Course Outline Winter 2016 Financial Statement Analysis ACCT 354 Instructor: Office:
Zvi Singer Bronfman 334
Email:
[email protected] Phone: (514) 398-6240
Class Schedule: Section 1 – 5617 Monday and Wednesday 1:05 – 2:25 pm, Room 046 Section 2 – 4597 Monday and Wednesday 2:35 – 3:55 pm, Room 045 Office Hours: Monday and Wednesday 4:00– 5:00 pm, or by appointment Course Overview and Objectives: The main purpose of the course is to teach you the processes and methods of financial statement analysis by which users extract information to answer questions about the firm’s performance. This course takes an indepth look into financial statements and shows how information therein can be analyzed and processed to assist various stakeholders (investors, managers, regulators, etc.) in their business decisions. The course will help you to discriminate substance from form of corporate financial reports, including assessing the impact of alternative accounting methods, management biases and stakeholder interests in the analysis and valuation of the firm. The course uses cases and real world examples to convey the material and to highlight important issues. Course Prerequisites: MGCR 211, Introduction to Financial Accounting, MCGR 341, Finance 1 Course Evaluation: Homework (4 individual cases; no more than 1 per topic) Participation Midterm Exam (Friday February 26) Term Team project (Due April 20) Term Team project presentation (last week, April 11&13) Final Exam (during final exam period, TBD) Total
5% 5% 30% 15% 5% 40% 100%
Right to submit written work in English or French: In accord with McGill University’s Charter of Students’ Rights, students in this course have the right to submit in English or in French any written work that is to be graded. Academic Integrity: McGill University values academic integrity. Therefore all students must understand the meaning and consequences of cheating, plagiarism and other academic offences under the Code of Student Conduct and Disciplinary Procedures
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(see http://www.mcgill.ca/integrity/ for more information). Instructor generated course materials (e.g., handouts, notes, summaries, exam questions, etc.) are protected by law and may not be copied or distributed in any form or in any medium without explicit permission of the instructor. Role of Office Hours: Office hours are not meant just to answer material related questions. You are welcome to review with me your progress on the project, discuss learning strategies, etc. Text (background reading): International Financial Statement Analysis, 3rd edition, by Thomas Robinson, Elaine Henry, Wendy Pirie, and Michael Briohahn. Wiley, 2015. ISBN: 978-1-118-99947-9. It is available either through the bookstore or online. The Wiley ebook link is: http://ca.wiley.com/WileyCDA/WileyTitle/productCd-1118999479.html It is also available on Amazon and other online vendors. This book is also useful for CFA Level 1 exams. A copy of this textbook will be on reserve in the library: http://mcgill.worldcat.org/oclc/779740486. Reference Texts: Financial Accounting: A User’s Perspective Fifth or Sixth Canadian Edition, by Hoskins, Fizzell, and Cherry. (Textbook from BCom, Introduction to Financial Accounting course). A copy of this textbook will be on reserve in the library. Class preparation, Class Participation and Homework: Preparation: I will post the lecture slides in advance to ‘mycourses’. While I will cover the slides I class, I may rush over some of them at times. I expect you to have made a first read of the slides before coming to class. The last page of the course outline entails the class schedule. The most right column lists mini-cases we will discuss in class. You need to read them before class and come prepared to discuss them. During class I will allocate time to discuss the questions of the case in groups. Time should be used to exchange your views regarding the answers to the questions, not to familiarize yourself with the case. Except for the first case, I will not bring copies to class. Class participation: It is important to attend classes. The class is composed of lectures and class discussion of examples to highlight key concepts and clarify areas of difficulty. Attendance is not mandatory, but class participation is assigned 5% of the grade, and it is impossible to participate without attending class. Participation will be evaluated on both quantitative and qualitative dimensions. Homework (mini cases): You need to submit individual written answers to 4 of the