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BBA 9215 COURSE OUTLINE (1)

BBA course outline

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11 views

BBA 9215 COURSE OUTLINE (1)

BBA course outline

Uploaded by

Boas Kanyama
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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BBA 9215: Financial Statement Analysis

Pre-requisites: BBA 3211 and BBA 3222

Aim:
The aim of the course is to provide the student with an understanding of the use of financial statement
information from a user perspective such as equity investor, debt-holder, financial analyst and
manager.

Objectives:
By the end of the course students are expected to:
 Demonstrate an understanding of financial statements (comprising statement of
comprehensive income, balance sheet, statement of cash flow, statement of changes in
equity and notes to accounts) from a user perspective such as equity investor, lender,
financial analyst and management
 Analyse the business performance and risk of a company based on its financial
statements
 Develop skills such as problem solving, decision making, team work, communication,
inquiry and analysis

Content
1. Overview of financial reporting and financial statement analysis
 Financial statement analysis
 The role of financial analysis in an efficient capital market
 Sources of financial statement information

2. Income flows versus cash flow analysis: understanding the statement of cash flows
 Purpose of the statement of cash flows, the relations among the cash flow activities
 Cash flow activities and a firm’s life cycle, understanding the relations among net
income, balance sheets, and cash flows
 Preparing the statement of cash flows, usefulness of the statement of cash flows for
accounting and risk analysis

3. Profitability analysis
 Return On Assets (ROA) and its components, Return On Common Shareholders’
Equity (ROCE)and relating ROA to ROCE
 Economic and strategic factors in the interpretation of ROA and ROCE, benefits and
limitations of using financial statement ratios

4. Risk analysis
 Disclosures regarding risk and risk management
 Analyzing financial flexibility by disaggregating ROCE, analyzing short-term and
long-term liquidity risk, analyzing credit risk, bankruptcy and systematic risk
5. Financing activities
 Equity financing, debt financing, leasing and post-retirement benefits, additional
issues in liability recognition and debt financing :- hybrid securities, off-balance sheet
financing arrangements
 Leases: operating lease method, choosing accounting method, converting operating
leases to capital leases, impact of accounting for operating leases as capital leases

6. Investing activities
 Investment in long-term operating assets
 Investment in securities, foreign currency translation

7. Operating activities
 Accomplishments (revenue recognition), efforts (expense recognition)
 Income taxes, pensions and other postretirement benefits, derivative instruments

8. Earnings quality
 Accounting quality, specific events and conditions that affect earnings quality
 Restated financial statement data, accounting classifications differences, financial
reporting worldwide, earnings management

9. Forecasting financial statements


 Introduction to forecasting
 Preparing financial statement forecasts
 Shortcut approaches to forecasting
 Analyzing projected financial statements
 Sensitivity analysis and reactions to announcements

10. Valuation models


 Risk adjusted expected rates of return and the dividends valuation approach
 Cash-flow-based approaches, earnings based approach, market based approaches

Assessment:
Continuous Assessment 50%
One assignment 10%
Group presentation 10%
Two tests 30%

Final Examination 50%

Required Reading:
Wahlen,J.M., Baginski, S.P. and Bradshaw, M. (2014) Financial Reporting, Financial Statement
Analysis, and Valuation, 8th Edition. Cengage Learning, Boston.

Easton P. D, McAnally, M.L, Sommers, G.A and Zhang, X (2014) Financial Statement Analysis and
Valuation, 3rd Edition. Cambridge Business Publishers: USA.

Recommended Reading:
Revsine, L. Collins, D. Johnson, B. Mittelstaedt, F. and Soffer, L. (2014). Financial Reporting and
Analysis. 6th Edition. McGraw-Hill Higher Education: New York.

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