ADVANCED FINANCIAL STATEMENT ANALYSIS

About this Course

This course entails in-depth analyses of companies¡¯ performance and financial reporting quality by applying relevant financial statement analysis tools. The analyses further integrate the use of real company¡¯s annual report, market and economic data and other specific industry information for a thorough assessment. Moreover, this course explores earnings management, earnings quality, and fraudulent financial reporting, delving into theories, techniques, motivations and red flags associated with opportunistic earnings management practices. Research articles related to these key topics will also be critically reviewed.

Course Learning Outcomes

1) Demonstrate communication skills in tasks related to the quality of reported earnings.
2) Evaluate firm performance based on quantitative and qualitative analyses.
3) Integrate leadership skills in tasks related to the analysis of financial performance.

Course Syllabus

+ Course Syllabus

1) Overview of financial statement analysis
- Objectives of financial statement analysis
- Types and components of business analysis (business, accounting and prospective analysis)
- Limitations

2) Advanced financial statement analysis analytical procedures
- Advanced quantitative analysis
- Qualitative analysis

3) Advanced analysis of financial statement
A comprehensive company analysis using company's financial information, market data, and other publicly available data

4) Earnings management
- Motivation of earnings management
- Application of earnings management techniques
- The mechanics of earnings management
- Application of theories relevant to earnings management


5) Earnings quality
- The relationship between earnings management and earnings quality
- Steps in evaluating earnings quality
- Characteristics of quality earnings
- Importance of earnings quality


6) Financial statement fraud
- Red flags
- Discuss articles relevant to fraudulent reporting
- Discuss relevant fraud cases
- Ethical issues

Frequently Asked Questions

Q1 : What is earnings management?
A1 : (1) Managing earnings is the process of taking deliberate steps within the constraints of generally accepted accounting principles to bring about the desired level of reported earnings. (Davidson, Stickney and Weil, 1987, cited in Schipper, 1989, p.92). (2) Managing earnings is a purposeful intervention in the external financial reporting process, with the intent of obtaining some private gain (as opposed to say, merely facilitating the neutral operation of the process).A minor extension of this definition would encompass real earnings management, accomplished by timing investment or financing decisions to alter reported earnings or some subset of it." (Schipper, 1989, p.92). (3) Earnings management occurs when managers use judgment in financial reporting and in structuring transactions to alter financial reports to either mislead some stakeholders about the underlying economic performance of the company or to influence contractual outcomes that depend on reported accounting numbers. (Healy and Wahlen, 1999, p.368).

Q2 : Is it necessary for me to have the basic financial accounting knowledge in order to enroll in this course?
A2 : It is not necessary, but having the fundamental knowledge of financial accounting would be greatly beneficial.

Q3 : Do learners need to be technologically literate to use FAR741 MOOC?
A3 : Learners need not be technologically literate as FAR741 MOOC is relatively simple and easy to use. Learners will be exposed to a right information management, develop critical thinking skills, and adhere to proper digital online learning behaviour.