Units

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Sample subject outline - Semester 1 2012

Note: Subject outlines often change before the semester begins. Below is a sample outline.

Rationale

This unit (traditionally called Financial Statement Analysis) is about the analysis of financial information arising primarily from the financial reports of entities. The fundamental analysis techniques that are covered in this unit are widely used in the financial sector. The unit is in essence a capstone subject that brings together areas of financial accounting, finance and strategic management. Because of the interdisciplinary nature of the unit, it is a very useful preparatory unit for the CPA, CA and CFA programs. Also, due to the applied nature and international focus of the unit, it is of interest to those contemplating careers in investment banking (particularly in equity research), security analysis, funds management, financial planning, business consulting, corporate finance and public accounting in both Australia and overseas countries. The unit also has wide application in personal financial analysis and investment activities.

Aims

The aim of this unit is to develop students' knowledge, understanding and ability to apply financial statement analysis in business decision making activities. Fundamental analysis techniques are examined in detail with particular emphasis on the application of these techniques in equity (share) valuation decisions.

Objectives

Course Learning Goals (Postgraduate)

The QUT Business School has established the Assurance of Learning (AOL) Goals to meet contemporary industry needs and standards. Achieving these learning outcomes will assist you to meet the desired graduate outcomes set at QUT - aligned with other internationally renowned business schools. Students will develop the following capabilities relevant to a contemporary global and sustainable business environment:

Have knowledge and skills pertinent to a particular discipline (KS)

1.1 Well-researched knowledge and critical understanding applied to issues at the forefront of a specialised discipline area
1.2 Ability to select and use effectively a range of tools and technologies to locate and/or generate information appropriate to the disciplinary context

Be critical thinkers and effective problem solvers (CTA)

2.1 Apply logical, critical and creative thinking and judgement to generate appropriate solutions to problems in the disciplinary context

Be professional communicators in an intercultural context (PC)

3.1 Ability to create and present professional documents and/or reports using high levels of analysis/synthesis/evaluation for a range of contexts and audiences
3.2 Ability to orally communicate and justify ideas and information, at a professional level, for a variety of contexts and audiences, including peers and discipline specialists

Be able to work effectively in a Team Environment (TW)

4.1 Operate effectively and with flexibility to achieve common goals in collaborative settings, using a range of skills, including leadership, negotiation, reflection, proactivity and support for team members

Have a Social and Ethical Understanding (SEU)

5.1 Apply knowledge of the ethical, social and cultural dimensions relevant to business situations, including appropriate standards or codes of practice, to provide courses of action

Unit Objectives

On completion of this unit you should be able to:

1. Demonstrate the application of financial statement analysis (FSA) techniques;
2. Explain the linkage between strategic business analysis, accounting analysis and financial analysis;
3. Identify and utilise value-relevant information contained within financial statements;
4. Recognise and explain the fundamental role of accounting numbers in the valuation of entities;
5. Prepare and substantiate a valuation that incorporates the strategic, accounting and financing activities of a business entity.

Other Graduate Capabilities

On completion of this unit, you should be able to:

A. Apply analytical thinking skills to determine how to effectively use detailed financial information in various contexts;
B. Take responsibility for your learning process;
C. Participate as a cooperative, responsive and productive team member;
D. Conduct applied business research (including locating and critically interpreting and evaluating firm-specific financial information);
E. Employ effective oral, written and interpersonal communication skills appropriate to the context.

The specific course learning goals and unit objectives that apply to this unit are shown in the assessment section of this unit outline.

Content

The unit comprises three related parts. Part one outlines the four basic steps in the fundamental analysis framework: business analysis, accounting analysis, financial analysis and prospective analysis. The next part combines these skills in addressing the question of valuation, while the final section of the unit applies the skills in several different contexts, such as credit analysis, security analysis, mergers and acquisitions and financial policy decisions. The financial analysis techniques are applied in case studies involving both domestic and international companies.

Approaches to Teaching and Learning

Seminar Procedure

There will be one three-hour seminar each week. The seminar will involve a one to two hour lecture component and a workshop that either precedes or follows the lecture. The workshop may be used to discuss a case, review assigned problems or practice skills. Normally case studies will be discussed in the week following the related lecture. You should bring your prescribed textbook and a calculator to each class.

