Post Graduate Program in Management (PGPM)

Teaching Plan (Course Description) – 2021-22

Course Code PGPM-2021-22-F/C-T1-FA

Course Title Financial Accounting
Course Dr. Kirti Sharma
Instructor(s)
Credit Value 3 (30 hours)
Programme
and
Trimester
Pre-requisite None
Learning
Objectives  CLO 1: To understand financial statements of a company, its components and its
(CLOs) implications in reporting requirements. (PLO 1)
 CLO 2: To evaluate the financial health of a company for various decision-making purposes.
(PLO 2)
 CLO 3: To compare the financial performance of the company over the years and with the
peers. (PLO 2).

Learning 1. Interpret the balance sheet, statement of profit and loss and the cash flow statement.
outcomes 2. Examine Annual Reports using reported financial and non-financial data.
3. Evaluate the impact of debt on profit and loss statement and balance sheet.
4. Use of financial ratios and cash flow statement to analyse financial statements of companies.
Course Financial Accounting & Decision Making course would help in developing knowledge of
Description accounting and finance for future managers. A manager who does not understand the financial
statements would find it difficult to take sound business decisions as these numbers play a vital
role for the company. The reporting eco-system is complex with multiple requirements and these
should be well understood by managers. The course would not only create expertise to extract
relevant information from Annual Report of the company, but also provides financial information
to various stakeholders in making decisions like buy or sell the shares, understanding the health
of the company, assessment of long-term and short-term performance by making comparison
with peers and the Industry and the most important aspect i.e. valuation of firms.

As a driver should know how to fix up a problem even before learning to drive, it is important for
a manager to know how financial problems can be fixed only if they understand what goes inside
these financial statements.

This course is necessary to learn management accounting and corporate finance better as the

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 analysis and interpretation taught in this course will lay the foundation to absorb these course
better.
Session Plan
Session Topic Readings for each session
No.
1 Introduction to Financial Accounting Horngren : Chapter 1
(1.5 hrs)  Understanding information needs of Ind AS 1: Presentation of Financial
different types of business. Statements.
 Key Financial Statements and their
relationship/requirement for
financial reporting.
2&3 Preparing the Balance Sheet Horngren : Chapter 1 &
(3.0 hrs)  Understanding the components of a Chapter 4
balance sheet.
 Identify the regulatory requirements Companies Act 2000, Schedule III
for the balance sheet.
Project: Group Assignment assigned.
4&5 Preparing the income statement Horngren : Chapter 2
(3.0 hrs)  Revenue Recognition
 Identify the regulatory requirements Format of the P&L as per Companies
for the income statement- Schedule Act.
III, CARO, Companies (Accounts)
Rules, 2014 and Companies (Audit
and Auditors) Rule coming into effect
w.e.f 1st April 2021.
6&7 Interpreting the Cash Flow Statement Horngren : Chapter 5
(3 hrs)  Understanding the components of a
Cash Flow Statement. AS 3 and Ind AS 7.
 Evaluate the different CFS scenarios
for different kinds of businesses.
8&9 Recording inventories Horngren : Chapter 7
(3.0 hrs)  Analysing its impact on P&L and
balance sheet. Ind AS 2: Inventories
 Practical aspects of the stock taking
process and valuation of inventories. Case: Classic Fixtures & Hardware
Company
10 & 11 Accounting for Fixed Assets Horngren : Chapter 8
(3.0 hrs)  Depreciation, Amortization,
Impairment, Revaluation
 Analysing its impact on P&L and Case: Depreciation at Delta Airlines
balance sheet (Harvard)
 Relevant provisions of ICAI with
regard to tangibles and intangibles. Ind-AS 16, 23 and 38

12 & 13 Long-term financial, non-financial and Horngren : Chapter 9

(3.0 hrs) Contingent Liabilities
 Understanding current and long Ind-AS 17
term liabilities – types, nature and
examples.

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  Difference between financial and
non-financial liabilities and their
presentation in the balance sheet.
 Altman Z score
14 & 15  Understanding and analyzing equity Horngren : Chapter 10
(3.0 hrs) – types, nature and examples.
 Regulatory Provisions w.r.t
disclosure in the balance sheet.
16 - 18 Financial Statement Analysis: In-class practice with the selected
(4.5 hrs)  Vertical and horizontal analysis companies financial statements.
 Ratios and their relevance for
different stakeholders.
 Du Pont Analysis
Preparing an assignment analysing ratios
for a listed company (refer project
guidelines for details).

19 Decision making using financial ratios. Discussion on the financial statements

(1.5 hrs)  Difference between cash and non- of Airtel.
cash entries and their impact on
profit.
 Standalone vs consolidated
statements.

20 Changes in the technical/regulatory In-class discussion on published news

(1.5 hrs) environment articles.
 Corporate Governance and ethical
accounting practices
 Role of various regulatory bodies in
conforming to ethical standards.
 XBRL filings
 A brief introduction to Accounting
Analytics
Teaching/  Class lectures and discussion
Learning  Assignments for integrating theoretical inputs with practical applications.
Methodolog  Application of concepts.
y  Case Studies and Annual Report discussions

Assessment
Methods in Specific assessment methods/ % AOL CLO1 CLO2 CLO3
alignment tasks weightage instruments
with learning Group written assignment 20 Rubric 5 5 10
outcomes Individual Assignment 10 Rubric 5 5 -
Quizzes 30 Embedded 10 10 10
Questions
End term Examination 40 Embedded 10 20 10
Questions
Total 100 30 40 30

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*AOL Assessment Instruments:
 Embedded Questions: Quiz, Class Test, Midterm Examination, Final Examination etc.
 Rubrics: Group Assignment, Class Participation, Case & Article Discussion, Group Projects
Discussion & Viva’s, Case Problem, Individual Communication Situations, Assertiveness Role
Play, Group Business Presentation, Individual Assignment, Team Project etc.

