FINANCIAL STATEMENT ANALYSIS

Course Description

This course is organized to help students to analyze and interpret the financial statements. Students will use the financial statements to decide the capital structure and solvency, profitability and liquidity positions of companies. This course will also teach students comparative analysis, vertical analysis, trend analysis, and ratio analysis to perform the analysis of financial statements. On successful completion of this course, all students will have developed knowledge and understanding of: Measuring and Estimating Costs, Accrual-based Versus Cash-flow-based Performance Measures, Cost of Capital, Credit Analysis, Growth Analysis, Decision Making, vertical analysis, trend analysis, and ratio analysis to perform the analysis of financial statements and Valuation and Accounting Quality.

FINANCIAL STATEMENT ANALYSIS

Evaluation Tools (Active Term)

No evaluation items have been defined.

Course outcomes

1. 01 primary financial statements
2. 02 profitability analysis,
3. 03 growth analysis
4. 04 liquidity risk analysis
5. 05 decision making.
6. 06 Valuation
7. 07 Cost of Capital
8. 08 Credit Analysis
9. 09 Profitability Analysis

Course Syllabus

Reference Books & Course Materials

1. 01 Subramanyam: Financial Statement Analysis, 11th Ed. International Edition, McGraw Hill
2. 02 Plenborg, T and Petersen, C, 2011. Financial Statement Analysis: Valuation - Credit Analysis - Executive Compensation, Pearson Publishing.

Learning Outcomes

1. L01 Explain business analysis and its relation to financial statement analysis. SOLO 3
2. L02 Apply several basic financial statement analysis techniques SOLO 5
3. L03 Describe the relevance of accounting information to business analysis and valuation, and identify its limitations. SOLO 2
4. L04 Analyze and interpret the financial statement as a preview to more detailed analyses. SOLO 4
5. L05 Explain cash management and its implications for analysis. SOLO 3
6. L06 Describe and analyze intangible assets and their disclosures SOLO 2
7. L07 interpret consolidated financial statements. SOLO 5
8. L08 Analyze financial reporting for intercorporate investments SOLO 4
9. L09 Explain the consolidation of foreign subsidiaries and foreign currency translation SOLO 3
10. L10 Analyze revenue and expense recognition and its risks for financial statement analysis. SOLO 4
11. L11 Describe and interpret interest costs and the accounting for income taxes SOLO 2
12. L12 Explain the relevance of cash flow in analyzing business activities. SOLO 3
13. L13 Describe the preparation and analysis of the statement of cash flows. SOLO 2
14. L14 interpret cash flows from operating activities SOLO 5
15. L15 analyze return on common shareholder's equity and its role in the analysis SOLO 4
16. L16 Explain the return on invested capital and variations in its computation SOLO 3
17. L17 Analyze return on net operating assets and its relevance for analysis. SOLO 4
18. L18 Explain operating and financial leverage SOLO 3
19. L19 Describe the importance of prospective analysis. SOLO 2
20. L20 Explain the process of projecting the income statement, the balance sheet, and the statement of cash flows. SOLO 3

Program Outcomes

1. P01 PO1 Been able to demonstrate their learned skills and knowledge regarding business related issues and research which they can use continuously in their personal and business life.
2. P02 PO2 Obtained theoretical and practical information from the courses that allowed students to learn and work independently.
3. P03 PO3 Been ensured that they learnt by increasing their level of knowledge and skills which are necessary in their field.
4. P04 PO4 Increased their creativity and analytical thinking and developed crucial skills which are needed to be applied both in their studies, research, and future careers.
5. P05 PO5 Adopted and implemented ethical principles and moral values regarding the use of technology in their studies and professional lives by creating an awareness on using the technological imperatives.
6. P06 PO6 Designed their theoretical and practical knowledge in a way that they could make use of in a collaborative usage and various working contexts.
7. P07 PO7 Enrolled in intercultural or international projects which could provide opportunities to develop their skills and implement them successfully in their studies, research and future careers.
8. P08 PO8 Improved their communication skills successfully and been able to implement them in various international education, research and work context by increasing their social capital.
9. P09 PO9 Been able to implement their learnt knowledge and research skills into practice through scenarios, case studies, empirical articles and real-life observations.
10. P10 PO10 Created awareness and developed ethical undertaking by incorporating the learnt theories with environmental approaches to be further implemented into their research and careers.

Po-Lo Matrix