Financial Accounting Reporting and Analysis
Code: 106397 ECTS Credits: 6| Degree | Type | Year |
|---|---|---|
| 2501572 Business Administration and Management | OB | 3 |
Contact
- Name:
- Diego Prior Jimenez
- Email:
- diego.prior@uab.cat
Teachers
- Diego Prior Jimenez
- (External) Maria Rosa Rovira
Teaching groups languages
You can view this information at the end of this document.
Prerequisites
To make the most of the content provided is advised to have successfully passed Introduction to Accounting, Cost Accounting and Financial Accounting, which provide the required knowledge to follow the activities fluently as per professive knowledge. Also, a basic Excel knowledge is required.
Objectives and Contextualisation
Background:
This module is a mandatory six-credit ECTS subject for the UAB Business Administration degree and Economics degree taught in the second semester of the third year.
Objectives:
The objective of this subject is to teach the financial statements of the firms: balance sheet, income statement, annual report, the changes in equity, and cash flows statements.
The teaching of analysis tools and techniques will allow the analysis of the financial statements to report the firms' past financial and economic situation (solvency and profitability). Additionally, to understand the company's future evolution and make decisions about the current situation. To develop critical thinking and to acquire professional skills.
The methodology consists of analysing companies' financial statements. Therefore, solid previous theoretical knowledge of the accounting financial statements is essential. It is a requirement to work constantly since this module is based on progressive knowledge.
Competences
- Act with ethical responsibility and respect for fundamental rights and duties, diversity and democratic values.
- Capacity for independent learning in the future, gaining more profound knowledge of previous areas or learning new topics.
- Capacity for oral and written communication in Catalan, Spanish and English, which enables synthesis and oral and written presentation of the work carried out.
- Demonstrate initiative and work individually when the situation requires it.
- Evaluate the usefulness of accounting information for decision-making of different users.
- Generate and transmit the appropriate accounting information at all times to the information needs of different users.
- Organise the work in terms of good time management, organisation and planning.
- Select and generate the information necessary for each problem, analyse it and take decisions based on that information.
- Students must be capable of collecting and interpreting relevant data (usually within their area of study) in order to make statements that reflect social, scientific or ethical relevant issues.
- Take account of social, economic and environmental impacts when operating within one's own area of knowledge.
- Use of the available information technology and adaptation to new technological environments.
- Using accounting information as a tool for assessment and diagnosis.
Learning Outcomes
- A capacity of oral and written communication in Catalan, Spanish and English, which allows them to summarise and present the work conducted both orally and in writing.
- Analyse the indicators of sustainability of academic and professional activities in the areas of knowledge, integrating social, economic and environmental dimensions.
- Analyze business sectors from the annual accounts.
- Capacity to continue future learning independently, acquiring further knowledge and exploring new areas of knowledge.
- Critically analyse the principles, values and procedures that govern the exercise of the profession.
- Demonstrate ethical behavior in the preparation of financial statements.
- Demonstrate initiative and work independently when required.
- Develop accounting information synthesis applying accounting principles and standards, as required.
- Develop information relating to a system of management accounting.
- Identify decisions that can be taken through the analysis and interpretation of accounting information.
- Identify the social, economic and environmental implications of academic and professional activities within the area of your own knowledge.
- Interpret economic indicators of an entity and its relationship to the profitability and productivity of the same.
- Interpret financial indicators of an entity and understand the decisions that can be taken from their analysis
- Know the accounting information systems to support the management and functions of the same in the management of organizations.
- Make a diagnosis from the economic and financial analysis of an entity
- Organise work, in terms of good time management and organisation and planning.
- Recognise the qualitative variables that can influence decision-making based on the financial statements.
- Register for accounting the economic and financial reality of organizations in accordance with the principles, standards and conventions applicable in each case.
- Select and generate the information needed for each problem, analyse it and make decisions based on this information.
- Students must be capable of collecting and interpreting relevant data (usually within their area of study) in order to make statements that reflect social, scientific or ethical relevant issues.
