Financial Analysis (2235.YR.014051.1)
General information
Type: |
OBL |
Curs: |
2 |
Period: |
S semester |
ECTS Credits: |
4 ECTS |
Teaching Staff:
| Group |
Teacher |
Department |
Language |
| Year 2 |
Soledad Moya Gutierrez |
Economía, Finanzas y Contabilidad |
ENG |
COURSE CONTRIBUTION TO PROGRAM
This Financial Statement Analysis course stopped being merely a complement for lawyers a long time ago. Today, having a background in Accounting and Finance is essential for lawyers. Bachelor in Law and Bachelor in Global Governance graduates not only need a solid legal background; they also need to understand financial statements and be able to analyse them. Otherwise, how will they defend their client firms? How will they advise them in terms of mergers and acquisitions? How will they appraise companies and distinguish between good and bad firms and in terms of what aspects? How will they detect possible non-payment? How will they know if a company is solvent?
The understanding of financial information together with the capacity of making a diagnosis about the economic and financial situation of companies and groups of companies, will provide future participants with essential skills and tools for their professional careers.
Course Learning Objectives
The objectives of the Financial Analysis course are the following:
1. Understand the content and usefulness of basic and advanced financial statements and the difference between unconsolidated vs consolidated financial statements;
2. Understand the basics of the consolidation process, the definition of groups and the implications of consolidation for the analysis of financial statements;
3. Examine the purpose of trends and ratios and understand how the related analysis can be used to evaluate corporate performance and make decisions;
4. Learn to assess the firm's ability to meet its short and long term obligations;
5. Examine the purpose and usefulness of profitability measures;
6. Learn how to do financial and economic diagnosis of a company
CONTENT
1. A revision of the main Financial Statements - Balance sheet structure. Principles. Profit allocation. Accumulated amortisation.
- Income statement. Revenues and expenses. EBIT. EBT. Net Income
- Cash flow statement
|
2. Consolidated Financial Statements 1. Some basic concepts: what is a group, requirements to consolidate
2. Accounting for investments: introduction to methods
3. Full consolidation method: goodwill, external partners and internal transactions.
4. Equity method and Implications of consolidated financial statements for analysis
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3. Liquidity and Solvency 1. Current assets, current liabilities and the operating cycle
2. Current assets compared to current liabilities: analysis of the working capital.
3. Other liquidity considerations
4. Income Statement consideration when determining long-term debt-paying ability
5. Balance Sheet consideration when determining long-term debt-paying ability
|
4. The analysis of profitability 1. Profitability measures
2. The relationship between profitability ratios
|
5. Final diagnosis and recommendations |
Methodology
Each Financial Analysis session will be developed as follows:
Lectures will be dedicated to the explanation of fundamental concepts along with practical examples for a better understanding. To best follow these classes you should prepare in advance the slides uploaded in the Moodle website together with the recommended readings if any. This way, questions can be posed during the class and the learning experience will be richer and much more enjoyable.
In the participatory sessions, practical exercises related to the theoretical background already introduced will be discussed and solved. The exercises will be uploaded in advance on the Moodle website so that participants can work and prepare them before the session take place. In this class, questions can be solved and additional analysis and discussion can take place.
Different activities will allow students to obtain feedback regarding their progress during the course. Apart from weekly assignments to be developed in the class of practice, we will have 3 tests that will allow students to assess her/his knowledge and skills in relation to the topics and competences developed through the course.
As part of the methodological approach of the course, students will also have to prepare a group project that will be presented in class. Details related to this assignment will be communicated in due time.
ASSESSMENT
ASSESSMENT BREAKDOWN
| Description |
% |
| Active Participation and Conduct |
10 |
| Tests |
15 |
| Group Project & Presentations |
25 |
| Final Exam |
50 |
Assessment criteria
10% Active Participation and Conduct
15% Tests
25% Group Project & Presentations
50% Final Exam
Active Participation and Conduct:
Attendance to classes, both lectures and participatory sessions, is compulsory. Students should come to class having reviewed the daily class slides and, on days with assigned exercises or cases, having read these materials and worked through the case questions.
Active participation grades are based on what you add to the learning experience of the entire class. It is expected that you actively participate in the sessions, in particular in the participatory ones.
Students who consistently make contributions that facilitate discussions, help to clarify technical points, or provide new insights will receive between 6 and 10 points, depending on the overall quality of their contribution. Contributions that are sporadic or peripheral will receive between 1 and 5 points, accordingly. Absence from class will result in 0 points. Consistently discourteous behavior will also result in 0 class participation points. The professor of the participatory session will assess your active implication in the sessions and this will account for the 10% of your total grade.
80% attendance is compulsory in order to be able to sit the final exam.
Tests
2 tests will take place during the course. They will be delivered in the participatory sessions. The dates for the tests will be announced in due time.
Group Project and Presentations:
You will be asked to perform the diagnosis of the financial and economic situation of a company/group of companies in groups.
Each student will be assigned to a group randomly and will have to present the work in class during the scheduled sessions. Detailed instructions regarding the work group and the presentations will be provided by the professor in due time.
Bibliography
Gibson, Charles. (2013). Financial Statement Analysis. 13th International Edition. South-Western Cengage Learning. Canada
Higgins, Robert C. (2012). Analysis for financial management. 10th Edition. Wiley. New York
Mahoney, P; MacLochlainn, N. (2013). Consolidated Financial Statements. 2ne Edition. Chartered Accountants Ireland.
White, G.; Sondhi, A. C. Fried, D. (2003). The analysis and use of financial statements. 3rd Edition. Wiley.
Timetable and sections
| Group |
Teacher |
Department |
| Year 2 |
Soledad Moya Gutierrez |
Economía, Finanzas y Contabilidad |
Timetable Year 2
From 2023/9/4 to 2023/11/29:
Each Wednesday from 15:00 to 16:30. (Except: 2023/11/1)
Each Monday from 18:30 to 20:00. (Except: 2023/9/11 and 2023/9/25)
Friday 2023/12/22 from 14:15 to 17:30.
Monday 2024/1/29 from 14:15 to 17:30.
