FINANCIAL STATEMENT ANALYSIS

Course Objectives:
This is a foundation course in finance, designed to develop the ability to use basic tools of analysis required by financial managers. Financial statement analysis, serves the essential function of converting data, of which, in this age of the computer, there are a bewildering quantity and variety, into useful information, which is always in scarce supply. The course should be useful to students contemplating careers in investment banking, credit lending, public accounting, security analysis, consulting, corporate management and anyone interested in personal investment.

Course Description :
This course on financial statement analysis provides students with a fundamental understanding of how to interpret accounting data presented in financial statements issued by corporations. The course introduces and analyses the relationship between business activities (planning, financing, investing and operating) and financial statements. It demonstrates popular tools and techniques in analyzing and interpreting financial statements with an emphasis on the need of users' of financial statements. The basic concepts and conventions applied to the construction of financial statements is briefly viewed, Emphasis is placed on the interpretation of financial data by means of comparative statements, trend percentages, detailed analysis of working capital and extensive use of various generally accepted ratios.

Course Outline: 

1. The Traditional Accounting Model
2. Forms of business entities
3. The Financial Statements
4. Elements of the Balance Sheet
5. Liquidity of short term assets
6. Liquidity Ratios
7. Elements of the Income statement
8. Leverage Ratios
9. Intangibles
10. Analysis of the investor
11. Mergers and acquisitions,
12. Statement of Cash Flows
13. Forecasting and Cash Flow analysis
14. Firm valuation using discounted cash flows and discounted residual income methods
15. Common size comparative valuation analysis
16. Financial statement variations by types of industry

Learning Outcomes:
By the end of this course, the student will be able to:

1. Read, analyze and interpret financial statements of organizations.
2. Know the limitations of statement analysis.
3. Use spreadsheet packages in financial statement analysis.
4. Apply analytical tools to the income statement, balance sheet and cash flow statement.
5. Analyze the overall financial condition of a firm from the perspective of creditors, investors, management, and auditors

Teaching Methods:
Electronic presentation; Use of Spreadsheet package to implement the analysis tools, and CD-ROM for action learning; Use of the Internet for up-to-date global information; Usage of Statistical CD-ROM data.

Skills to be developed:
This course helps students in developing the following skills:
1. Communication (Oral & written) Through Assignments, Case Study discussions and
Examinations
2. Analytical Through Case studies and examinations
3. Team Work Through Case studies
4. Creative Thinking Through Case studies, assignments, classroom
discussions
5. Adaptability to Change Through Case studies, and examinations
6. Ethics Through lectures and assignments
7. Use of Information Technology Through use of PCs, Internet, CD-ROM, Statistical
data base in the library
8. International issues Through Case studies, assignments, classroom
discussions, and examinations

Evaluating Student Performance:
Class participation and attendance 10%
Individual assignments 40%
Mid-term examination 20%
Final Exam 30% 

Grading:
Percentage Score Letter Grade GPA Points Percentage Score Letter Grade GPA Points

90 – 100 A 4.0 70 - 74 C 2.0
85 - 89 B+ 3.5 65 - 69 D+ 1.5
80 - 84 B 3.0 60 - 64 D 1.0
75 - 79 C+ 2,5 < 60 F 0.0

Educational Resources: 

Course Schedule & Outline:
Sixteen Week Semester, 3 hrs/Wk