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2016/2017  MA-MMBFO1229U  Financial Statement Analysis

English Title
Financial Statement Analysis

Course information

Language English
Course ECTS 3 ECTS
Type Mandatory
Level Part Time Master
Duration One Quarter
Start time of the course Third Quarter
Timetable Course schedule will be posted at calendar.cbs.dk
Study board
Study Board for Full-Time MBA
Course coordinator
  • Jeppe Christoffersen - Department of Accounting and Auditing (AA)
Main academic disciplines
  • Finance
  • Accounting
Last updated on 14-01-2016
Learning objectives
To achieve the grade 12, students should meet the following learning objectives with no or only minor mistakes or errors:
  • • Demonstrate understanding of central elements of financial statements
  • • Conduct a profitability analysis using financial ratios
  • • Conduct a credit analysis using financial ratios
  • • Prepare pro forma (budgetted) statements (income statement, balance sheet and cash flow statement) which articulate
  • Estimate firm values
Examination
Financial Statement Analysis:
Exam ECTS 3
Examination form Written sit-in exam
Individual or group exam Individual exam
Assignment type Written assignment
Duration 4 hours
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period Winter
Aids allowed to bring to the exam Limited aids, see the list below:
  • Written sit-in-exam on CBS' computers
  • Notes in paper format brought by the examinee
  • Access to personal drive (S-drive) on CBS' network
  • USB key to upload your notes before the exam
  • Access to all information on CBSLearn
  • Books and compendia brought by the examinee
Make-up exam/re-exam Oral Exam
Duration: 20 min. per student, including examiners' discussion of grade, and informing plus explaining the grade
Examiner(s):: If it is an internal examination, there will be a second internal examiner at the re-exam.
Course content and structure

This course gives you an introduction to financial statement analysis and firm valuation.

 

The first part of the course focuses on refreshing the students’ knowledge of basic financial accounting and components of the financial statements including the income statement, balance sheet, statement of changes in owners’ equity and cash flow statement. The first part also addresses the conceptual differences between accrual and cash flow based accounting. After completing the first part you should be able to read and understand the financial statements in the annual report. In this part of the course students will also be reminded that financial accounting is not an entirely objective endeavor meaning that subjective assessments underlie many of the seemingly objective numbers we interpret. The students will learn that numbers should therefore be interpreted with care. The students will also have the chance to discuss when the subjective assessments made by management can be considered manipulative and unethical and when they are in fact just assessments which need to be made.

 

The second part of the course focuses on ways to measure profitability. Key financial ratios like return on invested capital (ROIC) and return on equity (ROE) are defined and analysed. The students will learn that the profitability analysis consists of a number of profitability ratios that are mathematically and logically coherent allowing us to make fairly reliable in-depth assessments of profitability. After completing the second part you should be able to conduct a ratio analysis measuring the profitability of a firm. Further, you should be able to compare similar firms’ profitability.

 

The third part of the course concerns liquidity risk analysis. The students will learn about the most commonly applied accounting ratios reflecting liquidity risk analysis. They will also learn that whereas the profitability analysis is coherent and in-depth, the typical liquidity risk analysis consist of individual measures that each are somewhat piecemeal and superficial, meaning that care should be taken when using these. In other words the students will not only learn how and when the ratios should be applied but indeed also how and when they should not be applied. After completing the third part you should be able to conduct a liquidity risk analysis using financial ratios.

Teaching methods
The lectures will be based on texbook readings, articles, cases and a high level of student participation.
Student workload
Teaching 30 hours
Preparation 25 hours
Examination 25 hours
Last updated on 14-01-2016