
Financial Statements Analysis
Code: 102376Credits: 6
| Degree programme | Type | Course |
|---|---|---|
| Economics | OB | 2 |
Contact lecturer
- Name :
- Isabel Narbón Perpiña
- Email :
- isabel.narbon@uab.cat
Teaching staff
- Isabel Narbón Perpiña
- Inmaculada Ruiz Busons
- Ahmed Mohamed Aymen Ahmed
Group languages
You can consult this information at the end of the document.
Prerequisites
To make the most of this course, it is recommended the students have passed the course of Introduction to Accounting, which is taught during the first academic year in the Faculty of Business and Economics at the UAB. This last course provides the knowledge necessary to follow the contents of the course of Financial Statement Analysis.
Objectives
Context:
This is a mandatory 6 credit ECTS subject for the Bachelor's Degree in Economics at UAB. It is offered during the first semester of the second academic year.
Financial Statement Analysis complements the knowledge acquired on the course of Introduction to Accounting, in which the students have learnt the basic accounting methods as well as the main accounting statements and the way they are formulated.
Objectives:
The objective of this subject is to teach the main financial statements of the companies: balance sheet, income statement, annual report, statement of changes in equity and cash flows statement.
The teaching of analysis tools and techniques will allow the financial statements evaluation in order to make a diagnosis of the company’s past financial and economic situation (solvency and profitability). This also will help to understand the company’s future evolution and to make decisions about the mentioned situation.
To achieve this objective the methodology will be focused on practices using real accounting statements, and based on a theoretical knowledge about the elemental accounting statements.
Learning outcomes
- CM33 (Lead work teams, in terms of good time management, organisation and planning.) Lead work teams, in terms of good time management, organisation and planning.
- CM34 (Issue a diagnosis based on the economic and financial analysis of an entity.) Issue a diagnosis based on the economic and financial analysis of an entity.
- CM35 (Apply accounting solutions that demonstrate ethical behaviour in the preparation of financial statements.) Apply accounting solutions that demonstrate ethical behaviour in the preparation of financial statements.
- KM30 (Recognise the qualitative variables that can influence decision-making based on financial statements.) Recognise the qualitative variables that can influence decision-making based on financial statements.
- KM31 (Recognise the characteristics of the business sectors based on the annual accounts.) Recognise the characteristics of the business sectors based on the annual accounts.
- KM32 (Describe the economic and financial reality of the organisations in accordance with the principles, rules and agreements applicable in each case.) Describe the economic and financial reality of the organisations in accordance with the principles, rules and agreements applicable in each case.
- SM34 (Prepare information relating to a management accounting system.) Prepare information relating to a management accounting system.
- SM35 (Interpret an entity's financial indicators by considering the decisions that can be made based on its analysis.) Interpret an entity's financial indicators by considering the decisions that can be made based on its analysis.
- SM36 (Generate the necessary information for each accounting problem.) Generate the necessary information for each accounting problem.
- SM37 (Use the tools of an organisation's financial planning and budgeting process.) Use the tools of an organisation's financial planning and budgeting process.
Contents
TOPIC 1. FINANCIAL INFORMATION AND ANALYSIS OF FINANCIAL STATEMENTS
- Concept and usefulness of financial statement analysis.
- Main areas of analysis.
- Business information.
- Annual accounts.
- Sources of business information.
- The role of qualitative information.
- Users of business information.
- Limitations of financial reporting.
TOPIC 2. FINANCIAL STATEMENTS (I)
- The balance sheet.
- Structure and asset/liability categories.
- Elements of the asset/liability categories. The valuation issue.
- Preliminary analysis of the balance sheet: percentages and rates of change.
- The income statement.
- Structure and elements of the income statement.
- Types of income:
- Operating income, financial income and net income.
- Gross income, EBIT and EBITDA.
- Preliminary analysis of the income statement: percentages and rates of change.
- The notes to the financial statements.
TOPIC 3. FINANCIAL STATEMENTS (II)
- The Statement of Cash Flows.
- Concept and mandatory nature.
- Classification of cash flows.
- Methods of preparation: direct and indirect.
- Basic preparation and interpretation of the Statement of Cash Flows using the indirect method: a first approach.
- Relationship between profit or loss for the year and net cash from operating activities: earnings quality.
- The Statement of Changes in Equity.
- Concept and mandatory nature.
- Structure and basic interpretation of the Statement of Changes in Equity.
