Module ASB-4406:
Financial Analysis

Module Facts

Run by Bangor Business School

15 Credits or 7.5 ECTS Credits

Semester 2

Organiser: Prof Aziz Jaafar

Overall aims and purpose

To analyse the techniques that are used to evaluate a company's financial position and performance, and develop a critical awareness of the uses of financial data by capital markets for valuation purposes.

Course content

The content may include but will not be limited to; Balance sheet and income statement analysis; Financial ratio analysis and inter-firm comparison; Trend analysis and financial forecasting; Analysis of profitability and growth; The quality of financial statements, and using financial statements in valuation; Cash accounting, accrual accounting and discounted cash flow valuation; Pricing book values and earnings; Assessment of credit and equity risk.

Assessment Criteria

threshold

D- to D+; Basic understanding of key concepts and analytical techniques.

good

B- to B+; Good understanding of key concepts and good analytical skills.

excellent

A- to A*; Comprehensive and creative understanding of concepts and analytical techniques.

C- to C+

C- to C+; Broad and sound understanding of key concepts and analytical techniques.

Learning outcomes

  1. Apply appropriate methodologies in order to produce inter-firm comparisons of performance, and comparisons between the performance of the same firm over time.

  2. Critically analyse the uses of financial information by capital markets.

  3. Demonstrate competence for the purposes of equity valuation.

  4. Apply both basic and advanced techniques for the purposes of financial forecasting and the assessment of equity and credit risk.

Assessment Methods

Type Name Description Weight
REPORT GROUP ASSIGNMENT

2000 word group assignment in the form of a report.

25
EXAM FINAL EXAM 2.0 hours

Two hour closed-book exam at the end of semester

75

Teaching and Learning Strategy

Hours
Lecture

One 2-hour lecture per week

20
Practical classes and workshops

Computer workshop on Thomson One Banker

2
Practical classes and workshops

One hour seminar per week

10
Private study

A minimum of 160 hours of private study is advised - reading relevant chapters/papers; preparing tutorial questions, assignment and exams.

118

Transferable skills

  • Literacy - Proficiency in reading and writing through a variety of media
  • Numeracy - Proficiency in using numbers at appropriate levels of accuracy
  • Computer Literacy - Proficiency in using a varied range of computer software
  • Self-Management - Able to work unsupervised in an efficient, punctual and structured manner. To examine the outcomes of tasks and events, and judge levels of quality and importance
  • Exploring - Able to investigate, research and consider alternatives
  • Information retrieval - Able to access different and multiple sources of information
  • Inter-personal - Able to question, actively listen, examine given answers and interact sensitevely with others
  • Critical analysis & Problem Solving - Able to deconstruct and analyse problems or complex situations. To find solutions to problems through analyses and exploration of all possibilities using appropriate methods, rescources and creativity.
  • Teamwork - Able to constructively cooperate with others on a common task, and/or be part of a day-to-day working team
  • Argument - Able to put forward, debate and justify an opinion or a course of action, with an individual or in a wider group setting

Subject specific skills

  • knowledge of some of the contexts in which accounting can be seen as operating (examples of contexts include the legal, ethical, social and natural environment; the accountancy profession; the business entity; the capital markets; the public sector)
  • knowledge of contemporary theories and empirical evidence concerning accounting in at least one of its contexts (for example, accounting and capital markets; accounting and the firm; accounting and the public sector; accounting and society; accounting and sustainability) and the ability to critically evaluate such theories and evidence age
  • An ability to interpret financial data including that arising in the context of the firm or household from accounting statements and data generated in financial markets. The interpretation may involve analysis using statistical and financial functions and procedures such as are routinely available in spreadsheets (eg Microsoft Excel) and statistical packages. It may assume the skills necessary to manipulate financial data and carry out statistical and econometric tests (e.g. estimation and interpretation of asset pricing models; financial modelling and projections; event studies and residuals analysis; elements of time series analysis, such as serial correlation mean reversion, and stochastic volatility).
  • Numeracy: the use of quantitative skills to manipulate data, evaluate, estimate and model business problems, functions and phenomena.
  • An ability to understand financial statements, and a basic appreciation of the limitations of financial reporting practices and procedures (eg financial statement analysis; the relation between cash flow accounting and accrual accounting; discretionary accounting practices).

Resources

Reading list

Financial statement analysis and security valuation - by Stephen H. Penman - 5th ed. 2013