Institute of Management Technology
Hyderabad
Course Code. : FIA 19502
Course Title : Financial Statement Analysis
No. of Sessions : : 20
Duration of session : 90 Min
Instructor(s) : Nikhil Rastogi
Email : nrastogi@imthyderabad.edu.in
1. Course Description
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. Financial statement analysis applies analytical tools and techniques to general
purpose financial statements and related data to derive estimates and inferences useful in business
decisions.
2. Course Objective
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. Financial statement analysis applies analytical tools and techniques to general
purpose financial statements and related data to derive estimates and inferences useful in business
decisions. The objective of the course is to:
Enable students to go behind the accounting numbers and understand the assumptions based
on which they are generated.
Understand the limitations of Financial Statements in reporting the economic performance of
the business.
3. Learning Goals and Assessment:
S.No Learning goals Learning Outcomes Learning Assessment
. method
The course aims to impart At the end of the course the The outcomes would be
students should be able to assessed through
1. Functional Proficiency & Knowledge
Integration
Understand accounting Test
framework, theory and Comprehensive
regulation. Examination
Assignment
Understand the reasons
Class Participation (CP)
behind differences in
reporting requirements across
different jurisdictions and the
challenges of convergence
Understand the application of
accounting standards and its
effect on financial statements.
Skills
Analyze and interpret the
information provided in the
financial statements of
different business entities.
Demonstrate the ability to
apply and analyze financial
statements using ratios and
Group Project
other techniques.
Comprehensive
Demonstrate the ability to use
Examination
critical thinking, analysis and
synthesis for effective
decision making
2. Analytical and Critical Analyze the effect of Test
Thinking Ability changing regulation on Assignment
financial statements Group Project
Class Participation
Analyze the limitations of (CP)
financial statements Comprehensive
Examination
3. Communication Skills Articulate orally in a crisp Class Participation
and concise manner (CP)
Group Project
4. Leadership and Develop competencies Group project
Interpersonal Skills needed to function well in Assignment
teams
4. Prescribed text:
1. The Analysis and Use of Financial Statements: Gerald. I. White, Ashinpaul.C.Sondhi and Dov
Fried-Wiley India Edition (GW)
2. Cases as indicated
5. References:
1. Global Financial Reporting and Analysis by David Alexander, Britton and Jorissen, Cengage
Learning
2. Analysis of Financial Statements, Charles H. Gibson – South Western CENGAGE Learning
(Publication)
3. Financial Statement Analysis, John J. Wild, K.R. Subramanyam & Robert F. Halsey Tata McGraw
Hills (Publication)
4. Indian Accounting Standards, IFRS and US GAAP.
6. Prerequisites:
The student should have good understanding of concepts covered in accounting and corporate finance
course related to financial statements and their interpretation.
7. Pedagogy
Lecture, case discussion and sessions by practitioners.
8. Course content and Session Plan
S.