Guidelines for Individual Project

Topic: Altman Z Score
Type of Assignment : Individual
Data Source: Capital Line Plus
Format of Submission : Excel
Submission deadline: Date when Session 14 is done.
Word Limit (Only for text): 500 words

Brief: Calculate the Altman Z score for the assigned company for the last Ten (10) years. Show the
working clearly. Comment whether the score justifies the performance of the brand/product.
Most recent news articles can be used to support your answer. Refer Rubric for the evaluation
criteria.

Guidelines for the Group Written Assignment

Topic: Analysis (listed companies) using ratios for making an investment decision
Data Source: Annual Report(s)/Published News/Stock Market Data
Format of Submission : Word Document
Submission deadline: At the end of Session 20.
Word Limit (Only for text): 2000-2500 words
Type of Assignment : Group

Brief: Report must have the following sections-

Section I: Introduction (500 words): No ‘copy-paste’ please!

This would include a suitable justification for selecting a specific company. For example – if you
selected ITC, you would have had few reasons for selecting it. The company is in the sector which
you like or it is a market leader or it is a very old company or you just wanted to study this due to
the trending news. These reasons are indicative and you could decide to have your own reasons
for the choice but remember, whatever your reasons are, they should be clearly articulated and
presented.

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Section II: Analysis and Interpretation- The quality of analysis is important. You must include -
i. A vertical analysis, a horizontal analysis, ratio analysis for your company.
ii. Ratios to be calculated and analyzed under Profitability, Liquidity, Working capital
efficiency, Solvency and Investor decision making segment.
iii. Tables/charts/graphs to display the performance over the years or a two-year
period. Ex. charts like sales, assets and PBIT if taken for 5 years. These can be
taken from the previous annual reports and can be also be plotted for
competitors to make a meaningful comparison. More the merrier!
iv. Excel is allowed to calculate the ratios (show working notes, wherever required).
It is mandatory to calculate ratios for at least two years under each of these
categories.
v. Compare the company’s performance with competitors and with industry
average to comment on the performance.
vi. Industry Average can be taken from Capital Line Plus.

Critical analysis of financial statements: Evaluate the ratio numbers which you calculated – are
they good, could they be better. Try weaving different ratios together to present the big picture.
For example a poor liquidity coupled with a high stock turnover ratio could justify where the
correction is needed. Write your observations for each one of them comparing them with
competitors and industry.
Analyse crtically….Just writing yes it is good or no it is bad does not help.

Section III: Conclusion – In addition to the analysis done above, collate data from different
sources like information in the annual report, news about the company from newspapers,
company portal, websites like money control and investopedia.com comment on whether you
would invest in the company or not. It does not matter whether you decide ‘for’ or ‘against’
investing in the company but if you managed to identify the right reasons, the battle is won!

Plagiarism: Each report shall be subject to a similarity check on Turnitin. The following penalty
shall apply if plagiarism is detected.

Similarity %age Penalty

Upto 10% No penalty
Above 10% but upto 15% Final project score to be slashed by 10%.
Above 15% but upto 50% Final project score to be slashed by 50%
Above 50% Final project score to be slashed by 100% i.e. awarded a
“Zero”.

Rubric for project(s) evaluation

Weight

Criteria 3 – Good 2 – Average 1- Needs Improvement

Presentation 25% All the parts have The parts have Submission structure is
been presented in a somewhat been missing. Quite a few
structured manner. presented in a spelling
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 structured manner.
No spelling
Few spelling errors/grammatical
errors/grammatical
errors/grammatical errors. Tables are not
errors. The tables
errors. Tables are there/are but not
have been clearly
constructed with basic structured.
displayed.
data.
Application of
domain 25% Domain knowledge is
Displays thorough Displays no/very little
not displayed
Knowledge domain knowledge. domain knowledge.
completely.

All the parts have

Completeness 25% All parts have been Few parts have been
been covered
covered but not covered but have not
thoroughly.
expressed clearly. been expressed clearly.

Creativity 25%
Very creative Creativity attempted ‘Run of the mill’ ideas.

Reading list Required Textbook:

and  Introduction to Financial Accounting; Horngren, Sundem, Elliot, XI Edition; Pearson New
references International Edition.

Case(s):
 Harvard Business School - Depreciation at Delta Airlines and Singapore Airlines
 Harvard Business School - Classic Fixtures & Hardware Company

Reference Textbook(s):
 Financial Accounting: A Managerial Perspective; R. Narayanaswamy; PHI 6 th Edition.
 Financial Accounting: Tools for Business Decision Making; Kimmel, Weygandt and Kieso;
Publisher: Wiley
 Libby, R., Libby, P. A., Short, D. G., Kanaan, G., & Gowing, M. (2019). Financial Accounting.
Boston: McGraw-Hill/Irwin. 10th Edition

Others:
Annual Report of Airtel.

-----------------------------------------------------------End of course outline---------------------------------------

Prepared by Faculty

Dr. Kirti Sharma Signature

Recommended by Area Chairperson/ Prog Director Signature

Approved by Director GLIM Signature