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ACCT 416 | Financial Reporting & Analysis

Smrity Randhawa
Spring 2017 Syllabus

Professor   Smrity  Randhawa,  PhD  


srandhaw@usc.edu  
Telephone:    (213)  821-­‐7840  
Accounting  Building  Office:    ACC  210  

Class  Meeting  Time     Section   Days   Time   Room  


and  Location   Section  14105   Tuesdays  &  Thursdays   2:00  –  3:50  pm   ACC  303              
Section  14106   Tuesdays  &  Thursdays   4:00  –    5:50  pm   ACC  303              

Office  Hours   Tuesdays  &  Thursdays  9  am  to  9:45  am  srand&  12:30  pm  to  1:45  pm  or  By  
and  Location   Appointment;  ACC  210  

Communication   Blackboard  and  Email  

Course  Notes   Lecture  slides  and  notes  and  other  class  information  will  be  available  on  
Blackboard  
Financial  Reporting,  Financial  Statement  Analysis  and  Valuation,  8th  Edition,  by  
Required  Materials  
Wahlen,  Baginski  and  Bradshaw  
Prerequisites   1  from  BUAD  215  or  BUAD  306  
and  1  from  ACCT  370  or  ACCT  370B  or  ACCT  415  
 
Course  Description  and  Objectives  
In  this  course  we  will  use  financial  statements,  related  disclosures  and  other  publicly  available  information  to  
analyze  the  performance  of  firms.  Furthermore,  we  use  this  information  to  forecast  the  future  financial  
performance  of  the  firm.  
The  main  topics  of  focus  are  going  to  be  as  follows:  
1. Understanding  the  impact  of  company’s  industry  and  strategy  on  its  financial  statements.  
2. Evaluating  financial  statement  quality  of  a  given  company.  Do  financial  statements  present  the  correct  
picture  of  the  current  financial  position  and  performance  of  the  firm?  Do  we  need  to  make  adjustments  
to  the  presented  information  in  order  to  understand  the  financial  performance  of  the  company  better?  
3. Using  the  current  financial  statement  &  other  publicly  available  information  to  forecast  the  future  
financial  performance  of  the  firm.  
4. Finally,  using  these  forecasted  financial  statements  as  an  input  to  value  a  firm.  This  class  will  focus  on  
the  discounted  cash  flow  and  earning  based  valuation  approaches.    
 
Required  Class  Materials:  
1. Financial  Reporting,  Financial  Statement  Analysis  and  Valuation,  8th  Edition,  by  Wahlen,  Baginski  and  
Bradshaw  (ISBN:  978-­‐1-­‐285-­‐19090-­‐7).  The  book  has  not  been  ordered  at  the  bookstore  because  there  
are  a  number  of  cheaper  options  available:  
a. You  can  get  access  to  an  eBook  from  the  publisher  
(https://www.cengagebrain.com/shop/isbn/9781285190907&cid=APL1)  for  $41.49  for  4  
months.  
b. You  can  rent  the  Hardcover  for  $56.99  for  6  months  from  the  publisher  (you  get  access  to  the  
eBook  for  free  while  the  book  ships).  The  main  caveat  is  that  you  might  have  to  pay  for  any  
damage  to  the  book  at  the  end  of  the  rental  period.  
c. You  can  buy  the  eChapters  for  $15.99  each.  We  use  8  chapters  from  the  book  so  the  total  cost  
of  buying  8  chapters  would  be  around  $112  (the  first  chapter  is  free).  
d. There  are  more  options  to  rent  or  buy  the  textbook  through  Amazon.com.  
2. Additionally,  you  will  need  to  purchase  the  two  cases  from  HBS  
(http://cb.hbsp.harvard.edu/cbmp/access/56508997).  The  two  cases  are  available  as  a  course  pack  for  
$8.50.  
 