- Use available information technology and be able to adapt to new technological settings.
- Using the tools of financial planning and budgeting of an organization
Content
TOPIC 1. INTRODUCTION: FINANCIAL INFORMATION AND ANALYSIS OF FINANCIAL STATEMENTS
1. Concept and usefulness of the analysis of financial statements
2. Business information
a. Annual Report
b. Sources of business information
3. The role of qualitative information. Risk decision-making
4. Users of business information
5. Limitations of financial reporting
TOPIC 2. FINANCIAL STATEMENTS (I)
1. The balance sheet
a. Structure and accounting groups
b. Elements of accounting groups. The valuation problem.
c. Balance sheet analysis tools: percentages and variation rates
2. The income statement and the result of the period
a. Structure and items classification
b. Results:
i. EBIT, EBITDA and net profit
ii. Gross margin and Operating result
c. Income statement analysis tools: percentages and rates of variation
3. Notes to the annual report
TOPIC 3. FINANCIAL STATEMENTS (II)
1. The Cash-flow statement
a. Aim and requirement
b. The classification of cash flows
c. Methods: direct and indirect
d. Results for the period and cash for exploitation activities relationship: profit quality
2. The statement of changes in equity
a. Aim and requirements
b. The comprehensive statement of changes in equity
c. The statement of recognised revenues and expenses
3. The management report
4. The audit report
5. The consolidated accounts information
TOPIC 4. ANALYSIS OF LIQUIDITY AND SOLVENCY IN THE SHORT TERM
1. Liquidity Concept
2. Financial positions and financial equilibrium in the short term
3. Working capital and its classification
4. The operations cycle: the operating cycle, and cash conversion cycle
a. Concept
b. The operations cycle: manufacturing versus services company
c. Relation to short-term solvency
5. Liquidity ratios
TOPIC 5. LONG-TERM SOLVENCY ANALYSIS
1. Long-term solvency concept
2. Financial position and equilibrium in the long term
3. Long term solvency analysis
a. Concept of self-financing
b. Guarantee ratio
c. Indebtedness ratios and financial autonomy
d. Solvency analysis using Cash-Flow Statement
TOPIC 6. PROFITABILITY ANALYSIS
1. The economic return (ROA: return on assets)
2. The financial return (ROE: return on equity)
a. Profitability
b. Financial leverage
3. Market reference indicators
a. Net Financial Debt
b. Equity Value
c. Enterprise Value
d. Earnings per share (EPS)
e. Pay-out and dividend per share (DPS)
f. Price-to-earnings (PER) ratio
g. Price-book value (PBV) ratio
4. Benchmarking
a. External comparables (sector average benchmark)
b. Full competition range
c. Use of comparables (interquartile comparables range, OECD)
Activities and Methodology
| Title | Hours | ECTS | Learning Outcomes |
|---|---|---|---|
| Type: Directed | |||
| Lectures | 32.5 | 1.3 | 3, 14, 6, 8, 9, 15, 10, 12, 13, 20, 17, 18, 22 |
| Problem solving activities | 17 | 0.68 | 2, 3, 6, 15, 11, 12, 13, 20 |
| Type: Supervised | |||
| Consultation Hours | 8 | 0.32 | 1, 4, 7, 16, 19, 21 |
| Type: Autonomous | |||
| Assessment activities | 8 | 0.32 | 5, 3, 1, 14, 7, 6, 8, 9, 15, 10, 12, 13, 16, 20, 17, 18, 19, 22 |
| Independent study | 78.5 | 3.14 | 3, 1, 4, 14, 7, 6, 8, 9, 15, 10, 12, 13, 16, 17, 18, 19, 22, 21 |
Lectures and Tutorials are presencial
Theoretical classes: teacher's presentations using supporting material.
Practical classes: analysis and discussion of real cases. Exercises resolution and practical cases to reinforce and apply the theoretical knowledge, working individually or in group, always under the teacher's direction.
