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2017/2018  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 26/06/2017

Relevant links

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 on CBS' computers
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 Limited aids, see the list below:
The student is allowed to bring
  • USB key for uploading of notes, books and compendiums in a non-executable format (no applications, application fragments, IT tools etc.)
  • Any calculator
  • Books (including translation dictionaries), compendiums and notes in paper format
The student will have access to
  • Access to CBSLearn
  • Access to the personal drive (S-drive) on CBS´ network
  • Advanced IT application package
At all written sit-in exams the student has access to the basic IT application package (Microsoft Office (minus Excel), digital pen and paper, 7-zip file manager, Adobe Acrobat, Texlive, VLC player, Windows Media Player). PLEASE NOTE: Students are not allowed to communicate with others during the exam : Read more about exam aids and IT application packages here
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.
Feedback during the teaching period
Prior to every day of teaching students are to submit answers to exercises they have solved in groups. The submitted answers will be used in class as a starting point for a discussion about the way(s) to solve the specific exercises. Furthermore, the teaching style in this course in general provokes great student participation which allows for continuous feedback in class.
Student workload
Teaching 30 hours
Preparation 70 hours
Examination 25 hours
Last updated on 26/06/2017