Grading  Policies  
Your  grade  in  this  class  will  be  determined  by  your  relative  performance  on  quizzes,  a  midterm  exam,  case  
analyses,  a  final  project,  in-­‐class  exercises  and  class-­‐participation.  
        Weight  
Individual  Case  Analysis     3%  
Group  Case  Analysis     5%  
Two  Quizzes       12%  
Midterm         30%  
Class  Participation     10%  
In-­‐class  Exercises     5%  
Final  Project       35%  
 
Final  grades  represent  how  you  perform  in  the  class  relative  to  other  students.  Your  grade  will  not  be  based  on  a  
mandated  target,  but  on  your  performance.  Historically,  the  average  grade  for  this  class  is  about  a  3.3  (i.e.,  a  
“B+”).  Three  items  are  considered  when  assigning  final  grades:  
1.  Your  score  for  each  of  the  items  above  weighted  by  the  appropriate  factor  and  summed.  
2.  Your  overall  percentage  score  for  the  course.  
3.  Your  ranking  among  all  students  in  the  course(s)  taught  by  your  instructor  during  the  current  semester.  
 
Individual  Case  Analysis  
The  Individual  Case  (BNL  Case)  analysis  is  due  on  January  19th.  You  are  expected  to  answer  the  questions  in  less  
than  2  pages  of  text  (not  including  the  data  analysis  for  supporting  your  findings).  This  case  will  provide  you  with  
a  good  opportunity  to  work  on  your  Excel  skills.  
 
Group  Case  Analysis  
The  Group  Case  (NuWare  Case)  analysis  is  due  on  January  31st.  This  is  a  case  on  assessing  earnings  quality.  Each  
group  is  expected  to  provide  one  printed  version  of  their  case  analysis.  The  text  should  not  exceed  3  pages  (not  
including  the  data  analysis  for  supporting  your  findings).  
 
Quizzes  
There  will  be  two  quizzes  on  January  24th  and  February  21st  at  the  beginning  of  class.  Quizzes  may  include  
multiple-­‐choice  questions,  exercises  and  problems.  Quizzes  will  be  based  on  the  assigned  readings  and  class  
discussions.  
 
Midterm    
There  will  be  one  midterm  exam  held  on  February  7th  during  class  time.  The  midterm  may  include  multiple-­‐
choice  questions,  brief  essay  questions,  exercises  and  problems.  In  order  to  prepare  for  the  midterm  please  
make  sure  you  understand  the  assigned  readings  and  the  concepts  discussed  in  class.    
 

 
ACCT  416         Syllabus  –  Page  2  
The  Leventhal  School  of  Accounting  policy  is  exams  should  not  be  missed  unless  there  is  a  very  serious  
emergency  AND  it  can  be  properly  documented.  In  addition,  to  the  extent  possible,  you  must  inform  the  
instructor  of  the  emergency  prior  to  the  exam  (it  is  understood  this  is  not  always  possible).  If  you  miss  an  exam  
for  something  other  than  a  serious  emergency  and  /  or  you  cannot  provide  documentation,  you  will  receive  a  
zero  grade  for  the  exam.      
 
Class  Participation  
Your  class  participation  score  will  be  based  on  the  following  factors:  
1. Class  attendance:  This  class  covers  a  lot  of  material  in  half  a  semester,  as  a  result  it  is  really  important  to  
attend  as  many  classes  as  possible.    
2. Quality  of  comments  and  observations  made  in  class:  It  is  important  to  participate  in  class  discussions  
and  provide  insightful  questions  and  comments.    
3. Professionalism:  It  is  important  to  maintain  a  high  level  of  professionalism  while  interacting  with  your  
peers.    
 
Final  Project  
For  your  final  project  you  will  be  working  in  a  team  of  4  to  5  students  to  analyze  a  company.  This  project  will  
utilize  the  financial  statement  analysis,  forecasting  and  valuation  skills  you  will  learn  over  the  course  of  the  class.  
No  more  than  one  team  from  a  section  can  select  the  same  company.  Please  note  that  you  will  need  to  use  your  
Excel  skills  extensively  to  work  on  this  final  project.  The  grade  for  the  final  project  would  be  based  on  the  
following  two  components:  
Written  Component     65%  
Team  Presentation     35%  
          100%  
The  project  outline  details  will  be  available  by  February  7th.    
 