- The management report.
- The audit report.
- Information from consolidated financial statements.
TOPIC 4. ANALYSIS OF SHORT-TERM LIQUIDITY
- Concept of liquidity.
- Short-term financial positions and equilibrium.
- Working capital and its classification.
- The operating cycle: turnover ratios, average maturity periods and the cash conversion cycle.
- Analysis of liquidity using ratios.
TOPIC 5. ANALYSIS OF LONG-TERM SOLVENCY
- Concept of long-term solvency.
- Long-term financial positions and equilibrium.
- Analysis of solvency using ratios:
- Self-financing.
- Guarantee ratio.
- Debt and financial autonomy ratios.
- Ratios based on the Statement of Cash Flows.
TOPIC 6. ANALYSIS OF PROFITABILITY AND INCOME
- Return on assets (ROA).
- Return on equity (ROE).
- Components of the company’s profitability.
- Financial leverage.
- Basic market reference indicators:
- Net Financial Debt.
- Earnings per share.
- Pay-out and dividend per share.
- Price-earnings ratio (PER).
- Price-to-book ratio.
Learning activities and methodology
| Title | Hours | ECTS | Learning outcomes |
|---|---|---|---|
| Practical classes | 17 | 0.68 | CM34, CM35, KM30, KM31, KM32, SM34, SM35, SM36, SM37 |
| Autonomous work | 90 | 3.6 | CM33, CM34, CM35, KM30, KM31, KM32, SM34, SM35, SM36, SM37 |
| Theoretical classes | 32.5 | 1.3 | CM34, CM35, KM30, KM31, KM32, SM34, SM35, SM36, SM37 |
| Tutorships | 4.5 | 0.18 | CM33, CM34, CM35, KM30, KM31, KM32, SM34, SM35, SM36, SM37 |
- Theoretical classes: teacher’s presentations using supporting material.
- Practical classes: analysis and discussion of real cases. Exercises resolution and practical cases to reinforce and apply the theoretical knowledge, working individually or in groups, always under the teacher’s direction.
- Tutorship: doubts resolution, monitoring of the assigned work and the prepared cases.
- Autonomous student’s work: readings related to the matter, studying and preparation of diagrams, preparation of cases and exercises.
- Evaluation tests and monitoring: written evaluations of the acquired knowledge.
Use of AI – Restricted Use: For this course, the use of Artificial Intelligence (AI) technologies is permitted exclusively for support tasks such as text correction or translations. The student must clearly identify which parts have been generated using this technology, specify the tools used, and include a critical reflection on how these have influenced the process and the final outcome of the activity. Lack of transparency in the use of AI in this assessed activity will be considered academic dishonesty and may result in partial or total penalties to the grade of the activity, or more severe sanctions in serious cases.
Assessment
Continuous assessment activities
| Title | Weight | Hours | ECTS | Learning outcomes |
|---|---|---|---|---|
| Case study | 10% | 2 | 0.08 | CM33, CM34, CM35, KM30, KM31, KM32, SM34, SM35, SM36, SM37 |
| Mid term test. Theoretical and practical contents from Units 1-3. | 40% | 2 | 0.08 | CM34, CM35, KM32, SM34, SM35, SM36, SM37 |
| Final exam. Theoretical and practical contents from Units 4-6. | 50% | 2 | 0.08 | CM34, CM35, KM32, SM35, SM36, SM37 |
The evaluation will take place under the following criteria:
- Practical case study in group (10% of the final grade)
- Midterm exam with theoretical and practical contents from Units 1 to 3 (40% of the final grade)
- Final exam with theoretical and practical contents from Units 4 to 6 (50% of the final grade)
Additional Information:
- Students who get an overall grade equal to or greater than 5 points will pass the course.
- Students who get an overall grade equal to or greater than 3.5 points and less than 5 points will be able to take the retake exam. Lecturers will decide the modality of this test, which will be common to all students. Students who take the retake exam and pass, will get a maximum final grade of 5 points.
- Students who obtain a global grade lower than 3.5 points will not be able to take the retake exam and must repeat the course.
- Student will be considered “No evaluable” when he or she has not participated in any of the evaluation activities.
This subject does not offer the option for comprehensive evaluation.
Calendar of evaluation activities
The dates of the evaluation activities (midterm exams, exercises in the classroom, assignments, ...) will be announced well in advance during the semester.
