Financial Statement Analysis and Interpretation

This course uses the information from real companies to analyze and interpret their financial statements. The design of the course assumes that participants have very little background with respect to the preparation, analysis and interpretation of financial statements. While the mechanics of how to prepare financial statements are covered, emphasis is placed on what the numbers mean and how they are used. In the first part (60%) of the course, participants will learn: (1) how financial statements are prepared; (2) the linkage between the income statement, balance sheet, and cash flow statement; and, (3) how these statements need to be examined as a whole to understand a company's performance. Ratio analysis is explained and guidance is given regarding as to what to look for when analyzing a company’s operating, liquidity, and leverage ratios.



The remaining 40% of the course examines the uses and misuses of finan­cial state­ment data for a wide range of financing decisions. To avoid serious misdiagnoses of companies' prospects, analysts and users of financial statements must understand how to become financial detectives and get "behind the numbers" utilizing contemporary investigative analytic techniques. This seminar concentrates on how various financial report­ing options affect in­come, assets, cash flow fore­casts, financial ratios, and trends. Disting­uishing be­tween ac­counting rules and underlying economic reali­ties is emphasized throughout. Approaches that analysts can take when external reports do not reflect a firm's underly­ing economics are described and applied. The course focus­es on the pragmatic implica­tions of cor­porate disclosures (and nondis­closures).



Real-world case analysis, e.g. the recent financial reporting misstatements are used to enhance relevance and to promote participation in the learning process. Classroom discussion is designed to promote insight into resolving the issues presented by the case studies.

There will be a mid-term exam covering the material from the first part of the course. The grade on this exam will count toward 25% of the course grade. There will be a final exam (72 hour time frame distributed through Registration Services) covering the second part of the course. The grade on this exam will count toward 75% of the course grade.



The course can be taken either Credit/Fail or for a letter grade. In order to take the course for a letter grade, you must inform Registration Services of your desire to do so prior to the deadline which will be conveyed to you by Registration Services. If you do nothing or you inform Registration Services after the specified deadline, it is assumed you are taking the course Credit/Fail.