cases. You can only choose one case per topic (some topics will have more than 1 mini case). Homework may NOT be done in groups or pairs. Homework will be graded on effort and completeness base. Points will not be deducted for wrong answers. Homework is due in the beginning of class the topic is discussed. Term project Students will be asked to analyze the financial statements of a publicly traded company and write a report in teams of 3 or 4. The purpose of the report is to conduct a critical assessment of the financial reporting practices of the company, adjustment to the financial statements as appropriate, and a projection of the income statements for the Acct 354 Outline Fall 2011
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next 3 years. The report should be 8 to 10 pages long, plus numerical appendices & graphs if needed. The information in the appendices should only complement the report, and not be used to shift information from the report. For the report, each team should first pick a public company to analyze. You should send me the information about the team members and the company no later than Wednesday, Feb.24th. Feel free to come and discuss with me potential companies. You may work with students from the other section, but you need to make sure to be available for the project presentation if most of the group members are from the other section. Term project report format 1. The report should begin with executive summary, A 1-page overview of your paper, your main findings and your conclusion. 2. Main body of the report should include the following components: a. Industry and Competitiveness analysis b. Business models and corporate governance analysis c. An overview of the accounting policies d. A critical assessment of the reporting quality of the balance sheet, income statements, statement of cash flows, and the note disclosure e. The analysis in (d) should lead to identification of some adjustments (at least 2) to the financial statements. f. Using the insight from (D) and (e) should lead to the projection of the income statement for the next 3 years g. Conclusion Sections d-f should be the heart of the analysis. Term project is due on Wednesday April 1 because term papers due dates must be before the last 2 weeks of the end of the semester. None-the-less, I will accept late submission with no penalties until April 11, the date of the first presentation. Term project presentation In the last week, each team will be asked to present its term project analysis in class, using PowerPoint slides. Presentation should be of between 10 & 15 minutes. The presentation must be conducted by all team members. Exams The midterm will be held Friday February 26. (closed-book, 1 double-sided formula sheet). The final exam will be held during the final exam period (closed-book with 1 formula sheet allowed) There will be NO make-up exams for students who miss the midterm. The weight of the mid-term exam will then be transferred to the final exam. Practice Problems: Robinson text – these are multiple choice type questions. The suggested problems from Robinson & Hoskins are listed on Mycourse for each Topic. Though the completion of the practice problems is not mandatory, they may be a good way to understand and internalize the course material.
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FSA Class Schedule Fall 2012 LECTURE WEEK
1 2 3 4 5 6 7
8
TOPIC
Robinson Chapt er
Mini Cases
Jan. 7&11 Jan. 13&18 Jan. 20&25 Jan. 27 & Feb.1 Feb. 3&8 Feb. 10&15 Feb. 17&22
Introduction to FSA Financial Reporting Environment Income statement
Ch 1 Ch 3 Ch 4
King Digital Entertainment
Balance Sheet Cash Flow Statement Earnings Quality
Ch 5 Ch 6 Ch 11&17
IBM, Zynga, Game Shell
Financial Statement Analysis & Corporate governance Financial Information Credit & Equity Analysis Assets – A/R, Inventory
Ch 7
Apple
Feb. 24 &Mar.7
Assets – Long-lived Assets
Ch 9
Ch 12 Ch 8
AR: Bombardier vs. Rio Tinto, Intel vs. Cisco Inventory: Blackberry, Tesla Bombardier
Midterm Topics 1-8 Friday February 26 3-5 pm Review tutorial TBD
9
Mar. 9&14
1 0 1 1 1 2
Mar. 16&21 Mar. 23&30 Apr.
1 3
Apr. 11&13
Feb. 29 – Mar. 4 Reading Week – Have Fun! Investments & Consolidated Ch 15 Demand Media Financial Statements Guest speakers: Gaby Merhi, Senior Consultant, Deloitte, Alexandre Duchesne, Partner, Deloitte. Liabilities, Debt & Leases Ch 10 Air Canada Leases & Deferred Taxes
Ch 10, 13
Pensions
Ch 14
Pensions article
4 & 6 Term project presentations Final Exam (Cumulative) - TBA
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