Scores  for  individual  student  contributions  to  team  projects  are  assigned  by  me,  based  on  my  observations  of  
the  team’s  working  dynamics,  my  assessment  of  the  team’s  project  quality,  and  thoughtful  consideration  of  the  
information  provided  through  your  peer  evaluations.  
 
 
Add  /  Drop  Policy  
In  compliance  with  USC  and  Marshall’s  policies,  classes  are  open  enrollment  (R-­‐clearance)  through  the  first  week  
of  class.  All  classes  are  closed  (switched  to  D-­‐clearance)  at  the  end  of  the  first  week.  This  policy  minimizes  the  
complexity  of  the  registration  process  for  students  by  standardizing  across  classes.    I  can  drop  you  from  my  class  
if  you  don’t  attend  the  first  two  sessions.    Please  note:  If  you  decide  to  drop,  or  if  you  choose  not  to  attend  the  
first  two  sessions  and  are  dropped,  you  risk  being  not  being  able  to  add  to  another  section  this  semester,  since  
they  might  reach  capacity.  You  can  only  add  a  class  after  the  first  week  of  classes  if  you  receive  approval  from  
the  instructor.  
 
Marshall  Grading  Guidelines  
Course  Grading  Policy:    Marshall’s  target  mean  GPA  is  3.0  for  required  classes  and  3.3  for  electives.    The  mean  
target  for  graduate  classes  is  3.3.  
 
Assignment/Exam  Grading  Policy:    The  instructor  determines  what  qualifies  as  an  accurate  grade  on  an  
assignment,  exam,  or  other  deliverable,  and  the  instructor’s  evaluation  of  the  performance  of  each  individual  
student  is  the  final  basis  for  assigning  grades  for  the  course.  
 

 
ACCT  416         Syllabus  –  Page  3  
Retention  of  Graded  Coursework  
All  graded  work  which  affects  the  course  grade  will  be  retained  for  one  year  after  the  end  of  the  course  if  the  
graded  work  has  not  been  returned  to  the  student  (i.e.,  if  I  return  a  graded  paper  to  you,  it  is  your  responsibility  
to  retain  it).  
 
Technology  Policy  
Laptop  and  Internet  usage  is  not  permitted  during  academic  or  professional  sessions  unless  otherwise  stated  by  
the  respective  professor  and/or  staff.    Use  of  other  personal  communication  devices,  such  as  cell  phones,  is  
considered  unprofessional  and  is  not  permitted  during  academic  or  professional  sessions.  ANY  e-­‐devices  (cell  
phones,  PDAs,  iPhones,  Blackberries,  other  texting  devices,  laptops,  iPods,  iPads,  etc.)  must  be  completely  
turned  off  during  class  time.    Upon  request,  you  must  comply  and  put  your  device  on  the  table  in  off  mode  and  
FACE  DOWN.    You  might  also  be  asked  to  deposit  your  devices  in  a  designated  area  in  the  classroom.    
Videotaping  faculty  lectures  is  not  permitted,  due  to  copyright  infringement  regulations.    Audio  taping  may  be  
permitted  with  prior  approval  by  the  professor.    Use  of  any  recorded  material  is  reserved  exclusively  for  USC  
Marshall  students.  
 
Statement  for  Students  with  Disabilities  
Any  student  requesting  academic  accommodations  based  on  a  disability  is  required  to  register  with  Disability  
Services  and  Programs  (DSP)  each  semester.    A  letter  of  verification  for  approved  accommodations  can  be  
obtained  from  DSP.    Please  be  sure  the  letter  is  delivered  to  me  as  early  in  the  semester  as  possible.    DSP  is  
located  in  STU  301  and  is  open  8:30  a.m.–5:00  p.m.,  Monday  through  Friday.    The  phone  number  for  DSP  is  (213)  
740-­‐0776.  
 
