FINANCIAL STATEMENT ANALYSIS
Instructor: Gary Giroux
Meeting Time/ Section 501: 12:45 TTh, WCBA 155
Location: Section 502: 2:20 TTh, WCBA 155
Office: 449F Wehner
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
Giroux, Earnings Magic and the Unbalance Sheet:
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
Module 1: Financial analysis
Module 2: Earnings management
Grading: Mid-term exams 150 points
Financial analysis projects 60
Peer evaluations 10
Class projects, quizzes, class
Discussion & attendance 70
Total 500 points
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
• Use available sources of financial information, including
• Interpret ratios and other signals in the context of
• 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:
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
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
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
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 188.8.131.52)
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
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
May 5-6 Wednesday -Thursday. Reading days, no
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 &
Module 1: Financial Analysis Overview
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.
Financial Analysis Projects:
Group project 1 February 11
Group project 2 February 23
Group Project 3 April 29
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.
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
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
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).
Student Information Sheet
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?