Financial Analysis (2225.YR.000454.1)

General information

Type:	OBL	Curs:	2	Period:	S semester
ECTS Credits:	5 ECTS

Teaching Staff:

Group	Teacher	Department	Language
Year 2	Soledad Moya Gutierrez	Economía, Finanzas y Contabilidad	CAT, ESP

The Financial Analysis course focuses on the use and interpretation of financial statements in order to diagnose the financial and economic situation of companies or groups of companies and, based on the latter, to be able to make decisions for the near future. To this end, participants will employ a set of tools and indicators that will allow them to form a judgement on the situation of the company analysed. In addition, the course introduces financial statement forecasting and consolidation basics, adding to the previous analysis of financial statements and allowing participants to develop comprehensive diagnoses and provide recommendations. Sustainability reporting willl be also considered in the analysis

This is a fundamental course to understand the usefulness of financial reporting and the decision-making processes that take place in business.

The objectives of the Accounting and Financial Analysis III course are the following:

1. Understand the content and usefulness of basic and advanced financial statements and the difference between separate vs consolidated financial statements.
2. Examine the purpose and use of trends and ratios and understand how its integrated analysis can be used to evaluate corporate performance and make decisions.
3. Learn to assess the firm's ability to meet its short-term and long term obligations.
4. Examine the purpose and usefulness of profitability measures.
5. Learn to forecast financial statements in order to make predictions and evaluate future performance.
6. Understand the basics of the consolidation process, the definition of groups and the implications of consolidation for the analysis of financial statements.
7. Learn about latest trends and developments in Sustainability Reporting

1. INTRODUCTION TO FINANCIAL DATA: Advanced Financial Statements and other financial reporting topics 1. A general review of annual reports and elemental financial statements 2. Coping with international differences: use and role of IFRS 3. The statement of comprehensive income and the statement of cash flows

2. CONSOLIDATED FINANCIAL STATEMENTS 1. Some basic concepts: what is a group, what are the requirements for consolidation, why do we have to consolidate? 2. Accounting for investments: introduction to related methods 3. Full consolidation method: goodwill, external partners and internal transactions 4. Implications of consolidated financial statements for analyses

3. FINANCIAL STATEMENT ANALYSIS FINANCIAL STATEMENT ANALYSIS: A BRIEF OVERVIEW 1. Common-size analysis (vertical and horizontal) 2. Introduction to ratio analyses 3. Limitations to the analysis of financial statements LIQUIDITY OF SHORT-TERM ASSETS; RELATED DEBT-PAYING ABILITY 1. Current assets, short-term liabilities and the operating cycle 2. Current assets versus short-term liabilities: analysis of working capital. 3. Other liquidity considerations LONG-TERM DEBT-PAYING ABILITY 1. Income statement consideration when determining long-term debt-paying ability 2. Balance sheet consideration when determining long-term debt-paying ability PROFITABILITY ANALYSIS 1. Profitability measures 2. The relationship between profitability ratios 3. Market indexes 4. Introduction to pro-forma financial information

4. SUSTAINABILITY REPORTING

5. FINANCIAL PLANNING 1. The projection of the income statement 2. The projection of the cash flow statement 3. The projection of the balance sheet

The methodology used in this subject combines lectures and participatory sessions. In the lectures basic concepts will be provided together with examples and short cases that will help participants to assimilate the foundations of financial analysis. In the participatory sessions, participants will solve questions based on exercises that they will have previously prepared.

Additionally, students will sit two short tests during the course in the practical sessions, These tests will be based on the concepts worked on in previous sessions and will consist of multiple-choice questions.

The course methodology also includes a class debate and the preparation of a group project that will be presented in class. Faculty will provide details on this assignment during the theoretical sessions.

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.

Group	Teacher	Department
Year 2	Soledad Moya Gutierrez	Economía, Finanzas y Contabilidad