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  1. 1. FINANCIAL STATEMENT ANALYSIS ACCT/FINC 447 Spring 2010 Class Organization Instructor: Gary Giroux Meeting Time/ Section 501: 12:45 TTh, WCBA 155 Location: Section 502: 2:20 TTh, WCBA 155 Office: 449F Wehner Email: g-giroux@tamu.edu Web page: acct.tamu.edu/giroux/acct447.html Office Hours: TTh: 12-12:45, 3:30-4; Wednesday 2-3:30 Texts: Giroux, Core Concepts of Financial Analysis: A User Approach, Wiley Giroux, Earnings Magic and the Unbalance Sheet: The, Search for Economic Reality, Wiley Prerequisites: ACCT 229 & 230, ACCT 315 or ACCT 327, FINC 341 Overview & Purpose: This course focuses on users of financial information and their needs, rather than the preparation of accounting data. Key users are creditors and equity investors. Central to this focus is the information contained in financial reports of SEC-reporting corporations. Key components of the course will include management incentives for earnings management and how to detect manipulation; earnings quality; how to predict financial problems and potential for default and bankruptcy; standard analysis techniques; basic financial issues; and investment evaluation techniques. A set of financial analysis projects will be the primary focus of analysis. Structure: There are two modules, with an exam at the end of each: Module 1: Financial analysis Module 2: Earnings management Grading: Mid-term exams 150 points Final 210 Financial analysis projects 60 Peer evaluations 10 1
  2. 2. Class projects, quizzes, class Discussion & attendance 70 Total 500 points 2
  3. 3. 450 - 500 points A 400 - 449 B 350 - 399 C 300 - 349 D Below 300 F Goals—you should be able to: • Conduct a complete financial analysis systematically. • Compute standard financial ratios and other financial analysis techniques. • Use available sources of financial information, including the Internet. • Interpret ratios and other signals in the context of specific decisions. • Analyze complex accounting information effectively and be able to interpret earnings management techniques and their impact on accounting numbers. • Calculate and interpret financial models, including the DuPont Model, Altman’s Z-score and valuation models. • Analyze specific complex topics, including pensions, mergers and global operations. Academic Integrity Statement "An Aggie does not lie, cheat or steal, or tolerate those who do." The Honor Council Rules and Procedures on the web: http://www.tamu.edu/aggiehonor ADA Statement The Americans with Disabilities Act (ADA) is a federal anti-discrimination statute that provides comprehensive civil rights protection for persons with disabilities. Among other things, this legislation requires that all students with disabilities be guaranteed a learning environment that provides for reasonable accommodation of their disabilities. If you believe you have a disability requiring an accommodation, please contact the Department of student Life, Services for Students with Disabilities in Room 126 of the Koldus Building, or call 845-1637. Food & Beverage Policy 3
  4. 4. We have beautiful and state-of-the-art classrooms in the Wehner Building. We want to maintain the high quality of these classrooms for the students in future years. Thus, it is necessary for you to adhere to the established policy of NO BEVERAGES, FOOD, TOBACCO PRODUCTS, OR ANIMALS (unless approved) within the Wehner Building Classrooms. Attendance Policy: Attendance may be taken & extreme absences (5 or more) may result in lost points. Make-up Policy: If an absence is excused, the student will be allowed to make up exams within 30 calendar days from the last day of the absence. To be excused the student must notify his or her instructor in writing (acknowledged e-mail message is acceptable) prior to the date of absence, and provide appropriate documentation for the absence. In cases where advance notification is not feasible (e.g. accident or emergency) the student must provide notification by the end of the second working day after the absence, including an explanation of why notice could not be sent prior to the class. The reasons absences are considered excused by the university are listed below. See Student Rule 7 for details (http://student-rules.tamu.edu/rule7.htm). The fact that these are university-excused absences does not relieve the student of responsibility for prior notification and documentation. Failure to notify and/or document properly may result in an unexcused absence. Falsification of documentation is a violation of the Honor Code. 1) Participation in an activity that is required for a class and appears on the university authorized activity list. 2) Death or major illness in a student's immediate family. 3) Illness of a dependent family member. 4) Participation in legal proceedings or administrative procedures that require a student's presence. 5) Religious holy day. 6) Illness that is too severe or contagious for the student to attend class. a) Injury or illness of three or more class days -- student will provide a medical confirmation note from his or her medical provider within one week of the last date of the absence (see section 7.1.6.1) 4