The date of the final exam is scheduled in the assessment calendar of the Faculty.
"The dates of evaluation activities cannot be modified, unless there is an exceptional and duly justified reason why an evaluation activity cannot be carried out. In this case, the degree coordinator will contact both the teaching staff and the affected student, and a new date will be scheduled within the same academic period to make up for the missed evaluation activity." Section 1 of Article 264. Calendar of evaluation activities (Academic Regulations UAB).
Students of the Faculty of Economics and Business, who in accordance with the previous paragraph need to change an evaluation activity date must process the request by filling out an Application for exams' reschedule: e-Formulari per a la reprogramació de proves.
Grade revision process
After all grading activities have ended, students will be informed of the date and way in which the course grades will be published. Students will be also be informed of the procedure, place, date and time of grade revision following University regulations.
Retake Process
"To be eligible to participate in the retake process, it is required for students to have been previously been evaluated for at least two thirds of the total evaluation activities of the subject." Section 2 of Article 261. The recovery (UAB Academic Regulations). Additionally, it is required that the student to have achieved an average grade of the subject greater than or equal to 3.5 and less than 5.
The date of the retake exam will be posted in the calendar of evaluation activities of the Faculty. Students who take this exam and pass, will get a grade of 5 for the subject. If the student does not pass the retake, the grade will remain unchanged, and hence, student will fail the course.
Irregularities in evaluation activities
In spite of other disciplinary measures deemed appropriate, and in accordance with current academic regulations, "in the case that the student makes any irregularity that could lead to a significant variation in the grade of an evaluation activity, it will begraded with a 0, regardless of the disciplinary process that can be instructed. In case of various irregularities occur in the evaluation of the same subject, the final grade of this subject will be 0". Section 11 of Article 266. Results of the evaluation. (UAB Academic Regulations).
The completion of assessment activities is subject to the provisions set out in this course guide and in the "Policy of the School of Economics and Business on the Detection of Irregularities during Assessment Activities", which regulates the conditions under which assessment tasks are conducted and the procedures applicable in cases where indications of irregularities are detected. Students are encouraged to consult the policy.
Bibliography
Basic:
- Subramanyam, K.R. (2013), \"Financial Statement Analysis\". Irwin Accounting
Complementary:
- Walker, J. (2009): Accounting in a nutshell. Edició 3rd ed. Electronic resource from “Biblioteca de Ciències Socials. UAB”.
- Wild, J; Subramanyam, K.; Halsey, R. (2005): Financial Statement Analysis. 9ª ed. Ed. McGraw-Hill.
- Wahlen, J. M., Baginski S. P., Bradshaw, M. (2010): Financial Reporting, Financial Statement Analysis and Valuation: A Strategic Perspective, ed. South-Western College Pub, 7th edition.
Webs:
- Instituto de Contabilidad y Auditoría de Cuentas (ICAC). http://www.icac.meh.es
- Banco de España. http://www.bde.es
- Banc Central Europeu. http://www.ecb.int
- Borsa de Madrid. http://www.bolsamadrid.es
- Comisión Nacional del Mercado de Valores. http://www.cnmv.es
- Guía Empresarial de Esade. http://www.guiame.net
- Consell General de Cambres de Catalunya. http://www.cambrescat.es
- Informe Anual de l'Empresa Catalana. http://www.gencat.net/economia/progecon/ecocat/inform.htm
- Registro de Economistas Auditores. http://www.rea.es
- Registre Mercantil. http://www.registradores.org
- Instituto Censores Jurados de Cuentas de España. http://www.icjce.es
Software
Microsoft Excel.
Databases: SABI
Course groups and languages
The information provided is provisional until November 30. After this date, you will be able to consult the language of each group through this link. To access the information, you will need to enter the course CODE
| Type of teaching | Group | Language | Semester | Shift |
|---|---|---|---|---|
| (TE) Theory | 1 | Spanish | first semester | morning-mixed |
| (TE) Theory | 8 | English | first semester | morning-mixed |
| (PAUL) Classroom practices | 8 | English | first semester | morning-mixed |
| (PAUL) Classroom practices | 11 | Spanish | first semester | morning-mixed |
| (PAUL) Classroom practices | 12 | Catalan | first semester | morning-mixed |
| (TE) Theory | 51 | Spanish | first semester | afternoon |
| (PAUL) Classroom practices | 51 | Spanish | first semester | afternoon |