Seminar questions will be provided in class and posted on the Unit website in the week prior to the related seminar. It is essential that, prior to a seminar, you read the relevant unit materials and prepare written responses to assigned questions. Seminar questions often require additional research beyond the normal prescribed readings.

Self Study

Self study is a key element of the learning design of this unit. In most sessions readings and self study materials will be provided in class and/or posted on the Unit website to facilitate deeper learning of core elements of the unit. The aim of these self-study materials is to encourage you to assume responsibility in the learning process, and to broaden your understanding of the material covered in class. Please note that there are no reading sets required to be purchased at the start of the unit. All additional reading material will be distributed in class. This ensures that readings are current and topical.

Seminar Preparation and Performance

In preparation for each seminar, you will be expected to undertake the prescribed readings, attempt cases/problem sets prior to attending classes, and come to class suitably prepared. With this objective in mind, marks will be awarded for your attempt at completing the assignments and your class contribution (see below for details).

Workload

It is expected that you will spend at least 10 hours per week studying this unit. This time should be made up of reading, research, working on exercises and problems, performing computer tasks and attending classes. In periods where you need to complete assignments or prepare for examinations the workload may be greater. The cumulative nature of the material covered in the unit necessitates regular commitment each week to completing the assigned work.

Please note that under-estimation of on-going workload requirements has been a cause of failure for students in the past. You should take the required workload into account when planning how to balance study with employment and other activities.

Attendance

Regular and punctual class attendance (for the full time period) is expected in this unit. Attendance will be recorded at the commencement of each class. If you are not present at the roll call your attendance will not be recorded. Note that when in class you are expected to conduct yourself with consideration and respect for the needs of your fellow students and teaching staff. Conduct which unduly disrupts or interferes with a class, such as ringing or talking on mobile phones, is not acceptable and students may be asked to leave the class.

Keeping Informed

You should keep abreast of all announcements made in seminars or on the Unit website. Following each session lecture notes, summary solution points, spreadsheets and where practical, the additional reading material will be placed on the Unit website. If you miss a seminar, you should consult the website information prior to seeking information from the unit instructor. Also, important announcements may be forwarded directly to your university e-mail address without a follow-up paper copy. In all cases, you will be deemed to have received this information.

Students who comply with the above teaching and learning approaches are normally successful in meeting the assessment activities of the Unit. These activities (outlined below) have been carefully designed to progressively develop your knowledge, understanding and skills using a range of interrelated assessment methods appropriate to the Unit.

Assessment

The assessment in this unit aims to support your achievement of the learning objectives for both Discipline Knowledge and Other Graduate Capabilities. Assessment has been designed in order to allow you to both:

- receive feedback on your learning as you progress toward the development of knowledge, understanding, skills and attitudes (formative assessment); and
- demonstrate your learning in order to achieve a final grade (summative assessment).

Assessment name: Seminar Preparation&Performanc
Description: a) Seminar Assignment Preparation (15%) The seminar assignments are aimed at progressively building your knowledge and understanding of FSA issues as they are examined throughout the session. Seminar assignments include both assigned cases and project tasks (as outlined in the Week 1 Document). You should attempt the case questions shown for the case and any other assigned questions distributed in the class.
(b) Seminar Performance (5%)
The amount of learning that takes place in this unit critically depends on class interaction. To encourage effective interaction, a mark will be awarded (at the conclusion of the last class) for your performance/participation in the (on-campus) seminars.
Length/Duration:Length of answers to assignment questions will vary depending on the topic and questions but good quality assignments are frequently 4-6 (typed) pages.
Formative or Summative:Formative and Summative
Relates to objectives: Unit objectives: 1, 2, 3, 4, 5 and AOL goals: KS (1.1) and (1.2), CTA (2.1), PC (3.1), PC (3.2)
Weight: 20%
Internal or external: Internal
Group or individual: Individual
Due date: progressive

