Sukkur IBA University
FACULTY OF BUSINESS ADMINISTRATION
Analysis of Financial Statements (BSAF-402)
Course Outline
1. Course Identification and General Information
Program and Class: BSAF- VII Semester: Fall-2023
Credit Hours: 03 Instructor: Muhammad Asim
E-mail: [Link]@[Link]
Office Location: Room 302, Admin Block
Pre-requisite Course: N/A Counseling Hours: Via Phone or email for
appointment
2. Schedule of Assessment Tasks for Students during the Semester
[Link]: Assessment Task (e.g. essay, test, group Week Due Proportion of Final
project, examination etc.) Assessment/Marks
1 Written analysis of financial statements and 5
other material information disclosures
2 Class Discussion 10
3 Project Report 13 10
4 Presentation 14 5
5 Mid-Term Academic 30
Calendar
6 Final Exam Academic 40
Calendar
3. Learning Resources
I- Recommended Books:
1. Financial Reporting, Financial Statement Analysis and Valuation: A Strategic
Perspective, 7/e by James M. Wahlen,Stephen P. Baginski, and Mark Bradshaw
2. Financial Statement Analysis: Valuation, Credit Analysis, Executive Compensation
By: Christian V. Petersen & Thomas Plenborg.
II- Reference Books/ Material
1. Notes Provided by Instructor
2. Financial reporting & Analysis: Using Financial Accounting Information by: Charles
H. Gibson, South Western Cengage Learning 12th Edition.
III- Electronic Materials, Web Sites etc.
Electronic material if any would be shared in class
1|Page
Analysis of Financial Statements BSAF-VII, Course Outline Fall-2021.
IV- Other Learning Material (such as computer-based programs/CD, professional
standards/regulations) PowerPoint lecture presentations, assignments and other required
readings will be shared in class.
4. Course Overview:
Analysis of financial statements is the application of analytical tools, technology and
techniques to general-purpose financial statements and related data to derive estimates and
inferences useful in business analysis. The course aims to provide participants with an
understanding of the use of financial statement information from a user perspective such as
equity investor, debtholder, financial analyst and manager. Participants will develop skills in
analyzing financial statements for investment, credit and other business decisions.
5. Course Learning Outcomes (CLOs)
i. Students will able to critically evaluate assumptions and limitations of various financial
tools (ratios).
ii. Students will be able to calculate various financial ratios of companies by using
financial statements
iii. Students will be able to use profitability, liquidity, leverage, and other investors’
specific ratios to make business decisions.
iv. Students will be able to analyze non-financial data provided in annual reports.
v. Students will be able to develop and present project report in groups based financial
and non-financial analysis of a company.
vi. Students will be able to present effectively the financial analysis of a company in the
class
vii. Students will be able to analyze the flexibility provided in IFRS
6. Assessment Task Description
a) Assignment
Students will be required to submit the analysis on assigned topic related financial and non-
financial disclosures from the annual report of a listed company.
b) Class Discussions
Students will be provided actual financial statements and other material information
disclosures of the listed companies by the instructor. Students will be required to come
prepared in the class for discussion.
c) Project
Students have to develop equity research report on a company assigned by instructor. The
contents of equity research report will be discussed in the class and a sample for equity
research report will be provided for reference. Furthermore, students are required to present
the report in the class.
Students will be assessed on following areas
1. Analytical skills (problem identification, analyzing and provide recommendations)
2. Written communication skills
3. Oral communication skills
4. Use of interactive graphs and illustrations for representing data
2|Page
Analysis of Financial Statements BSAF-VII, Course Outline Fall-2021.
7. Lesson Plan & week wise Schedule
Suggested
Discussion Topic
Week Assignments/Quizzes Reading
1 Introduction Analysis of Financial Statement
Importance of the financial analysis Notes will be
What are the implications of analysis of provided by
financial statement? instructor
What is fundamental analysis? (Introduction to
What is technical analysis? Fundamental
Qualitative Factors: The company and The Analysis)
Industry
Introduction to Financial Statement
o The Income Statement
o The Balance Sheet
o The Cash Flow Statement
2 Accruals-based versus cash-flow based Part-1 Chapter-03
performance (See recommended
Accruals based performance measures book)
Cash-flow based performance measure
3 Importance of cash based performance Notes will be
Why Cash Matters? Note: Harvard provided by
o The importance of understanding a Business Publisher: instructor
cash flow statement Why cash matters?
o Cash is king
Note: Harvard
o Power cash flow
Business Publisher:
o Free cash flow and its implications cash, receivables and
Relationship of cash, receivables and revenue recognition
revenue recognition
4 Corporate governance Notes will be
Corporate governance and financial provided by
performance instructor
What Problems does corporate governance
try to solve?
Mechanism for mitigating agency problem:
Shareholder-Manager conflict
o Institutional investors
o Compensation contracts
Qualitative analysis of a company
3|Page
Analysis of Financial Statements BSAF-VII, Course Outline Fall-2021.
6 How to read the annual report of a company Annual report of
What to look for in an annual report? a company will
Financial highlights be discussed
The management statement
Management Discussion and Analysis
Corporate information
Directors’ Report
Analysis of Corporate governance
Auditor’s report
Industry analysis
Impact of news and other macroeconomic
factors
7 Quantitative analysis of a company 1. Note: Harvard Notes on ratio
The financial Ratio Analysis Business Publisher: analysis will be
Profitability: The
Profitability ratios: The higher the better provided by
higher the better
Leverage ratios: The balancing Act instructor
Liquidity ratios: Can we pay our bills? 2. Note: Harvard
Business Publisher:
Leverage: The
balancing Act
3. Note: Harvard
Business Publisher:
Liquidity: Can we
pay our bills?
8 Quantitative analysis of a company
Valuation ratios 1. Note: Harvard
Business Publisher:
Operating ratios
Making the most of
Efficiency ratios: Making the most of your your assets
assets
Prepare Forecasted Financial Statements 2. Note: Introduction to
and Valuation of the Firm Valuation
Equity research
Stock price and Business fundamentals
Investor’s analysis
9 Leverage and its effects on Earnings Chapter-09
EPS Case Study: Drivers Reference Book
P/E Ratio of Industry Financial by: Charles H.
Dividend Payout Structure Gibson, South
Dividend Yield Western Cengage
B/V Per share
Stock Options (Stock Based Compensation) SIMULATION:
Restricted Stock Financial Detectives
Stock Appreciation Right
MID TERM --EXAM
4|Page
Analysis of Financial Statements BSAF-VII, Course Outline Fall-2021.
11 Accounting flexibility in the income statement Part-4 Chapter-14
Accounting regulation and flexibility (See recommended
Accounting flexibility and economic book)
consequences
Accounting issues in valuation
Accounting is credit analysis
Accounting issues in executive
compensation
Accounting flexibility in the Balance sheet
12 Assets, liabilities and related expenses Part-4 Chapter-15
Accounting regulation and flexibility (See recommended
Accounting flexibility and economic book)
consequences
Accounting issues in valuation
Accounting is credit analysis
Accounting issues in executive
compensation
Accounting quality
13 Part-4 Chapter-13
The purpose of financial statement analysis (See recommended
and good accounting quality book)
Assessment of accounting quality
Total assessment of accounting quality
PROJECT-PRESENTATION
14
FINAL EXAM
5|Page
Analysis of Financial Statements BSAF-VII, Course Outline Fall-2021.