Statement  on  Academic  Integrity  
USC  seeks  to  maintain  an  optimal  learning  environment.    General  principles  of  academic  honesty  include  the  
concept  of  respect  for  the  intellectual  property  of  others,  the  expectation  that  individual  work  will  be  submitted  
unless  otherwise  allowed  by  an  instructor,  and  the  obligations  both  to  protect  one’s  own  academic  work  from  
misuse  by  others  as  well  as  to  avoid  using  another’s  work  as  one’s  own.    All  students  are  expected  to  understand  
and  abide  by  these  principles.    SCampus,  the  Student  Guidebook,  contains  the  Student  Conduct  Code  in  Section  
11.00,  while  the  recommended  sanctions  are  located  in  Appendix  A  of  the  Student  Guidebook.  
http://scampus.usc.edu/university-­‐governance/    
 
Students  will  be  referred  to  the  Office  of  Student  Judicial  Affairs  and  Community  Standards  for  further  review,  
should  there  be  any  suspicion  of  academic  dishonesty.    The  Review  process  can  be  found  at  
http://www.usc.edu/student-­‐affairs/SJACS/    Failure  to  adhere  to  the  academic  conduct  standards  set  forth  by  
these  guidelines  and  our  programs  will  not  be  tolerated  by  the  USC  Marshall  community  and  can  lead  to  
dismissal.  
 
Emergency  Preparedness/Course  Continuity  
In  case  of  emergency,  and  travel  to  campus  is  difficult,  USC  executive  leadership  will  announce  an  electronic  way  
for  instructors  to  teach  students  in  their  residence  halls  or  homes  using  a  combination  of  Blackboard,  
teleconferencing,  and  other  technologies.  

 
ACCT  416         Syllabus  –  Page  4  
 
ACCT 416 | Financial Reporting & Analysis
 
 
Session Date Chapter Topic Assigned Reading* Deliverables
Introduction to the Financial
Statement Analysis, Public
sources of company data,
Understanding the Industry of a
1 Jan 10 Company Chapter 1- pp. 1 to 30
Understanding the Industry &
Company's Strategy (Contd.) &
2 Jan 12 Statement of Cash Flows Chapter 3 - pp. 148 to 182
Statement of Cash Flows (Contd.)
3 Jan 17 & Introduction Profitability Analysis Chapter 4 - pp. 241 to 297
BNL Case
4 Jan 19 BNL Case Chapter 3 - pp. 182 to 195 Analysis
5 Jan 24 Risk Analysis Chapter 5- pp. 353 to 380
Chapter 6- pp. 416 to 425,
6 Jan 26 Accounting Quality 443 to 469
Nuware Case
7 Jan 31 Nuware Case Analysis
8 Feb 2 Midterm Review
9 Feb 7 Midterm
Chapter 10 - pp. 761 to
10 Feb 9 Forecasting Financial Statements 787
Chapter 10 - pp. 787 to
11 Feb 14 Forecasting Financial Statements 822
Chapter 12 - pp. 905 to
908, Exhibit 12.2 (Right
hand side), 914 to 915,
920, 922 to 924, 927 to
12 Feb 16 DCF Model 932
Chapter 13 - pp. 967 to
13 Feb 21 Earnings Based Model 976, 981 to 987
Sensitivity Analysis/Day to work
14 Feb 23 on project
15 Feb 28 Group presentations Final Project
16 Mar 2 Group presentations Final Project
*Wahlen, Baginski and Bradshaw
 

   

