FINANCIAL STATEMENT ANALYSIS
2010/2011, Semester 2
School of Business (Accounting)
Modular Credits: 4
This course is about the analysis of financial information arising primarily from the financial reports of entities. Fundamental analysis techniques are examined in detail with particular emphasis on the application of these techniques in equity (share) valuation decisions. The course comprises three related parts. Part one outlines the four basic steps in the fundamental analysis framework: business analysis, accounting analysis, financial analysis and prospective analysis. The next part combines these skills in addressing the question of valuation, while the final section of the course applies the skills in several different contexts, such as credit analysis, security analysis, mergers and acquisitions and financial policy decisions.
On successful completion of the course you should be able to:
1. Describe and apply the basic techniques of financial statement analysis (FSA);
2. Explain the linkage between strategic business analysis, accounting analysis and financial analysis;
3. Identify and utilise value-relevant information contained within financial statements;
4. Recognise and explain the fundamental role of accounting numbers in the valuation of entities;
5. Prepare and substantiate a valuation that incorporates the strategic, accounting and financing activities of a business entity.
6. Learn independently and to assume responsibility for the learning process;
7. Learn within teams (such skills as task assignment and management, conflict resolution and co-operation, consensus building, and leadership);
8. Conduct applied business research (including locating and critically interpreting and evaluating firm-specific financial information);
9. Apply FSA knowledge in both local and global organizational contexts;
10. Provide professional business presentations (both oral and written).
Students are expected to have a good background in accounting and finance before they take the course. The prerequisites are ACC1002 and FIN2004. Any more advanced courses in accounting or finance will certainly help.
There will be one three-hour seminar each week. The seminar will involve a one- to-two-hour lecture component and a workshop that either precedes or follows the lecture. The workshop may be used to discuss a case, review assigned problems or practice skills. Normally case studies will be discussed in the week following the related lecture. You should bring your prescribed textbook and a calculator to each
It is essential that, prior to a seminar, you read the relevant course materials and prepare written responses to assigned/case study questions. Seminar/case study questions often require additional research beyond the normal prescribed readings.
Learning Outcomes assessed
Weekly Case Write-up
1 – 5, 6, 8,9
Week 2 – 11
Group Case Presentation
1 – 5, 6 – 10
Week 3 – 5, 7 – 12
1 – 5, 6 – 10
1 – 5
1 – 5, 6, 8, 9
Introduction to Financial Statement Analysis
PH Chap 1
PH Chap 2
The Dot-Com Crash
Accounting Analysis 1
PH Chap 3
Accounting Analysis 2
PH Chap 4
PH Chap 5
PH Chap 6
PH Chap 7
PH Chap 8
Equity Security Analysis
PH Chap 9
Home Depot in
the New Millennium
PH Chap 10
United Parcel Service's IPO
Mergers & Acquisitions
PH Chap 11
Financial Policies & Communications
PH Chap 12
Schneider & Squares D
It is expected that you will spend at least
per week studying this course. This time should be made up of reading, research, working on exercises and problems, and attending classes. In periods where you need to complete assignments or prepare for examinations, the workload may be greater.
Over-commitment has been a cause of failure for many students. You should take the required workload into account when planning how to balance study with employment and other activities.