Assessment name: Analysis Project
Description: The FSA project is aimed at developing your understanding of, and practical skills in financial statement analysis and valuation. It is also designed to enhance teamwork, and analytical and communication skills. Upon successful completion of the project you will have acquired a working knowledge and practical skills in undertaking an equity valuation using 'leading-edge' financial statement analysis techniques. From past experience, the final report often provides excellent evidence of your analytical skills that can presented to prospective employers when applying for jobs.
Length/Duration:Report word limit: 1000 words per member.
Formative or Summative:Formative and Summative.
Relates to objectives: Unit objectives: 1, 2, 3, 4, 5 and AOL goals: KS (1.1) and (1.2), CTA (2.1), PC (3.1), TW (4.1)
Weight: 30%
Internal or external: Internal
Group or individual: Group with Individual Component
Due date: Week 11

Assessment name: Project (applied)
Description: The final piece of assessment will be either an in-class or a take-home assignment, and will be available to students in Week 12 or 13. (Full details will be provided in Week 1). All material covered in the unit is assessable and the assignment content will be similar in spirit to the problems and cases assigned during the semester. Past experience has shown that in this type of Unit, the final assignment is a very effective means of reinforcing learning outcomes without placing undue pressure on students to complete the final assessment item in a short time period. Please note that you must pass the final assessment item to pass the unit, otherwise a fail grade for the Unit will be awarded even if your total recorded marks for the Unit exceed 50%.
Length/Duration:The take home exam can normally be completed in 8 dedicated hours. An in-class exam will be for a duration of 2 hours (plus 15 mins. perusal).
Formative or Summative:Summative
Relates to objectives: Unit Objectives:1, 2, 3, 4, 5 and AOL goals: KS (1.1) and (1.2), CTA (2.1), PC (3.1)
Weight: 50%
Internal or external: Internal
Group or individual: Individual
Due date: Week 13

Academic Honesty

Academic honesty means that you are expected to exhibit honesty and act responsibly when undertaking assessment. Any action or practice on your part which would defeat the purposes of assessment is regarded as academic dishonesty. The penalties for academic dishonesty are provided in the Student Rules. For more information you should consult the QUT Library resources for avoiding plagiarism.

Resource materials

Prescribed Textbook / Readings

Palepu, K., P. Healy, V. Bernard, S. Wright, M. Bradbury, P. Lee, 2010, Business Analysis & Valuation Using Financial Statements - Text & Cases, 1st (Aus.) ed., Cengage Learning, Australia.
- Additional readings will be handed out in seminars throughout the unit.

Other Useful References

Other Textbooks (Editions as shown or any newer editions):

Foster, G., 1986, Financial Statement Analysis, Prentice Hall, Englewood Cliffs, New Jersey.
Lonergan, W., 1994, The Valuation of Businesses, Shares and other Equity, 2nd ed., Longman.
Lundholm, R., and R. Sloan, 2004, Equity Valuation & Analysis with Eval, McGraw Hill.
Penman, S.H., 2007, Financial Statement Analysis and Security Valuation, 3rd Edition, McGraw Hill.
Revsine, L., D Collins and W Johnson, 2005, Financial Reporting and Analysis, 3rd Edition, Pearson Education.
Stickney, C.P., P.R. Brown and J. M. Wahlen, 2004, Financial Reporting and Security Analysis: A Strategic Perspective, 5th ed., Thomson, South-Western.
White G.I., A.C. Sondhi and D. Fried, 2003, The Analysis and Use of Financial Statements, 3rd ed, John Wiley & Sons, Inc.
Wild, J.J., L.A., K.R. Subramanyan, and R.F. Halsey, 2007, Financial Statement Analysis, 9th ed., McGraw Hill.

Accounting Standards:
CPA Australia and The Institute of Chartered Accountants in Australia, Accounting and Auditing Handbook (latest edition).

The AIFRS (Australian International Financial Reporting Standards) can also be downloaded from the AASB web-site (www.aasb.com.au) together with information on the convergence of AASB /IFRS standards.

Other Resources

Students would normally be expected to purchase the prescribed text books and print lecture and tutorial materials and appropriate documents from the Unit website and/or CMD.

Risk assessment statement

There are no out-of-the-ordinary risks associated with lectures or tutorials in this unit. You should, however, familiarise yourself with evacuation procedures operating in the buildings in which you attend classes and take the time to
view the Emergency video.

Disclaimer - Offer of some units is subject to viability, and information in these Unit Outlines is subject to change prior to commencement of semester.

Last modified: 31-Jan-2012