 
ACCT  416         Syllabus  –  Page  5  
 
ACCT 416 | Financial Reporting & Analysis
 
USC Leventhal School of Accounting
Important Dates
Spring 2017

First Day of Class   Monday, January 9  

Accounting Orientation – ACCT-370 lab time Friday, January 13, 10am

Martin Luther King Jr. Birthday, University Holiday Monday, January 16

USC Career Fest January 30 - February 3

Resumes for Spring Resume Book due Friday, February 3 at 8am

 
Leventhal Scholarship Applications Due  
Monday, February 6

 
USC Career Day  
Thursday, February 9

Summer Leadership Programs, Information Session Panel Friday, February 10, Noon

Meet the Firms – Galen Center (Accounting Society) Wednesday, February 15, 6-9pm

Presidents' Day, University Holiday Monday, February 20

Spring Break Monday, March 13 - Friday, March 17

LSOA Annual Scholarship Dinner Wednesday, April 19

Last Class Meeting for Regular (001) and 442 sessions Friday, April 28

Study Days Saturday- Tuesday, April 29- May 2

Commencement Friday, May 12

First-Half Session Dates (Session 431), January 11 - March 2


Last Day to Add or Drop first half ACCT/BUAD courses w/out a “W” Tuesday, January 17
Last Day to Change from P/NP to Letter Grade Tuesday, January 31
Last Day to Drop first half ACCT/BUAD courses with a "W" Tuesday, February 14
Final Exams for first half ACCT/BUAD courses Monday, February 27 – Thursday, March 2
 

   

 
ACCT  416         Syllabus  –  Page  6  
 
ACCT 416 | Financial Reporting & Analysis

LEVENTHAL  SCHOOL  OF  ACCOUNTING  


  GRADING  AND  ACADEMIC  STANDARDS  
  ACCT  370,  371,  372,  373,  374,  377,  416,  430,  462,  463,  470,  472,  473,  474  
 

The  Leventhal  School  of  Accounting  adheres  strictly  to  the  grading  standards  of  the  University  and  the  School  of  
Business  Administration.    Additionally,  the  Leventhal  School  of  Accounting  has  supplemented  those  standards  
with  certain  others.    For  students'  convenience,  and  to  prevent  misunderstanding,  these  additional  standards  
are  summarized  below.  

GRADING  STANDARDS  

The  following  grades  are  used:    A  -­‐  excellent;  B  -­‐  good;  C  -­‐  fair;  D  -­‐  minimum  passing;  F  -­‐  failure.    The  grade  of  F  is  
awarded  for  failing  work  at  the  end  of  the  semester.    The  assignment  of  minuses  and  pluses  when  earned  is  
required.  

The  grade  of  W  (Withdraw)  is  assigned  if  the  student  officially  withdraws  after  the  third  week  but  before  the  end  
of  the  twelfth  week  of  the  semester.    No  withdrawals  will  be  permitted  after  the  end  of  the  twelfth  week  except  
by  student  petition  to  the  University's  Committee  on  Academic  Policies  and  Procedures.  

Students  may  elect  to  audit  courses  during  the  first  three  weeks  of  the  semester.    A  course  taken  for  audit  (V)  
will  be  assessed  at  the  current  tuition  rate.    A  course  taken  for  audit  (V)  will  not  receive  credit  and  will  not  
appear  on  the  USC  transcript  or  grade  report.    Under  no  circumstances  will  the  University  allow  a  change  in  the  
registration  status  of  a  course  from  letter  grade  or  credit  to  audit  (V)  or  vice  versa  after  the  third  week  of  a  given  
semester.  

Incomplete  Grades  Explanation    

In  incomplete  (IN)  grade  may  be  assigned  due  to  an  “emergency”  that  occurs  after  the  6th  week  of  classes  for  
half  semester  courses  or  the  12th  week  for  full-­‐semester  courses..    An  “emergency”  is  defined  as  a  serious  
documented  illness,  or  an  unforeseen  situation  that  is  beyond  the  student’s  control,  that  prevents  a  student  
from  completing  the  semester.    Prior  to  the  6th  or  12th  week,  the  student  still  has  the  option  of  dropping  the  
class.    Arrangements  for  completing  an  IN  course  should  be  initiated  by  the  student,  and  negotiated  with  the  
instructor.    Class  work  to  complete  the  course  should  be  completed  within  one  calendar  year  from  the  date  the  
IN  was  assigned.    The  IN  mark  will  be  converted  to  an  F  grade  should  the  course  not  be  completed.  

