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PA5003: Introduction to Financial Analysis and Management


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PA5003: Introduction to Financial Analysis and Management

  1. 1. PA5003: Introduction to Financial Analysis and Management Fall 2003 Humphrey Institute of Public Affairs University of Minnesota Class Meetings: Monday 5:45-8:15pm (10/27/03-12/8/03) HHH Center 35 Instructor: Aijun Nie Office: HHH 154 Office Hours: Monday 2:00-4:00pm or by appointments Office Phone: 612-626-2011 Email: TA: Yi Li Office Hours: Thursday 1:00-2:00pm (In the cubicle behind the front desk in the main office area on the 1st floor; outside Professor Stone’s office) Email: Course Description/Objectives: There is increasing demand for public and non-profit organizations to manage their finances well while providing quality services. Governments are pressured to “do more with less” and nonprofit organizations are expected to “do better in doing good”. In order to meet these challenges, it is important that managers of public and nonprofit organizations possess the fundamentals of financial analysis and management. This is an introductory course to financial analysis and management in the context of public and nonprofit organizations. It is designed for students who have little or no background in financial analysis and management but wish to gain basic understanding in this area. It is one of the core courses at the Humphrey Institute and it serves as a preparatory course for PA5111 that is to be offered in the spring semester. The primary objective of this course is to help students understand and use financial information available from financial documents such as budgets and financial statements. Conceptual frameworks and analytical techniques will be emphasized and applied to analyze real-world financial problems. Micromanagement of financial resources is also examined in the broader contexts of the performance of the national or regional economy.
  2. 2. With this course, students are expected to: 1) Understand financial management as an integral part of public/nonprofit management 2) Obtain basic knowledge and skills in budgeting and accounting 3) Build up capacity to perform straightforward financial analysis 4) Improve communication and writing skills regarding financial matters Textbooks/Reading Materials 1. Financial Management for Public, Health, and Not-for-Profit Organizations by Steven A. Finkler 2. An Analyst’s Guide to Government Financial Statements by GASB (2001) 3. Other relevant materials will be distributed throughout the semester. Homework Assignments There are three homework assignments for the course. They are selected problems from the textbook. These homework assignments are helpful for students to grasp the concepts learned in class. They are counted toward 50% of the final grade, with the relative weight distributed as the following: Homework Assignment 1 15% Homework Assignment 2 15% Homework Assignment 3 20% Sub-total 50% Final Course Report There are no midterm or final exams for this course. To fulfill the requirement of the course, students are expected to independently complete a final course report, which takes up the remaining 50% of the grade. The final course report is a great opportunity for students to improve their communication skills with regard to financial issues. In 10- 15 double-spaced pages, students are expected to perform straightforward financial analysis by analyzing the annual financial report of a public/nonprofit organization and evaluate its financial performance/condition. The instructor will provide the annual financial reports from a variety of public/nonprofit organizations. Early in the course, students are required to choose the organization to be analyzed. However, students also have the option to choose a different public/nonprofit organization other than the ones designated by the instructor. If students choose to analyze the financial report of an organization of their own interest, they are expected to consult with the instructor early in the course. Other topics are permissible with instructor’s approval. Students are required to submit a one-page proposal about their choices of organizations, which is due by start of class on November 17, 2003. More details will be announced in class.
  3. 3. Course Policy This course is fast-paced, so attendance is expected. Given the intensity of the lectures, students are strongly encouraged to complete required readings before each class. This is extremely important for you to understand the materials covered in class. Students are expected to be in class on time. Cell phones should be powered off or set to silent mode. There will be some class discussion, so active class participation is encouraged. Students are also expected to turn in homework assignments and final course report on due dates as specified in the course outline. Academic integrity is expected to be strictly honored. Incidents of academic dishonesty will be handled according to the university policies. Grading Scores for homework assignments and final course report are originally recorded on a 100-point basis. Class participation is encouraged and appreciated but not graded. The final course grade (letter) is then assigned for each student based on the following table: A 94% A- 90% B+ 86% B 82% B- 78% C+ 74%
  4. 4. Course Outline I. Introduction and Basics of Budgeting 10/27 Introduction to the course Basics of Budgeting Reading: Finkler, Preface, Chapter 1, and Chapter 2 II. Budgeting 11/03 Additional Budgeting Concepts and Variance Analysis Reading: Finkler, Chapter 3 and Chapter 7 HWK # 1 handed out (due by start of class on 11/10) III. Financial Accounting 11/10 Basics of Financial Accounting and The Balance Sheet Reading: Finkler, Chapter 8 American Red Cross Annual Financial Report 1999 HWK # 1 due by start of class HWK # 2 handed out (due by start of class on 11/17) 11/17 The Activity Statement and The Statement of Cash Flows Reading: Finkler, Chapter 9
  5. 5. American Red Cross Annual Financial Report 1999 HWK # 2 due by start of class HWK # 3 handed out (due on Wednesday, Nov 26) *Note: You have about one and a half weeks to turn in HWK # 3 *Final Course Proposal Due by Start of Class 11/24 The Activity Statement and The Statement of Cash Flows (Continued) Unique Aspects of Accounting for Nonprofit Organizations Reading: Finkler, Chapter 9 and Chapter 10 American Red Cross Annual Financial Report 1999 IV. Financial Analysis 12/1 Financial Statement Analysis Reading: Finkler, Chapter 12 American Red Cross Annual Financial Report 1999 12/8 Financial Condition Analysis Reading: Finkler, Chapter 11 and Chapter 13 GASB Guide *****Final course report due by 5:00pm on 12/12/03*****