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  1. 1. LANGSTON UNIVERSITY SCHOOL OF BUSINESS FINANCIAL STATEMENT ANALYSIS FN3363 FALL 2005 INSTRUCTOR: Dr. Mary M. Graves 317 Moore Hall, Ext. 3279 Office Hours Posted E-mail: ASSESSMENT: The grades will be based on weekly assignments (30%), three exams (40%), the final exam (20%) and quizzes (10%). The final exam will be comprehensive REQUIRED TEXT: Revsine, Collins, and Johnson, Financial Reporting and Analysis, 3rd Edition, Prentice Hall, 2005. CATALOG DESCRIPTION: In-depth exploration of financial reporting topics introduced in AC 2013 and 2023 and further examination of additional topics not covered in those courses. (Students)… will obtain a sufficient understanding of concepts and recording procedures to enable them to interpret various disclosures in an informed manner. Financial reporting issues will be discussed in terms of their effect on assessments of firms' profitability and risk. Prerequisite: At least a grade of B in AC 2023. SCHOOL OF BUSINESS EDUCATIONAL PHILOSOPHY: Our classroom mission is to impart undergraduate education and to synthesize theory and practice that will equip students with mastery of the following skills: • Team building, leadership, communication, and professional skills [A] • Critical thinking and self-reflection skills supported by qualitative and quantitative analysis essential to professional effectiveness in one’s discipline. [B] • Cross-disciplinary skills to understand business and non-business discipline insights for enhanced business decision-making. [C] • Technology that support contemporary business analysis and decision-making [D] • Application of one’s disciplines to real problems “in the field” including “service” contributions and practice in appropriate business etiquette. [E] Coverage of these skills is indicated below in the Learning Outcomes. COURSE OBJECTIVES: After completing this course, you should be able: 1) to discuss the environment of financial choices; 2) to explain the options available in financial reporting; 3) to discuss how financial statement information is used; 4) to 1
  2. 2. explain how misuse of financial information can be avoided; 6) to understand how transactions are reported and the decision implications; 7) to discuss what statement users can do to overcome the problems associated with various accounting policy decisions; 8) to examine what the reported numbers mean; and 9) to integrate critical analysis, finance, economics, and accounting concepts 2) Knowledge and Understanding [B, D, E] Teaching/learning methods and Relevant quantitative and qualitative strategies Techniques regarding the role of Financial Formal lectures, practical and Statement Analysis with a particular organization conventional classes, supervisions Topics include: supported by directed and assessed self study. 1. Building on economic and accounting Feedback and guidance are important theory and concepts parts of study. 2. The implications of accounting choices. Assessment: 3. Do the statements reflect the underlying These are assessed through a economic transaction? combination of quizzes, 4. Making informed decisions based on the examinations, assignments, and financial statements. class discussions. B: Intellectual Skills [B, C, E] Teaching/learning methods and Cognitive skills of critical thinking, analysis, strategies synthesis, including the ability to identify Substantive issues are illustrated in assumptions, evaluate statements in terms of lectures and group discussions. financial implications, to define terms Assignments provide adequately, and to make informed decisions. related opportunities for problem Understanding of quantitative problem solving solving. Lectures supported by and decision-making skills. assignments and discussions Specifically: provide basis of ensuring the growing knowledge base becomes 1. Synthesize and evaluate the concepts comprehensible. The weekly of the syllabus assignments provide the central 2. Appraise conventional approaches and means of incorporating the skills their relevance to different situations. 3. Understand the interrelationships between topics. Assessment: 4. Quantitatively and qualitatively assess 1-4 are assessed through the multiple facets of financial assignments and examinations. reporting. 2
  3. 3. C: Course Specific Skills [A, B, C, D, E] Teaching/learning methods and Development of quantitative skills strategies effective communication and information Practical issues are illustrated in technology skills for financial statement analysis. lectures and supported by class Specifically, ability to: discussion, reinforced by the 1. Analyze and interpret business related assignments. information within the financial analysis context, taking into consideration the relevant Assessment: risks. 1-4 are assessed through the 2. Use tools and concepts from this course and assignments and examinations. others to analyze financial information in a variety of contexts. 3. Develop competence in the practical application of the tools of financial analysis. 4. Understand the environment in which financial statement analysis is performed. D: Transferable skills [A, B, C, D, E] Teaching/learning methods and Specifically, the student should be able to: strategies 1. Make effective oral and written Economic data, accounting communication using a range of data, financial information, and traditional and electronic media. organizational management skills 2. Achieve effective self-management are an integral part of the practical in terms of time, planning, and side of the course. Students are behavior, motivation, self-starting, encouraged to assimilate all the skills individual initiative and enterprise, learned in related business courses. and self-reflection. These involve website searches, 3. Use the tools of financial analysis library resources, personal integrating textual contacts, and presentation of written (qualitative) and numerical documents including graphic (quantitative) material. displays. 4. Subject specific transferable skills Good time management is essential including analysis, deduction, and to organizing a timetable to complete problem-solving. financial analysis of an organization. Assessment Assessment of transferable skills is incorporated at several points during the semester through exams and the assignments. 3