  5. 5. b) Injury or illness of less than three class days – student will provide the following within one week of the last date of the absence: (i.)Texas A&M University Explanatory Statement for Absence from Class form available at http://shs.tamu.edu/forms.htm, or (ii.) Confirmation of visit to a health care professional affirming date and time of visit 7) Required participation in military duties. 8) Other absences may be excused at the discretion of the instructor with prior notification and proper documentation. There will be unannounced quizzes and homework to be turned in (5 points each). The lowest quiz grade or turn-in project (or one missed quiz) will be dropped. For an excused absence, the makeup requirement is a short paper related to quiz content. (See Exam suggestions.) Important University Dates Jan. 25 Friday, 5 p.m. Last day for adding/dropping courses for the fall semester. Mar.15-19 Spring Break April 6 Monday, 5 p.m. Last day for all students to Q-drop courses with no penalty April 6 Last day to officially withdraw from the University. May 5-6 Wednesday -Thursday. Reading days, no classes. May 7-12 Friday, Monday - Wednesday. Spring semester final examinations. SCHEDULE SUMMARY + DUE DATES (Tentative, content subject to change): See Calendar on my Webpage for Complete Schedule & updates Module 1: Financial Analysis Overview Week of: 5
  6. 6. January 19 Introduction, Chapter 1 Jan. 26 Chapters 2-4 February 2 Chapters 4 & 5 Feb. 9 Chapter 6 (Group Project 1 due Feb. 11) Feb. 16 Chapters 11 & 12 Feb. 23 Chapter 13, Group Project 2 due Feb. 23) March 2 Mid-term Exam, March 2 Module 2: Earnings Management March 4 EM Chapters 1 Mar. 9 EM Chapters 2-6 Mar. 23 EM Chapters 7-8 Mar. 30 EM Chapters 9-11 April 6 EM Chapters 12-13 Apr. 13 EM Chapters 14 Apr. 20 EM Chapter 14 Apr. 27 EM Chapter 14 (Group Project 3 due Apr. 29; teacher evaluations and peer evaluation, Apr. 29) Final exam: Section 501: Wednesday, May 12, 8-10 a.m. Section 502: Wednesday, May 12, 1-3 p.m. Due Dates: Financial Analysis Projects: Group project 1 February 11 Group project 2 February 23 Group Project 3 April 29 6
  7. 7. Individual (Peer) Evaluation Sheet, April 29 Teacher evaluations, April 29 Cooperative Learning Course Plan This course is structured to develop a base on which continued learning can be built. The class will be divided into groups of four or five. The Financial Analysis Projects are group projects, based on individual companies within a specific industry. The written projects are based on this industry analysis. Class Projects During many class periods a project will be required: to be written on the board, discussed in class, or turned in by the end of class. Many of these are end-of-chapter exercises. Class time will be used to compare answers and write up the correct or most appropriate solution. These will be graded on either an individual or a group basis. Active learning is expected in this process with group members learning from interaction from other members. A substantial amount of effort is expected outside of class. My role is as a facilitator. I will be available to answer questions or give guidance as needed. Problems with the Group If there is dissatisfaction in the group, two options are available. (There may be a point penalty involved). A single member can be “fired” from the group by the unanimous vote of the other members (this must be in writing) & my approval. That individual can attempt to find another group (unanimous consent of that group and my approval required) or work alone on projects that I will assign (note that a zero will be given on peer evaluation points for that individual). An individual can “self-select” out of a group and work alone on projects that I assign (also with a potential penalty to the individual and group). 7
  8. 8. Financial Analysis Projects See my webpage for more complete information There are two written group projects during the semester. Each group will evaluate a specific industry, including detailed analysis of 4 companies within that industry. Group Project 1: standard quantitative financial of the companies using the template provided on my webpage (10 points). Group Project 2: market analysis of the companies using the template provided on my webpage (10 points). Group Project 3: analysis of earnings management based on a list of accounting-related factors on earnings management and other earnings quality considerations. A template will be provided for the analysis (40 points). 8
  9. 9. ACCT/FINC 447 Spring 2010 Student Information Sheet Name _____________________________ Email address __________________________ Name you would like to be called? ___________________________________ Do you plan to take the CPA Exam? Yes _____________ Do you plan to take the CFA Exam? Yes _____________ How does this course fit in your career plans (e.g., financial analyst, Big 5, commercial banking, investment banking)? _________________________________________________________________ _________________________________________________________________ Identify any areas of expertise or work experience that may be beneficial to this course (internship, math or statistics background, computer skills, etc.) _________________________________________________________________ _________________________________________________________________ Are there any members of the class you want in your group? _________________________________________________________________ _________________________________________________________________ 9
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