T A PAI MANAGEMENT INSTITUTE (TAPMI), MANIPAL

FINANCIAL STATEMENT ANALYSIS

Programme: MBA-BKFS
Batch: 2023-2025
Term: 3
Course Name: Financial Statement Analysis – BFS 5320
Credits: 3 (24 Sessions)
Course Instructor: Prof. Meera Aranha (Core)

PART 1

INTRODUCTION
Financial Statements are the basis for many decisions taken by the stakeholders of the
company. Therefore, it is important to know to interpret the information provided in the
financial statements for better decision making.

The activities of an enterprise can be broadly classified into Operating, Investing and
Financing. While presenting the information in the financial statements representing each of
these activities, the management exercises specific choices from various alternatives
available in the Accounting Standards. This course helps understand and evaluate those policy
choices made by the management in specific circumstances.

This course is aimed at a student who has already undergone a basic course in Financial
Accounting and therefore has the necessary skillset for preparing a complete set of financial
statements with relevant notes/explanations.

COURSE OBJECTIVES (CO)

Set in this background, the objective of this course is to enable the student to:

1. Appreciate the application of relevant AS / IndAS standards to a specific context.

2. Demonstrate the ability to analyze information contained in the general-purpose financial
statements and other filings such as Annual Report, Interim Statements, etc. and use them
to do Prospective Analysis
3. Analyze various Earnings Management strategies used by companies.

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COURSE LEARNING OUTCOMES (CLO):

CLO 1: Students will be able to demonstrate application of relevant AS / IndAS to specific

context (PLG 1)

CLO 2: Students will be able to analyze/evaluate various Reporting practices pertaining to

Operating, Investing and Financing Activities and perform Accounting Analysis (PLG 2)

COURSE CONTENT:

• Operating Activities - Nonrecurring Items, Revenue Recognition, Deferred Charges,

Income Taxes, EPS
• Financing Activities - Equity, Non-Current Liabilities, Contingencies & Commitments,
Leases
• Investing Activities – Receivables, Inventory, Depreciation & Impairments, Intangible
Assets, Intercorporate Investments
• Cash Flow Analysis
• Segmental Reporting and Related Party Transactions
• Sensitivity Analysis of Forecasts & Credit Analysis
• Earnings Quality, Earnings Management & Comprehensive Case

PRESCRIBED TEXTBOOK

"Financial Statement Analysis" by K. R. Subramanyam - 11 e - McGrawHill

POLICY ON PLAGIARISM:

A similarity index score up to 10% in all evaluation components, where applicable, is

permitted. Any score beyond the permitted range will invoke section 8.4 (Academic integrity)
of the PGP handbook.

ASSESSMENT SCHEME AND WEIGHTAGE:

{a} MID TERM & END-TERM

Evaluation Weightage Duration Open /

Evaluation CLO Tested
Component (%) Minutes Closed Book
Mid Term Mid Term 20 90 Closed Book CLO 1
End Term End Term 30 120 Closed Book CLO 2

{b} OTHER ASSESSMENTS

Evaluation Evaluation Unit of
Sl. No. Weight Time CLO
Component Component Evaluation
1 Quiz Quiz 1 Individual 15% After 9thsession -

2 Quiz Quiz 2 Individual 15% After 16th session -

Group Group To be submitted
3 Group 20% -
Project Project by Session 21

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 PART 2: SESSION PLAN

Session. Topic Pedagogy & Readings

Exercises (Chapters 1, 2, 7, 8 & 10)

Course overview, Case: Anandam Manufacturing Company: Analysis
1-3 Review of Financial Statements & of Financial Statements
Analysis Tools Case: American Apparel: Drowning in Debt
Case: Comfort Remote Site Services Ltd

Case: The Financial Detective, 2016

Case: String Tie Ltd
Industry, Firm Strategy & Financial
4-6 Case: Crème Couture Bridal Inc: Revenue
Performance
Segmentation
Case: Ahold versus Tesco – Analyzing Performance

Operating Activities - Nonrecurring

7-9 Items, Revenue Recognition, Deferred Discussions & exercises (Chapter 6)
Charges, ESOPs, Income Taxes, EPS
QUIZ - 1 (WT-15%)
Financing Activities - Equity, Non- Case: Leasing Decision at Magnet Beauty Products,
10-11 Current Liabilities, Contingencies & Inc
Commitments, Leases (Chapter 3)
Investing Activities – Receivables,
Inventory, Depreciation & Impairments, Discussions & exercises
12-13
Intangible Assets, Intercorporate (Chapter 4 & 5)
Investments
14 Cash Flow Analysis Exercises (Chapter 7)
Segmental Reporting and Related Party
15 Discussions
Transactions
Sensitivity Analysis of Forecasts & Credit Case: Forest of Flowers
16
Analysis (Chapter 9 & 10 )
QUIZ - 2 (WT-15%)

Cases:
• Assessing Earnings Quality: Nuware Inc
• Toshiba: Accounting Fraud
Earnings Quality, Earnings Management • Ricoh India Limited: Financial Shenanigans
17-22 • Accounting Fraud at Worldcom
& Comprehensive Case
• Poseidon Concepts Corporation: Boom to Bust
• Lehman Brothers’ Fall
• Using Accounting Analytics to make an
Investment Decision

23-24 Group Project Presentations & Course Review

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 PLG MAPPING FOR THE COURSE
Addressed
by CLO
PLG# Program Level Learning Goal
Course? No.
(Yes / No)
Application of Fundamentals
PLG1 Traits: Demonstrate application of functional / conceptual YES CLO 1
knowledge to business situations
Problem Identification and Solution
PLG2 Traits:Demonstrate ability to identify a problem, critically YES CLO 2
assess various alternatives and suggest appropriate solution
Integrative Thinking
PLG3 Traits:Demonstrate ability to identify inter-linkages among NO NA
functional areas within an enterprise and assess the impact of
external environment on its performance
Effective Communication
PLG4 Traits:Demonstrate proficiency in Oral and Written NO NA
Communication
Ethical Responsibility
PLG5 Traits:Demonstrate awareness and assedss impact of ethical NO NA
behaviour on business
Leadership
PLG6 Traits:Demonstrate capability to take leadership role in a NO NA
business situation

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