Academic  Integrity  –  Leventhal  School  of  Accounting  Honor  Code  

Students  enrolled  in  any  class  offered  by  the  Leventhal  School  of  Accounting  are  expected  to  uphold  and  adhere  
to  the  standards  of  academic  integrity  established  by  the  Leventhal  School  of  Accounting  Student  Honor  Code.    
Students  are  responsible  for  obtaining,  reading,  and  understanding  the  Honor  Code  System  handbook.    Students  
who  are  found  to  have  violated  the  Code  will  be  subject  to  disciplinary  action  as  described  in  the  handbook.    For  
more  specific  information,  please  refer  to  the  Student  Honor  Code  System  handbook,  available  in  class  or  from  
the  receptionist  in  ACC  101.  

 
ACCT  416         Syllabus  –  Page  7  
 
ACCT 416 | Financial Reporting & Analysis

LEVENTHAL  SCHOOL  OF  ACCOUNTING  


  GRADING  AND  ACADEMIC  STANDARDS  
  ACCT  370,  371,  372,  373,  374,  377,  416,  430,  462,  463,  470,  472,  473,  474  
 

G.P.A.  PREREQUISITES  FOR  UNDERGRADUATE  ACCOUNTING  COURSES  

The  grade  point  average  prerequisites  for  any  undergraduate  student  enrolled  in  any  accounting  course  is:  a  
minimum  2.5  gpa  for  all  completed  accounting  courses  for  students  entering  USC  prior  to  Fall  2013;  a  minimum  
2.7  gpa  for  all  completed  accounting  courses  for  students  entering  USC  in  Fall  2013  or  later.  In  computing  grade  
point  average  prerequisites,  BUAD  280,  281,  285ab,  286ab,  305  and  302T  are  considered  accounting  courses.  

Grades  in  accounting  courses  taken  at  other  institutions  will  not  be  included  in  the  computation  of  the  
cumulative  accounting  grade  point  average.  

When  a  student's  cumulative  accounting  grade  point  average  falls  below  2.5  or  2.7,  the  student  is  placed  on  
probation.    If  a  student  on  probation  does  not  regain  a  minimum  accounting  cumulative  GPA  of  2.5  or  2.7  after  
completing  the  next  12  semester  hours  in  all  courses  (including  accounting  courses)  attempted  within  the  
University,  that  student  will  not  be  permitted  to  continue  as  an  accounting  major  in  the  Leventhal  School  of  
Accounting.    Exceptions  to  this  policy  may  be  granted  only  in  unusual  circumstances  by  the  Academic  Standards  
Committee  of  the  Leventhal  School  of  Accounting.    Decisions  of  the  Academic  Standards  Committee  are  final.  

To  be  removed  from  probationary  status,  a  student  may  elect  either  to  take  another  accounting  course  or  
courses  for  which  prerequisites  are  met  or  to  repeat  an  accounting  course  or  courses  in  an  attempt  to  earn  a  
higher  grade.    Regardless  of  the  course  of  action  taken,  all  courses  completed  will  be  counted  in  computing  the  
cumulative  accounting  grade  point  average.  

The  grade  of  "W"  in  an  accounting  course  taken  while  a  student  is  on  probation  will  not  extend  probation.    The  
probation  period  ends  at  the  end  of  that  semester  during  which  the  student  completes  a  cumulative  total  of  12  
semester  hours  of  courses  in  any  subject(s)  at  the  university.    Under  no  conditions  will  the  student  be  permitted  
more  than  two  successive  semesters,  including  the  summer  semester,  to  complete  the  12  semester  hours  of  
courses.  

Students  must  attain  a  minimum  2.5  or  2.7  cumulative  accounting  grade  point  average  to  graduate  with  a  
Bachelor  of  Science  in  Accounting  degree.  

See  the  USC  Catalogue  for  further  restrictions  on  including  grades  in  repeated  classes  in  the  overall  grade  point  
average  computation.  

OTHER  ACADEMIC  STANDARDS  

   1.   The  ability  of  students  to  write  clearly  and  concisely  is  a  necessary  prerequisite  to  success  in  accounting  
work.    Accordingly,  students  will  be  required  to  demonstrate  writing  capability  in  all  accounting  courses.    
This  may  be  accomplished  primarily  through  the  inclusion  of  essay-­‐type  questions  on  course  
examinations.  

 
ACCT  416         Syllabus  –  Page  8  

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