FRA Course Outline 2014 (Part Time) - S R Das.doc

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Post-Graduate Diploma in Management-Part Time
(PGDM-PT)
Area: Finance
Course Title – Financial Reporting and Analysis
Course Faculty:
Name: Dr. Saumya Ranjan Dash
Contact:
Email: sdash@imt.edu
Mob. 08130170927, Office: 0120-300-2287
Student Meeting Hour: Friday 3p.m.-5p.m. or with prior appointments

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Course Description:
The course Financial Reporting and Analysis (FRA) focuses on basic techniques of Financial
Accounting. It has been designed to enable the students to prepare, comprehend and analyze
corporate financial statements. The course is designed to provide an understanding of the role
and relevance of accounting function in an organization and also the basic concepts, techniques
and methodologies relevant to accounting function. Course coverage includes: Preparation,
understanding of financial statements including Cash Flow statements of Corporate
Organizations, Accounting of Property Plant and Equipment, and Analysis of Published Annual
Reports with respect to various financial ratios. Current Developments like New Schedule VI
has been incorporated in the course structure. Apart from the recording and financial statement
analysis technique, the course also intends to demonstrate the ethical approach in financial
reporting and its economic implications.
Learning Objectives:
This course endeavors to develop students with the following specific learning objectives -
1. To develop an understanding of the nature of accounting and its role in business decision-
making.
2. To prepare, comprehend and analyze financial statements demonstrating both technical
and analytical capabilities.
3. To develop a working knowledge of using Annual Reports.
4. To demonstrate analytical skill in terms of the financial reports of the company and its
future prospects.
5. Demonstrate a long term ethical orientation towards business and society by focusing on
the financial reporting aspect of business.
6. To develop understanding of the role of financial accounting at different functional areas
of business.
Pedagogy:
The course shall be delivered essentially through a fusion of lectures, exercises, and by
discussing real life financial statements to develop student’s ability to read and analyze them.
Total 20 sessions of 1 hr 15 minutes each would be conducted. Students are encouraged to
interact with the faculty during the entire duration of course delivery and particularly during
analyzing situations.

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Course Requirements:
i. Since much of the course material requires class discussion, it is important that you are
prepared for the class and present and defend your ideas. Preparation for class includes
having read the assigned material.
ii. The class will be divided into a number of groups and each group will have 6 students.
For all group assignments, each group will submit its recommendations/solutions
meeting the deadlines specified by the faculty. Late submissions will not be accepted.
iii. As three quizzes on a best two basis will be taken, there will be no make-up quizzes.
iv. Class participation will be based on the value you add to the class through your
questions, statement, and comments. It is the quality of these that is more important than
the quantity.
v. This course involves lots of numbers. Students are advised to bring to the class a
calculator.
vi. Mobile phones shall strictly be switched off before the start of each session. Silent mode
is not permissible to ensure focused learning. Laptops/tablets can be used by the students
in the classroom only upon the instruction of the faculty.
Evaluation
Quizzes : 20%
Project : 20%
Case study assignment : 20%
End Term : 40%
Specific Assessment Method Weight Intended Objectives to be Assessed
1 2 3 4 5* 6
Quizzes
(three quizzes on a best two basis)
20% √ √ √
Group Project 20% √ √ √ √ √ √
Cases Study Assignments* 20% √ √ √
End Term Examination 40% √ √ √ √
*AACSB AOL-Sub Goal (2.1) to be assessed in the course: “Demonstrate a long term ethical orientation towards
business and society”. Assignment will be given after Session 9&10.
Group Project
The group project will be an important learning tool of the course. It is essentially an application
of the classroom learning. The project shall be assigned by the faculty at the end of session 10-
11. The project, while not being highly complicated, will require some deep thinking by the
students before forming a conclusion.
Cases Study Assignments
i. Short Case Report: A short case report has to be submitted.
ii. Additional assignments on financial statement analysis will be given during the course.