Tutorship: doubts resolution, monitoring of the assigned work and the prepared cases. Autonomous student's work: readings related to the matter, studying and preparation of diagrams, preparation of cases and exercises.
Evaluation tests and monitoring: written evaluations of the acquired knowledge.
Advanced knowledge of use of excel and worksheets is required to be acquired progressively during the sessions. In this sense, the case studies must be prepared IN ADVANCE. During the sessions will not be time to review the formulation but in the relevant discussion to provide managerial recommendations.
Annotation: Within the schedule set by the centre or degree programme, 15 minutes of one class will be reserved for students to evaluate their lecturers and their courses or modules through questionnaires.
Assessment
Continous Assessment Activities
| Title | Weighting | Hours | ECTS | Learning Outcomes |
|---|---|---|---|---|
| Case Study | 15% | 2 | 0.08 | 5, 2, 3, 1, 4, 14, 7, 6, 8, 9, 15, 10, 11, 12, 13, 16, 20, 17, 19, 22, 21 |
| Final Exam | 45% | 2 | 0.08 | 3, 14, 8, 9, 15, 10, 12, 13, 17, 18 |
| Midterm exam | 40% | 2 | 0.08 | 14, 8, 9, 10, 12, 13, 17, 18 |
Additional information:
To pass, you must have an overall grade equal to or higher than 5.
Students with an overall grade (average) lower than 3.5 will fail the subject and will not be entitled to retake it.
Students who do not submit any assessment activities are considered "non-evaluable".
Students entitled to resit must achieve an overall grade equal to or higher than 3.5 and lower than 5.
The lecturers will decide the type of exam, taking into account that they will cover the entire syllabus of the subject and that it will be the same for all students. Regardless of the grade obtained in the resit, as long as it is greater than or equal to 5, it will be a 5.
This module does not offer the option for comprehensive evaluation
Irregularities in evaluation activities
In spite of other disciplinary measures deemed appropriate, and in accordance with current academic regulations, "in the case that the student makes any irregularity that could lead to a significant variation in the grade of an evaluation activity, it will be graded with a 0, regardless of the disciplinary process that can be instructed. In case of various irregularities occur in the evaluation of the same subject, the final grade of this subject will be 0". Section 10 of Article 116. Results of the evaluation. (UAB Academic Regulations).
Bibliography
-
- Recommended:
Subramanyam, K.R. (2013), "financial Statement Analysis". Irwin Accounting
Walker, J. (2009): Accounting in a nutshell. Edició 3rd ed. Electronic resource from "Biblioteca de Ciències Socials. UAB".
- Complementary:
Múñoz Merchante, A; Ibáñez Jiménez, Eva (2020); Análisis de Estados Financieros
Software
Advanced knowledge of use of excel and worksheets is required to be acquired progressively during the sessions. In this sense, the case studies must be prepared IN ADVANCE. During the sessions will not be time to review the fomulation but in the relevant discussion to provide managerial recommendations.
Language list
| Name | Group | Language | Semester | Turn |
|---|---|---|---|---|
| (PAUL) Classroom practices | 2 | Catalan/Spanish | second semester | morning-mixed |
| (PAUL) Classroom practices | 4 | English | second semester | morning-mixed |
| (PAUL) Classroom practices | 13 | Spanish | second semester | morning-mixed |
| (PAUL) Classroom practices | 52 | Catalan/Spanish | second semester | afternoon |
| (PAUL) Classroom practices | 60 | Catalan/Spanish | second semester | morning-mixed |
| (TE) Theory | 2 | Catalan/Spanish | second semester | morning-mixed |
| (TE) Theory | 4 | English | second semester | morning-mixed |
| (TE) Theory | 13 | Spanish | second semester | morning-mixed |
| (TE) Theory | 52 | Catalan/Spanish | second semester | afternoon |
| (TE) Theory | 60 | Catalan/Spanish | second semester | morning-mixed |