Course Outline Template

Indian Institute of Management Calcutta

Programme : PGDBA

Name of the Course: Financial Statement Analysis

Core / Elective Core Cap (for Elective) NA.

Credit: 1.5

Academic Year & Term: 2022-23 Pre Semester

Course Coordinator: Prof. Manju Jaiswall.

Email: IIMC id: manju@iimcal.ac.in

Introduction to Course /Course Description

This is an introductory course on corporate financial statements and their basic analysis. It aims to expose students to understanding and interpreting corporate financial
statements and annual financial disclosures. Corporate financial reports are an important source of economic and financial information for a firm’s investors and other
stakeholders. Companies prepare financial statements, which form the core of the annual report, based on generally accepted accounting principles (GAAP). Business
managers should be able to analyze the financial statements in order to assess the firm’s performance vis a vis the competition as well as evaluate the financial strengths
and weaknesses of its vendors and customers.
Course Objective and Key-takeaways from the course
At the end of this course students should be able to:

 Understand the basic structure of financial statements (Balance sheet, Profit and Loss account and Cash flow statement).
 Understand the nature of items that usually appear in financial statements of public limited companies.
 Analyze financial statements and arrive at a logical conclusion about the operating and financial strengths and weaknesses of a public limited company.

Programme Level Learning Goals (7)

Goal 1. Critical Thinking Skill [1 (a & b)]: Attain knowledge in the functional area of financial accounting as well as the ability to think critically and apply the skills
acquired to identify, appraise and arrive at reasonable conclusions to accounting problems in organizations
 Objective a: Attain theoretical and practical understanding of the financial accounting concepts
 Objective b: Develop critical thinking ability through analytical treatment of important contemporary problems and issues related to financial reporting. For
example, critically think about the effect of choice of some accounting policies like depreciation on usefulness of financial statements
Goal 2. Acquiring Ethical Values [2 (b)]: Ability to recognise and handle ethical issues related to financial reporting.
 Objective b: Understand the issues of ethical importance specific to misuse of accounting discretion leading to window-dressing of the financial statements

Goal 3. Acquiring Global Perspective [3(b)]: Develop an understanding of the contemporary financial reporting issues with a global perspective
Objective b: Acquire the ability to understand and comprehend financial reporting issues and practices prevalent in international arena. For example, the course
uses a US GAAP based text book but students work with Companies using may be Indian GAAP based accounting policies. The course also involves case
discussions, textbook and real life examples involving some of the accounting issues in international context.

Goal 4. Communication Skills [ 4 (a, b & c)]: Develop their capacity to articulate thinking and ideas through verbal and written communications, at a managerial level
 Objective a: Acquire the ability to organize the thought process about presentation of financial statements and evaluation thereof
 Objective b: Demonstrate the understanding of corporate communication through annual report in analyzing financial strengths and weaknesses of a
company
 Objective c: Acquire the ability to articulate the findings of ‘Financial Statement Analysis’ of real-life companies in a coherent and structured written
format (written report on Analysing Financial Statements of firms) towards building a managerial case for financial decisions

Goal 6. Problem solving skills [6 (a)]: Acquire capacity to apply their professional knowledge and skills to diagnose and resolve business problems in actual
organizational settings
  Objective a: Acquire the ability to identify accounting related problems in both real life settings (for several Indian Companies) and through simulated
situations (in HBS cases)

International Components in your course (if any)

The course uses a US GAAP text book. It also involves case discussions, text book and real life examples involving some of the accounting issues in international
context.

Pre-requisites
None

Required Text Book(s) “Financial Accounting – Tools for Business Decision Making”, Kimmel, Weygandt, & Kieso, International Student Version, Wiley
Publications, Seventh Edition, referred as Basic Text (BT)

Recommended Text Book(s)

Course Pack Distribution to students

Text Book and Cases

Technology enabled learning component for your course

The Technology enabled learning component of the course comes the students using various IT-enabled analytical tools, techniques and methods for collecting and
analysing data for solving problems of ratio analysis, horizontal and trend analysis, towards better understanding of financial performance and position of business.
 Session Plan

Session Topics Covered Pre Reading Case Pre Reading

1.& 2. Overview of Financial Reporting
 Users & Purpose of Financial
Reporting
 Conceptual Framework of
Accounting
 Key Accounting Concepts &
Principles
 Accounting Equation
Six Friends Inc - case (to Handout 1
be given in class) BT: Chapter 1 (thorough), Chap
2 (page 56 - 58), 3 (Only
Learning Objectives 1 & 9 on
pages 84-92)
Assignment
Chapter 1 = E1-15, E1-16; Chapter
3 = BE3-2, E3-4

3. & 4. Preparing & Understanding Income HBS Case: Maria Handout 2 &3
Statement and Balance Sheet Hernandez BT: Chapter 2 (thorough), Chapter
HBS (9-902-401) 5 (thorough);

Assignment
Chapter 2 = E2-5, E2-8, P2-3A;
Chapter 3 = P3-3A;

5. Reading Corporate Income Statements HBS Case: Richie Advisors Assignment

and Balance Sheets Pvt. Ltd. IIMC Case Chapter 5 = E5-7, E5-8, P5-5A,
research centre
6. &7. Preparing & Understanding Cash Flow CFS to be prepared for BT: Chapter 12 (thoroughly)
Statements (CFS) Maria Hernandez
HBS (9-902-401) & Richie Assignment
Advisors Pvt. Ltd. E 12-2, E 12-14, P12-7A
8. Reading Corporate Cash Flow Statements Corporate CFS to be Assignment
(CFS) analyzed BY P12-7

9. Analysis of Financial Statement – Tools BT: Chapter 13 (thorough)

• Preparing Common Size Statements,

 • Preparing Trend Analysis Statements
• Basic Financial Ratios

10. BT: Chapter 13 (thorough)

Analysis of Financial Statement –
Interpretation of Ratios
Assignment
P13.3A, P13. 5A
• Intra-firm and Inter-firm comparisons

Evaluation Components

 Components  Weightage

Quiz 20%
End Term 60%
Group project 20%