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Reading Materials for Cases Study Assignments
 Corporate Accounting Frauds: A Case study of Satyam Computers Limited, International Journal
of Contemporary Business Studies, vol.3, no.1, pp-16-42.
 Tunneling vs Agency Effect: A Case Study of Enron and Satyam, Vikalpa, vol.26, no.3,
pp-9-20.
 The Satyam Story: Many Questions and a Few Answers, Vikalpa, vol.34, no.1, pp-69-88.
Recommended Text Book
 Financial Accounting: A Managerial Perspective, R. Narayana Swamy, Prentice
Hall of India, 2/e.
Other Reference Books
 Financial Accounting – Reporting and Analysis, 7e, E K Stice & J D Stice, Thomson
South-Western.
 Accounting – Text and Cases, 12e, Robert N. Anthony, David F. Hawkins and Kenneth A.
Merchant, Tata McGraw Hill.
 Essentials of Financial Accounting, 2e, Asish K. Bhattacharya, PHI
 Financial Accounting, Weygandt, Kieso, Kimmel, Wiley
 Introduction to Financial Accounting, 9e, C.T. Horngren, G. L. Sundem, J.A. Elliott, and
D. Philbrick, Pearson Prentice Hall.
 Financial Reporting and Management Accounting, William J Bruns Jr., Thomson South-
Western.
 Financial Accounting for Management, 3e, N Ramachandran and Ram Kumar Kakani,
Tata McGraw Hill
Journals
 The Chartered Accountant
 Management Accountant
 Finance India
 Journal of Accounting and Finance
Relevant Websites
 www . icai.org : ICAI
 www . my icwai.com :ICWAI
 www. Icsi .edu : ICSI
 www.mca.gov.in
 www.clb.nic.in
 www.fasb.org
 www.iasb.org

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Course Outline: Session/Module/Reading Material
Sessions 1 & 2: Introduction to Accounting: Accounting system, Accounting principles, Concepts
and conventions, Importance of financial accounting and its economic implications from different
stakeholders’ perspective, Basic accounting terminologies, Difference between event and transaction,
Types of accounts, Accounting process through double entry system of book keeping. Recording
financial transactions: introduction to journal and ledger entry rules, Practice exercise.
Sessions 1 & 2 (150 minutes)
20 minutes 20 minutes 10 minutes 30 minutes 20 minutes 20 minutes 30 minutes
Accounting
as language
of business,
Accounting
system
Accounting
principles,
Concepts
and
conventions,
GAAP,
Importance of
financial
accounting
and its
economic
implications
from different
stakeholders’
perspective
Basic
accounting
terminologies,
Difference
between event
and transaction,
Types of
accounts
Accounting
process
through
double entry
system of
book keeping
Recording
financial
transactions:
introduction
to journal and
ledger entry
rules
Indian
accounting
standards
Concluding
the class
discussion
(5/10
minutes)
Readings:
Financial Accounting: A Managerial Perspective, R. Narayana Swamy, Prentice Hall of India,
2/e. Chapter 1.
Sessions 3-4: Recording and Processing Transactions: Journal, Ledger and Trial Balance, Trial
balance adjustment entries. Preparation of statement of profit and loss, measuring business
income, Practice exercise.
30 minutes 30 minutes 20 minutes 30 minutes 40 minutes
Journal and
ledger
Posting,
Balancing the
ledger and
inputs for trial
balance.
Preparation of trial
balance,
Exercise on the
correction of trial
balance,
Essence of trial balance
for the P&L and Balance
sheet.
Trial balance
adjustment entries,
Relation of such
entries with the
various accounting
concepts and
conventions.
Preparation of
statement of profit
and loss,
measuring business
income
 Practice
exercise.
Concluding the class
discussion (5/10
minutes)
Readings: Financial Accounting: A Managerial Perspective, R. Narayana Swamy, Prentice Hall
of India, 2/e. Chapter 2-4.
Sessions 5-6: Preparation of Financial Statements: Profit and Loss account with and without
adjustments. Introduction to annual report new schedule VI. Preparation of Balance Sheet, Detail
discussion on balance sheet structure and profit and loss account.