Topic Concepts covered Readings
No
Nature and objectives of Financial Statements,
Overview of Financial statement Accounting Framework, Importance of
Chapter
1 Analysis and Annual report, Financial Statement Analysis, contents of
1: GW
Ethics in Financial Reporting annual report, Introduction to IFRS, Reasons for
differences in standards globally
Purpose and use of ratio analysis, common size
Foundation of ratio and Financial Chapter
2 statements, category wise ratios, integrated
Analysis 4: GW
analysis using ratios
Foundation of ratio and Financial
3 Concept application using class exercise
Analysis
Accounting Income and Assets: Chapter
4 Issues in revenue and expenditure recognition,
The Accrual Concept 2: GW
Accounting Income and Assets: Chapter
5 Standards for recognition, Non-recurring items
The Accrual Concept 2: GW
6 Accounting Income and Assets: Concept application using case study Case
titled
"Biovail
Corp
The Accrual Concept
Revenue
Recogniti
on"
Capitalization vs. Expensing conceptual and
Chapter
7 Analysis of Fixed Assets industry issues, Valuation and implications,
7: GW
Borrowing Cost
Chapter
7: GW,
Tangible and intangible assets, Valuation of Case
Tangible and Intangible Assets, Methods Of titled
8 Analysis of Fixed Assets
Valuation, Fair Value Accounting, Reporting "Lewis:
under IFRS, Amortization of Intangible Assets, PPE
Accountin
g"
Depreciation, methods of depreciation, Chapter
9 Analysis of Fixed Assets
Impairment of assets, Asset Revaluation 8: GW
Income tax accounting issues, deferred tax Chapter
10 Analysis of Income Tax
liability/assets 9:GW
Chapter
11 Analysis of Income Tax Temporary Vs Permanent differences
9:GW
Incentive for leasing, lease classification
Leases and off-balance sheet ,reporting by lessor and lessee, Accounting and Chapter
12
debt Reporting of Operating lease, Finance lease, 11: GW
Off-balance sheet financing activities ,
Securitization, take or pay and throughput
Leases and off-balance sheet arrangements, Impact of Operating and Chapter
13
debt Financing Leases on Income Statement and 11: GW
Balance Sheet.
Pension and other employee Defined contribution plans, defined benefit Chapter
14
liabilities plans, 12
Investment in securities, Accounting, Reporting
Analysis of Intercorporate and Analysis of Investment in Associates, Chapter
15
Investments Investment in Joint Ventures, Accounting and 13: GW
Analysis of Investment under Cost Method,
Market Method, lower of cost or market
Analysis of Intercorporate method, Equity Method, Fair Value Accounting Chapter
16
Investments for Investments , analyzing of investment 13: GW
performance
17 *Financial Instruments Financial Asset, Financial Liability,
Measurement category of Amortized cost, Fair
Value through OCI, fair value through P&L
Reclassification of Financial Assets, de-
18 *Financial Instruments recognition, embedded derivatives, Hedging
accounting, hedging item, hedging instrument
19 *Financial Instruments Fair Value Hedge, Cash flow hedge
Analysis of Financial Statements:
Various adjustments to Balance sheet and Chapter
20 Adjustment to Assets and
reported Income 17: GW
Liabilities
9. Assessment Scheme
No. Parameter Learning Goals Weightage Conducting
assessed on
1 Mid-Term 1,2 20 End of 10
sessions
2 Group Project 1,2,3,4 10 Due end of
sessions
3 Assignment 1,2,4 10 Pre-mid
term
4 Class participation (10-Pre+10- 1,2,3 20 10- Pre-Mid
Post) term.
10- Post-Mid
term.
5 Comprehensive Examination 1,2 40
Total 100
Details about the assessment components and guidelines
i. Class Participation
Individual Class Participation: Average of best three quizzes will be considered for both pre and
post midterm Class participation
ii. Assignment
Group of 5 to 7 students will have to submit an assignment. The details would be shared.
iii. Midterm
Students are required to answer questions consisting of MCQs, fill up the blanks, True or False
and concept clarifiers.
1v. Group Project Guidelines
The details would be shared
v. Comprehensive Exam (at the end of the trimester)
An end term exam covering the entire syllabus will be for 2 hrs. The exam pattern will be
subjective and analytical including problems and cases.
1. Plagiarism Policy
Copying of the language, structure, ideas, or thoughts of another and representing the
same as one's own original work amounts to plagiarism. Examples of plagiarism include:
failing to use quotation marks when directly quoting from a source; failing to document
distinctive ideas from a source; fabricating or inventing sources; and copying
information from books and the internet.
Students found guilty of plagiarism will not be evaluated. Instructor shall decide to give
warning or grade cut or refer such students to the disciplinary committee for further
action.
2. Online Consultation Hours: Wednesday 4:00 PM -5:30 PM
Note: Make-up may be given only on genuine grounds. Prior permission has to be obtained.