  4. 4. RATIONALE: Provide all of the essential concepts for understanding financial statement analysis. The primary emphasis in this course will be the financial analyst’s decision-making process. We will examine factors that a financial analyst considers in a particular situation and the objectives of financial statement analysis in a given area. We will also examine the decisions required and the analysis appropriate for evaluation of the situation. We will integrate the practical aspects of financial statement analysis as well as the important concepts that are the underpinning financial analysis. ATTENDANCE: Attendance will be taken on a regular basis. You are expected to be in class each day, and you are expected to be on time. Three instances of tardiness will be equivalent to one absence. Six absences over the semester will automatically lower your grade by a full letter grade. SCHOOL OF BUSINESS DRESS CODE: Students are required to maintain good personal hygiene and present themselves in acceptable professional attire. Professional attire for males constitutes wearing dress or casual slacks, button shirts and ties. Professional female attire includes dress or casual skirts, slacks, blouses, sweaters, and hose. Jeans and athletic shoes are not considered professional attire. Male students are discouraged from wearing earrings. Caps, hats, or other unacceptable headdress are not allowed in the School of Business or in the classroom. Casual Fridays, preferably University color(s), are allowed. Students who do not comply with the dress code will be asked to leave the class. SEE page 8 of the School of Business Student Handbook. 4
  5. 5. ASSIGNMENTS There are assignments for each chapter which are given below. The assignments are due the class period following coverage of each individual chapter. No late assignments will be accepted. If you cannot attend on the due date, send your assignment with a classmate. Week Topic Chapter Week 1 The Economic and Institutional Setting for Financial Reporting Assignments: 1 Problems: 1.7, 1.9 Case: C1-3 In class team case C1-7 Week 2 Accrual Accounting and Income Determination 2 Exercises: 2-3, 2-5, 2-10, 2-11, 2-14, 2-21, 2-25 Problems: 2-4, 2-6, 2-11, 2-17, 2-18 Case: 2-2 In class team case: 2-4 Week 3 Labor Day, September 5th Additional Topics in Income Determination 3 Exercises: 3-2, 3-4, 3-9, 3-12, 3-14, 3-17, 3-16, 3-22 Case: 3-1, 3-3, 3-5, Week 4 Structure of the Balance Sheet and Statement of Cash Flows 4 Exercises: 4-5, 4-7, 4-12, Problems: 4-1, 4-2, 4-5, 4-6, 4-13 Case: 4-3, 4-5 In-class team case: 4-8 EXAM #1 (CHAPTERS 1-4) SEPTEMBER 16th Week 5 Essentials of Financial Statement Analysis 5 Problems: 5-4, 5-9, 5-11, 5-15, 5-17, 5-19 Case: 5-6 Week 6 The Role of Financial Information in Valuation, Cash Flow Analysis, and Credit Risk Assessment 6 Problems: 6-12, 6-15, 6-18 Case6-1 In-Class team case: 6-5 5
  6. 6. Week 7 The Role of Financial Information in Contracting 7 Problems: 7-8, 7-9, 7-10, 7-11 Case 7-4 Week 8 Receivables 8 Exercises: 8-4, 8-6, 8-11, 8-12 Problems: 8-7, 8-10, 8-16, 8-19, 8-21 Case 8-3 EXAM #2 (CHAPTERS 5-8) OCTOBER 14 Week 9 Inventories 9 Exercises: 9-10, 9-13, 9-16, 9-17, 9-19 Problems: 9-3,9-8,9-9, 9-17, 9-19 Case: 9-3 In class team case: 9-5 Week 10 Long-Lived Assets and Depreciation 10 Problems: 10-5, 10-9, 10-10, 10-12, 10-17, 10-19 Case: 10-1 Week 11 Financial Instruments as Liabilities 11 Problems: 11-3, 11-6, 11-7, 11-9, 11-13, 11-18, 11-19, 11-22, 11-25, 11- 27, 11-28 Case: 11-4 Week 12 Financial Reporting for Leases 12 Problems: 12-2, 12-3, 12-5, 12-10, 12-13, 12-14, 12-18 Cases: 12-1, 12-3 In class team case: 12-5 Week 13 Income Tax Reporting 13 Problems: 13-1, 13-2, 13-4, 13-10, 13-13 Cases: 13-2, 13-5 In class team case: 13-7 Week 14 Pensions and Postretirement Benefits 14 Problems: 14-1, 14-2, 14-4, 14-8, 14-9, 14-10 Cases: 14-1, 14-2 Week 15 Financial Reporting for Owners’ Equity 15 Exercises: 15-1, 15-5, 15-8, 15-9, 15-10, 15-11, 15-12, 15-13 EXAM #3 (CHAPTERS 9-15) DECEMBER 1 Week 16 Intercorporate Equity Investments 16 Assignment: STP 17-1, 17-3 Exercises: 16-2, 16-3, 16-5, 16-8, 16-11, 16-12, 16-19, 16-21 6
  7. 7. Case: 16-4 Dec. 15 FINAL EXAM (CHAPTERS 1-16) 10:00-12:00PM AFFIRMATIVE ACTION STATEMENT Langston University in compliance with Title VI and VII of the Civil Rights Acts of 1964, Executive Order 1121 as amended, Title IX of the Educational Amendments of 1972, Americans with Disabilities Act of 1990, and other Federal laws and regulations, does not discriminate on the basis of race, color, national origin, sex, age religion, handicap, or status as a veteran in any of its policies, practices, or procedures. This includes buy is not limited to admissions, employment, financial aid, and educational services. AMERICANS WITH DISABILITIES (ADA) STATEMENT Langston University fully subscribes to all required standards of the ADA Act of 1990. Persons in need of assistance should contact the ADA Compliance Officer in the Office of Student Affairs, Room 199, Page Hall, 405-466-3445. This should be reported at some point before, during, or immediately after the first scheduled class period so accommodations can be provided for the student to be successful in that class. Prepared by________________________________________________Date_________ Instructor Reviewed by________________________________________________Date_________ Chairperson Coordinator Accepted by_________________________________________________Date________ Dean Accepted by _________________________________________________Date________ Student 7
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