Title Accounting and Financial Analysis

Lecturer Margaret Stewart Tutor Margaret Stewart

Code AG911 Semester 1 Weeks 1 – 12 Credits 20

Assessment Examination 70% Coursework 30% Test

Finance Compulsory Int. Banking Compulsory Investment Compulsory Int. Accounting Compulsory
& Fin. & Fin. & Fin.

CLASS AIMS
The aim of this class is to provide students with an understanding of the basic principles of
financial accounting and financial analysis, the ability to interpret financial statements and
their use in assessing the financial position and performance of companies. This class
provides an introduction to the principles of accounting and the analysis of financial
statements. The class will enable students to prepare financial statements in accordance with
International Financial Reporting Standards (IFRS) and to interpret and analyse these
statements. Particular emphasis is placed on the accounting concepts and information
employed in financial analysis and decision taking. Class participants will develop the ability
to prepare and interpret financial statements and construct cash forecasts. In addition,
students will develop an understanding of the demand and supply for accounting information;
an appreciation of the role of financial analysis and analysts; and an awareness of the
statistical characteristics of accounting numbers.

LEARNING OUTCOMES
The class provides opportunities for students to develop and demonstrate knowledge,
understanding and skills in the following areas:

i) Knowledge Based Outcomes:

On completion of the class students should be able to:

 prepare a basic set of financial statements

 interpret a set of financial accounts;
 understand the significance of accounting principles, standards and policies;
 prepare a cash budget
 undertake ratio analysis (including investment ratios)
 identify the accounting problems relating to non-current assets, provisions and capital
instruments
 assess the risk factors to be taken into account in credit and bond ratings.

ii) Skills Outcomes:

On completion of this class students should be able to demonstrate:

 the ability to interpret technical information

  numerical and analytical skills, especially in economic and financial decision making; and
 the ability to identify the strengths and weaknesses of information systems.

TEACHING AND LEARNING

There will be 48 contact hours and the teaching will be on the basis of lectures, workshops
and workshops. EQL is a computer package which will develop bookkeeping skills and will be
available to students should they wish to developed their skills. The workshops will provide an
opportunity to discuss the topics covered in the lectures more fully. Attendance at workshops
is compulsory.

ASSESSMENT
An assignment will account for 30 per cent and a final examination for 70 per cent of the
assessment. The final examination will take place in the January diet of examinations. The
assignment will be submitted during the first semester. The final examination will comprise
both quantitative and essay elements. The final examinations will take place in the January diet
of examinations and last three hours. Any reassessment will be via a re-sit exam of the same
format as the main exam.

READING
John Dunn, “Financial Reporting and Analysis”, Wiley 2014.
Philip O’Regan, “Financial Information Analysis”, 2nd Edition John Wiley 2006

Further Reading:
Stephen H Penman, “Financial Statement Analysis and Security Valuation”, Irwin McGraw-Hill
Higher Education 5th edition, 2013
John J. Glynn, John Perrin and Michael Murphy, “Accounting for Managers”, Chapman and
Hall, 3rd revised, 2003.
Sir David Tweedie, Thomas R. Robinson, Hennie van Greuning, Elaine Henry, Michael A.
Broihahn,
“International Financial Statement Analysis”, John Wiley 2008

Web Resources
EQL
Useful Websites:
www.IASplus.com

LECTURE PROGRAMME
Session Lecture Title/Subject/Content
1 Introduction to accounting. An overview of the information provided by accountants
and the basis on which this information is prepared will be covered. Role of financial
analysis and analysts, the demand and supply of accounting information, the nature
and role of international accounting standards, the harmonisation of standards
worldwide, and the nature and usefulness of the information for the different users
groups will be discussed.
2 Preparation of financial statements and an introduction to the IFRS formats for
financial statements. Preparation of a statement of financial position and statement
of income from a trial balance.
3 The adjustments for depreciation, accruals and prepayments and bad debts in the
preparation of financial statements.
4 Published financial statements. The nature of published financial statements and the
regulatory framework. Cash flow statements, notes to the financial statements and
the audit report
5 Preparation of a cash flow forecast, the role of the management accountant, decision
making, and budgeting.
6 The interpretation of financial statements The information provided by financial
statements will be utilized to provide an assessment of the financial position and
performance of a company – this will be illustrated by means of a comprehensive
example.
7 The analysis of financial statements - efficiency ratios and liquidity ratios
8 The analysis of financial statements - capital structure and gearing. Investment ratios
- earnings per share, PE ratio, and the dividend yield.
9 The management of earnings disclosure, earnings sustainability, methods of earnings
management, tangible and Intangible assets, goodwill and brands.
10 Liabilities and provisions, statement of financial position disclosure, reserves and
provisions, contingencies, capital instruments and debt v equity.
11 Credit and risk, debt ratings and corporate bond ratings
12 Course review