Financial Statement Analysis

UNIVERSITY OF TEXAS AT DALLAS

Course Syllabus
Fall 2005
Instructor: Shu Lin
Course Number: AIM 4336
Semester Hours: 3
Location: SOM 2.722
Time: Wednesday, 7:00-9:45 pm
Office Hours: Wednesday 5:00 – 6:00pm or by appointment
Office Phone: (972) 883-4442
Email Address: WebCT Email

Course Overview:
The course will cover financial statement from a user’s perspective. Broad concepts will be covered
related to financial statements with application of different industries, companies, including a comparative
analysis of various industries. This course is designed to take the students beyond the routine filling of
boxes with standard financial ratios, calculated according to precise and inflexible definitions. The
course emphasizes the application of the concepts to real life situations.

The main goal is to provide students with a broad, practical perspective to work on financial statement
analysis to determine:

1. A reasonable assessment of the financial condition of the firm

2. What may be reasonable forecasts of its future position
3. Weather the firm is worthy of credit
4. The operation characteristics of the firm

Prerequisites:
Pre-requisite: AIM -2301
Pre-requisite: AIM -2302
Pre-requisite: MATH-1325
Pre-requisite: MATH-1326
Pre-requisite: MATH-2333

Required Materials:
• Financial Reporting & Analysis, 9th Edition, Charles Gibson, 2004, South-Western Publishing.
Financial Statement Analysis 2

Course Objectives:
The purpose of this course is to give the student an in-depth exposure to various financial statements used in
business activities-- specifically to evaluate how statements and their construction vary from firm-to-firm within
various legal and institutional requirements. Additionally, a perspective of the following will be explored:

• The differing perspectives of various parties examining & preparing financial statement data

• Reporting requirements of government and accounting professional agencies

• Differing composition of financial statements in differing industries

• The effect of computer software & internet access on computing and evaluating financial ratios &
industry data

Homework:
All assignments should be completed and turned on WebCT by midnight the evening prior to class.
The individual project will require a written paper and powerpoint presentation. To assist with
discussion in class and make grading of homework easier also bring a hard copy of the assignment with
you to class on Thursday to turn in. The class format will typically be to lecture on the information a
week before the assignment is due then discuss the questions from that chapter the following week.
Homework assignment will be made at least a week in advance.

Communication:
We will make use of WebCT for posting assignments and projects. Also, you can take advantage of the
discussion features of webct to discuss issues with other students. My use of webCT for discussion will
be somewhat limited to one time per week so please ask questions during class and don’t use webCT
for discussion of class topics.

Case Studies and Discussion:

The textbook has extensive problems, case studies, to the net exercises, and a Web Case at the end of
each Chapter. Make sure you are doing the correct problems, case studies and questions as each
chapter will have different problems assigned from each area. You will be assigned problems and case
studies which will later be selected for review and discussion in class.

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Financial Statement Analysis 3

Tests:
You will have two tests that will not be comprehensive in nature. The first test will cover the topics from
Chapter 1-7 and the second test will cover Chapters 8, 9, 10, 11, and 13.

Grading:
Your grade will consist of the following:

Percent
Homework 20%
Class participation 5%
Midterm Exam 35%
Final Exam 40%
Total 100%

Academic Dishonesty:
Candidates are expected to be above reproach in scholastic activities. Candidates who engage in scholastic
dishonesty are subject to disciplinary penalties, including the possibility of failure in the course and dismissal from
the University. “Scholastic dishonesty includes, but is not limited to cheating, plagiarism, collusion, the
submission for credit of any work or materials that are attributable in whole or in part to another person,
taking an examination for another person, any act designed to give unfair advantage to a student or the
attempt to commit such acts.” 1 Since scholastic dishonesty harms the individual, all candidates, and the integrity
of the University, policies on scholastic dishonesty will be strictly enforced.

Class Schedule:
The class schedule is subject to change, based on the needs of the students. Class will be composed of
some lecture, discussion on case study and problems, and discussion on current events. For each student
to get the most of this class it is recommended that you be in tune with events impacting the financial
community. Many events are impacting the corporate environment due to financial reporting issues.
Reading of material such as the Wall Street Journal, Forbes, Money Magazine, etc. is strongly encouraged
along watching CNNfn. It is expected that students bring these issues to class for discussion as
appropriate.

Changes to the class and schedule will be discussed as the need arises.

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(Regents’ Rules and Regulations, Part One, Chapter VI, Section 3, Subsection3.2, Subdivision 3.22
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Financial Statement Analysis 4

Schedule
Week Date Topic Chapter
1 8/24 Introduction to Financial Reporting Chapter 1
2 8/31 Introduction to Financial Statements Chapter 2
Balance Sheet Chapter 3
3 9/7 Balance Sheet Chapter 3
Income Statement Chapter 4
4 9/14 Income Statement Chapter 4
Basics of Analysis Chapter 5
5 9/21 Liquidity of Short Term Asset Chapter 6
6 9/28 Long-Term Debt-Paying Ability Chapter 7
7 10/5 Test #1
8 10/12 Profitability Chapter 8
9 10/19 For the Investor Chapter 9
10 10/26 For the Investor Chapter 9
11 11/2 Statement of Cash Flows Chapter 10
12 11/9 Statement of Cash Flows Chapter 10
13 11/16 Extended Analysis Chapter 11
14 11/23 Extended Analysis Chapter 11
15 11/30 Final Exam