UNIVERSITY OF DAR ES SALAAM

BUSINESS SCHOOL
DEPARTMENT OF FINANCE

BFN 202: Financial Statement Analysis for Second Semester of 2021/2022

for Bachelor of Business Administration (BBA)

Lectures: Mondays 18 – 19:55hrs (UDBS2/C124) Seminars: Monday 17-17:55 (UDBS2/C124)

Tuesday 17-17:55 (UDBS1/C033)

Course Instructor Dr. Mesia Ilomo

Email ilomo5@yahoo.com // ilomo.mesia@udsm.ac.tz
Office Location UDBS C711
Phone +255 784 653 288
Specific Consultation Time Mondays 16:00 -17:00 or any other time (with appointment)

Course Credits 12 Lecture Hours 2/week for 15 weeks

Seminar Hours 1/week for 15 weeks

A: Course Overview and Introduction

Analysis of financial and non-financial information is important in making an effective analysis of
financial health of any company. Various decisions need various forms of financial analysis. These
include but not limited to stakeholders’ decisions concerning investment in publicly-traded securities,
extension of credits and the review of equity, mergers and takeovers as well as judgments made by
investors concerning matters to be placed before shareholders during their general meetings.

B: Course Objectives
The general objective of the course is to prepare students to be able to understand and diagnose the
information contained in financial statement so as to judge the profitability and financial soundness of the
business firms and to make prediction of the future prospects of the business firms.

The course specifically intends;

 To provide an overview of financial statements and where and how to obtain them.
 To equip students with better understanding of financial statement analysis
 To guide students on the appropriate application of financial statement analysis tools in decision
making.

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  To equip students with better assessment of investment potentials and overall health of
organizations
 To provide understanding on financial distress prediction models and their applications.
 To facilitate students, appreciate the role of non-financial information in decision making with
business and non-business organizations.

C: Learning Outcomes
On successful completion of this course students should be able to:
1. Demonstrate a clear understanding of financial statements
2. Demonstrate an understanding of the range of techniques employed in financial statement
analysis and the role of both financial and non-financial data.
3. Assess different opportunities and make informed decisions regarding investments
4. Discuss the role of information in financial markets specifically money and capital markets.
5. Describe and differentiate between fundamental and technical analysis of securities and evaluate
the role of financial information in debt ratings and pricing.
6. Identify and predict financial distress through the use of financial information and explain the
process and potential outcomes of corporate restructuring and means of firm valuation.

D: Course Prerequisite and Delivery Methodology

Course Prerequisite
BFN 201: Introduction to Financial Management. Further, it is assumed that students have good working
knowledge of business management, financial principles and business mathematics acquired during their
first year of study.

Delivery Methodology
As per University regulations students are required to attend all classes –two lecture hours and one
seminar hour. The latter is used for presentations and discussions. Students are also expected to actively
participate in class discussions/presentations. Attendance will be taken and records kept for
administrative purposes. Students MUST be aware that, class attendance, participation and maintaining a
conducive in-class learning environment is compulsory. Maintenance of conducive in-class learning
environment means avoiding distractive activities such as coming to class late and the use of cell phone
during class time. Disciplinary measures will be taken to students failing to maintain conducive in-class
learning environment.

There will be at least two group works in which students will apply skills acquired through this course to
handle real life situation in Tanzania and/or global context.

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E: Course Evaluation
Item Weight Learning Outcome Timing/Deadline
Seminar Assignments, Group
Understanding of specific
works, Presentations & 10 To be determined
issues
Individual participation
To be determined
Understanding of specific
Quizzes 10 (week 12 for
issues
Announced Quiz)
Understanding of specific
Test 20 Week 6
issues
Total Coursework 40
Final Examination 60 3 Hours
100%

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F: Topics Covered/ Weekly Lecture Schedule:
Week Lecture Content Reading (s) Assignment
Overview of Financial Statement Analysis
1.1 Income Statement
1.2 Balance Sheet Chapter 1 - Helfert
1 1.3 Funds Flow Statement (2001/latest To be determined
1.4 Cash Flow Statement edition)
1.5 Retained Earnings Statements
1.6 Disclosure requirements and Auditors’
Reports
Factors Affecting the Contents and Timing of
Financial Statements
2.1 The Demand For Financial Statement Chapters 1&2 -
2 Information Foster G, (latest To be determined
2.2 The Supply of Financial Statement version)
Information
2.3 Agency Problem
Recap – Financial Statement Analysis Chapter 3- Foster
Techniques G, (latest version);
Chapters 2&3-
3.1 Vertical Analysis
3.2 Horizontal Analysis Helfert (2001/latest
3 3.3 Ratio Analysis edition); Chapter 9 To be determined
3.4 Cross-sectional Analysis – Watson (latest
3.5 Trend Analysis edition); Chapters 7
3.6 Assessment of Business Performance to 11 – Penman
(2007/latest
edition)
Non-Financial Statement Information Chapter 5- Foster
4.1 Reported Numbers and Accounting Methods. G, (latest version);
4.2 Factors affecting Accounting Methods Chapter 4-
4 To be determined
Choice.
4.3 Alternative Accounting Methods and Helfert (2001/latest
Financial Variables. edition)

Chapters 5&6-
Penman
Asset Pricing and Information Release
5 (2007/latest To be determined
edition)

6 TEST NONE

Debt Ratings, Debt Securities and Financial Chapter 11- Foster

Statement Information G, (latest version);
Chapter 13-
7-8 6.1 Ratings of Debt Securities To be determined
Penman
6.2 Pricing of Debt Securities
(2007/latest
edition)

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 Week Lecture Content Reading (s) Assignment
Capital Markets, Information Efficiency and
Corporate Information Release
7.1 Capital Market reaction to Firm–Oriented Chapter 8- Foster
9 To be determined
Announcement G, (latest version)
7.2 Market Efficiency
7.3 Market Efficiency Anomalies
Chapters 9&10-
Distress and Bankruptcy Analysis Foster G, (latest
8.1 Indicators of Financial Distress version); Chapter
10 & 11 3- To be determined
8.2 Models of Distress Prediction
8.3 Capital Market Reaction to Financial Distress Helfert (2001/latest
edition)
12 Recap and Announced Quiz
Corporate Restructuring and Financial Chapters 11 to 13-
Information Weston, J;
9.1 Organization /corporate restructuring Mitchell, M &
13 & 14 To be determined
9.2 Sources of Value in Corporate Restructuring Mulherin, J
9.3 Information Sources about the firm value (2004/latest
edition)

Main Readings
1. Foster G, (latest version); Financial Statement Analysis, Prentice-Hall, New Jersey.
2. Helfert, Erich (latest version), Financial Analysis: Tools and Techniques, Guide for Managers,
McGraw-Hill

Other Recommended Readings

1. Busara, E (2014), Financial Statements and Competitive Advantage Analysis for Banks, Micro
Finance & Manufacturing, Emilian Busara
2. Watson, P (latest edition), Financial Statement Analysis; An International Perspective, Business Press
3. Penman, S. H (2007)/Latest Edition, Financial Statement Analysis and Security Valuation, McGraw-
Hill
4. Weston, J. F; Mitchell, M.L & Mulherin, J.H (latest edition), Takeovers, Restructuring and Corporate
Governance, Prentice Hall
5. Stickney Clyde P, 1993; Financial Statement Analysis. A Strategic Perspective; The Dryden Press.