for your company.

The Return on Investment (ROI) Seminar is a one or two-day business seminar for non-financial professionals and managers. The one-day version is targeted at groups who are financial statement literate and just want to learn how to calculate free cash flow and use it to calculate ROI.

The seminar provides the participants with "real" financial skills that can be applied to their everyday work tasks. One of the major skills acquired is the ability to actually calculate ROI for all types of business investments. For example, investments in new or existing products, marketing and sales programs, manufacturing equipment, information technology software and systems, etc.

Consequently, if business people understand the elements required to calculate ROI they can be more effective in managing the tasks and events required to achieve significant ROI's. After all, in the final analysis a business is a collection of investment projects managed by a collection of individuals.

Although business people talk about ROI all the time, a considerable number of people cannot properly calculate ROI for all the various types of investments. For example, when asked to calculate the ROI from an existing product investment most people will use the increased or incremental sales or profits generated divided by the investment.

One of the many problems with the above calculation is that it is an "apples and oranges" calculation. The investment is typically cash while sales will eventually become cash after the accounts receivable is collected, but then costs and expenses have to be subtracted from the sales number to derive profits and profits are not cash. Although, a lot of business people think profits are cash.

Therefore, in the typical ROI calculation the cash investment is being divided into a non-cash number. If a business invests cash it wants cash in return.

Hence, the free cash flow that is generated as a result of the investment has to be calculated from the sales and profits generated. Additionally, the free cash flow returned from the investment has to be at a sufficient level to generate a significant ROI.

The other major problem with the typical ROI calculation is that it doesn't factor in the time value of money. Money does have a time value and it can have a significant impact on the ROI of an investment. For example, a million dollars in free cash flow returned next year is worth significantly more at typical discount rates than a million dollars in free cash flow returned five years from today.

Consequently, if business people don't know how to properly calculate ROI they can't think about it properly and therefore, they certainly can't achieve an acceptable ROI from all the various investments required to manage and grow a successful business.

In addition, although the participants will learn how to evaluate the balance sheet, income and cash flow statements the financial statements' focus is not on "debits and credits" or "accounting mechanics." The emphasis is on understanding financial objectives and analysis techniques.

The seminar's topics are linked together by four overarching business methodologies:

A. To provide a return on investment (ROI) to the owners of a business, be they private or public stockholders, management has to continually increase the value of the business through producing significant profitable annual sales growth that generates a sufficient level of free cash flow.

Although, profitability is the necessary condition of a business or a new product it is not sufficient, because contrary to conventional business wisdom profits are not cash. The necessary and sufficient condition of a successful business or a new product is free cash flow, which is the real measure of generated economic value.

B. In addition, the free cash flow has to be at a sufficient minimum level to cover the weighted average cost of capital, the risk adjusted cost of capital or the opportunity cost of capital. In other words, before a company can generate a satisfactory level of free cash flow to increase the value of the business the company has to invest capital and achieve a ROI greater than the cost of the capital itself.

Hence, looking upon a business as a collection of investment projects, for example, investments in new or existing products, new manufacturing equipment, sales programs, information technology software and systems, etc., the goal has to be to have every investment project generate or save a significant level of free cash flow and thereby achieve a sufficient ROI. Accordingly, every investment project can and has to be measured on a free cash flow and resulting ROI basis.

C. To accomplish the above, companies have to measure the correct financial value “drivers” with the correct “tools.” In addition, the companies have to use the same “tools” to measure all the various types of investment projects, as well as, measuring the business as a whole.

They also have to utilize the identical "tools" employed by outside professional investors to assist them in making their investment decisions vis-à-vis the company. In other words, companies have to use the same measurement "tools" internally as would be used by outside investors to measure their investments in the companies.

Consequently, companies cannot use standard accounting methods to measure ROI like return on equity (ROE) or return on assets (ROA), which measure substandard value producing activities. Additionally, ROE and ROA cannot be used to measure all the various types of investment projects and outside professional investors cannot use them to make successful debt and/or equity investment decisions.

D. Optimize prices between buyers, competitors and internal financial requirements through: 1) determining the value to be delivered to the buyers, with emphasis on incremental value delivered via competitive advantages, and classifying features and benefits based on the value they deliver to the buyers, that is, required, persuasive, and preemptive features and benefits, and detrimental, dissuasive, and preemptively dissuasive features, and 2) analyzing prices using pricing segments analysis, pricing leverage analysis, pricing sensitivities, price versus demand schedules, pricing strategies, direct costs, manufacturing overhead, contribution margin, etc.

Amongst, the specific topics presented are: 1) how to quickly evaluate business ventures or new product investments before performing a detailed financial evaluation, 2) why you should and how to calculate the free cash flow and the return on investment (ROI) generated from a new or existing product investment, a marketing or sales program, an information technology system or a manufacturing automation investment, and 3) how to evaluate and analyze the balance sheet, income statement and cash flow statement.

On this site, we list the major financial questions answered in the seminar. These questions are especially informative in respect to the overall content presented in the seminar.

If you or your associates can answer these questions today don't have us conduct one of our sessions. However, if you or they cannot answer these questions please contact us for the details on us conducting our seminar at your location.

This seminar has been extremely well received by over 10,000 professionals from large and small companies. As affirmation, see the letters from Sharp Electronics, Manugistics, Advanced Micro Devices, Verizon, Sony, IBM, Varian Associates, MDL Information Systems, RISE Technology, etc.

In addition, to marketing and product management professionals the seminar attracts scientific, manufacturing and engineering professionals and managers who want to deepen their understanding of the subjects covered. It also helps them to design and manufacture value-producing products and to communicate more effectively with their counterparts in the financial functions.

The seminar also attracts salespeople and sales managers who want to improve their ability to sell using ROI and financial concepts and analyses. It helps to turn salespeople into business people who sell.

Additionally, although the participants will learn how to evaluate the balance sheet, income and cash flow statements the financial statements' focus is not on “debits and credits” or “accounting mechanics.” The emphasis is on understanding financial objectives and analysis techniques.

If you want to improve your or your associates' ability to think as financially adroit business people, then please have us conduct a session for your company. Accordingly, we would be happy to discuss an in-house seminar, either standard or customized. Contact us for pricing and scheduling.

All the subjects presented in The ROI Seminar are also presented in The Executive MBA Seminar albeit with far fewer examples and exercises. However, additional product marketing and product management subjects are presented in The Executive MBA Seminar.

Finally, send us an e-mail if you would like us to e-mail you an Adobe Acrobat PDF File containing all the information on this site.