Advanced Financial Analysis

Module description

This is an optional course whose principal function is to ensure that you are able to use the tools needed for analysing annual reports. You will learn how to critically assess the content of annual reports and how to make sense of reported numbers.  Specifically, in this course you will learn several approaches to the analysis of published financial statements such as of companies whose shares are traded on a stock exchange and which follow IFRS. The course will also discuss reporting incentives of company’ managers and how these may affect the quality of financial statements. In this course you will learn how to adjust reported numbers, and assess performance based on the revised figures, in view of these reporting incentives.

Full module specification

Module title:Advanced Financial Analysis
Module code:BEAM063
Module level:M
Academic year:2016/7
Module lecturers:
  • Professor Gilad Livne - Convenor
Module credit:15
ECTS value:

7.5

Pre-requisites:
Co-requisites:

BEAM024 Advanced Financial Accountinge

Duration of module: Duration (weeks) - term 2:

11

Module aims

The principal aim of this module is to enable students to review annual reports critically and to apply the fundamental tools used by investment analysts such as financial statement analysis, credit analysis and cross-industry analysis. The module builds on the theoretical accounting knowledge that the students gain from their Term 1 courses and extends it to a practical sphere to enable them to engage in detailed financial statement analysis.

ILO: Module-specific skills

  • 1. develop a framework for assessing a firm’s financial performance and position that is useful to fund managers, financial analysts, strategy advisors and the stakeholders of the company
  • 2. apply the different approaches used to perform financial statement analysis
  • 3. explain and discuss the discretion available to managers in preparing financial statements
  • 4. determine and apply appropriate analyst adjustments to a company’s financial statements to facilitate comparison with another company
  • 5. critically interpret and analyse a firm’s financial performance and position from its annual reports

ILO: Discipline-specific skills

  • 6. apply a set of structured techniques to reach a well-defined decision within a noisy environment, where a clearly defined unique solution does not exist
  • 7. communicate in writing a detailed and convincing company assessment, appropriate both to a practitioner as well as an academic audience

ILO: Personal and key skills

  • 8. demonstrate an ability to undertake independent study and manage time effectively
  • 9. demonstrate problem solving skills

Learning activities and teaching methods (given in hours of study time)

Scheduled Learning and Teaching ActivitiesGuided independent studyPlacement / study abroad
281220

Details of learning activities and teaching methods

CategoryHours of study timeDescription
Lectures2211 x 2-hour lectures
Tutorials63 x 2-hour tutorials
Guided Independent Study62Reading assigned financial statements, reviewing class notes, supporting materials and preparing for class discussion and tutorials
Guided Independent Study60Preparing for assessments

Formative assessment

Form of assessmentSize of the assessment (eg length / duration)ILOs assessedFeedback method
Review exercises. Each lecture is accompanied by a review exercise. These will be of exam-level difficulty.1-1.5 hours of independent work1-9Suggested solutions on ELE
Tutorial exercises. Each tutorial will have several questions. These will be of exam-level difficulty2-3 hours of independent work followed by 2 hours of in-class discussions1-9Suggested solutions on ELE

Summative assessment (% of credit)

CourseworkWritten examsPractical exams
01000

Details of summative assessment

Form of assessment% of creditSize of the assessment (eg length / duration)ILOs assessedFeedback method
In-class test301 hour1-9Written feedback
Examination702 hours1-9Suggested solutions on ELE

Details of re-assessment (where required by referral or deferral)

Original form of assessmentForm of re-assessmentILOs re-assessedTimescale for re-assessment
Examination and in-class test2-hour written exam1-9August Examination Period

Syllabus plan

  • Course overview and introduction
  • Ratio analysis
  • Operating vs. financial items in financial statement
  • Reformatting and analysis of the cash flow statement
  • Analysis of taxes
  • Earnings management
  • Fixing reported numbers – depreciation and R&D
  • Off balance sheet debt
  • Coursework test
  • Pension accounting and related disclosure
  • Catch-up, review and feedback

Indicative learning resources - Basic reading

  • Palepu, K., Healy, P. and Peek, E. (2016), Business Analysis and Valuation – IFRS edition (4th ed.), Andover: Cengage Learning Business Press.

Supplementary reading:

  • Penman, S.H. (2006) Financial Statement Analysis and Security Valuation (3rd ed.), London: McGraw-Hill.
  • Picker et al. (2016) Applying IFRS Standards, (4th ed.) Wiley.

Module has an active ELE page?

Yes

Origin date

01/04/2016

Last revision date

05/08/2016