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Preparation of Profit
and Loss account
with and without
adjustments.
 Practice
exercise.
Introduction to
annual report new
schedule VI
Example from
Company
Annual Report
(Tata Consultancy
Service)
Preparation of
Balance Sheet
Discussion on
balance sheet
structure and profit
and loss account
Integration of Trial
Balance with the
Financial
statements
 Complete
exercise on
Journal entry,
ledger, trial
balance and
financial
statement.
discussion (5/10
minutes)
of India, 2/e. Chapter 8-10.
Session 7-8: Depreciation Charge: Methods of calculating the periodic depreciation charge –
Straight Line Method; WDV Method, Sum-of-years digits. Methods of recording depreciation in
the accounting books.
 Case Study: Robert S. Kaplan, David Kiron, Accounting Fraud at WorldCom, Harvard
Business School Case (104071-PDF-ENG)
Methods of
calculating the
periodic
depreciation
charge – Straight
Line Method;
WDV Method,
Sum-of-years
digits
Provision of
depreciation and effect
of depreciation on
companies in different
industry.
Accounting standard
governing depreciation.
 Practice
exercise
.
Case Study
Discussion:
Accounting
Fraud at
WorldCom
Concluding the case
discussion (10
minutes)
of India, 2/e. Chapter 7.
Session 9-10: Internal Control System and Ethics in Corporate Reporting
 Case Study: Healy, Paul, and Krishna Palepu, The Fall of Enron, Harvard Business
School Case (109039-PDF-ENG).
of India, 2/e. Chapter 5.
Additional Readings:
(i). Corporate Accounting Frauds: A Case study of Satyam Computers Limited, International Journal of
Contemporary Business Studies, vol.3, no.1, pp-16-42.
(ii). Tunneling vs Agency Effect: A Case Study of Enron and Satyam, Vikalpa, vol.26, no.3, pp-
9-20.
(iii). The Satyam Story: Many Questions and a Few Answers, Vikalpa, vol.34, no.1, pp-69-88.

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Case Study
Discussion: The
Fall of Enron
Concluding the case
discussion
Ethics in
Corporate
Reporting:
Examining global
accounting frauds
Why ethics in
accounting?
Tunneling vs
Agency Effect
Economic
consequences of
accounting fraud.
Students views and
discussion
discussion
Sessions 11 - 12: Fund Flow and Cash Flow Statement: Purpose, preparation &
interpretation of Cash Flow statement
40 minutes 35 minutes 75 minutes
Fund Flow and Cash Flow
Statement
Preparation & interpretation of
Cash Flow statement
 Practice exercises
Concluding the class discussion (5/10 minutes)
Readings:
2/e. Chapter 12.
Sessions 13 - 14: Financial Statement Analysis-I: Horizontal and Vertical Analysis, Ratio
analysis: Current Ratio, quick ratio, inventory turnover, receivables or debtors turnover, creditors
turnover, total assets turnover, fixed assets turnover, current assets turnover, capital turnover,
defensive-interval ratio, Debt-Equity ratio, Debt to capital ratios, interest coverage, dividend
coverage, total coverage, gross profit margin, net profit margin, expenses ratios.
Types of financial
statement analysis
Horizontal and vertical analysis
exercises and interpretations
Ratio analysis with examples and their
interpretation and comparison.
Readings:
2/e. Chapter 11.
Sessions 15 - 16: Financial Statement Analysis-II: Profitability ratios, ROA, ROCE, ROE,
EPS, DPS, Dividend pay-out ratio, P/E ratio, Earnings yield, Net Worth. Du pont analysis.

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Profitability ratios Du pont analysis Analysis of Company Annual Report ( Tata
Steel)
Sessions 17 - 18: Financial Report and Business Valuation
Readings: Analyst Reports on Company Valuation Will be distributed separately.
30 minutes 30 minutes 50 minutes 40 minutes
Use of ratio analysis for
Company valuation
Implication of P/E, Dividend yield,
PEG ratios for company valuation ,
ratio analysis and valuation models
Based on class
assignment: discussion
of analyst report and
financial statement
analysis for buy or sell
side stock
recommendations.
Overview of the
course and
question answer
session.
Sessions 19 - 20: Project Presentation and Discussion

FRA Course Outline 2014 (Part Time) - S R Das.doc

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