LAHORE COLLEGE FOR WOMEN UNIVERSITY, LAHORE

Department of Management Sciences

Syllabus BBA/B.Com/BPA Program

Year – 4 (7th Semester)

Finance Specialization II

Course Title: Financial Reporting and Analysis

Course Objective:
The objective of the course is to create competency of reading and in depth understanding the
financial statements. The course traces the historical development of financial reporting. The
course develops the tools to determine the quality of financial statements. Once
understanding is developed, the course is intended to highlight the firm’s financial health
based on multifarious approach i.e., through financial performance indicators, business
environment and strategies.

Learning Outcomes:
Successful completion of this course builds in students an ability to collect and perform
analysis of data from published financial statements and other sources in order to produce a
more comprehensive report on the true financial status of the organizations. On completion of
the course, students are expected to:
 Understand the historical development of financial reporting.
 Understand the theoretical underpinning of conceptual framework.
 Analyze the financial statements for economic decision making.
 Understand the issues and controversies in financial statements.

Module Titles:
1. An Overview of Financial Statement Analysis: Business Analysis its different types
and relation to Financial Statement Analysis, Purpose of each Financial Statement and
linkages between them, Analyze and interpret Financial Statements and Application of
several basic financial statement analysis tools.
2. An Overview of Financial Reporting and Analysis: The history and objective of
Financial Accounting, Financial reporting and analysis environment, Qualitative
characteristics of Financial Statements, Development of Accounting Standards,
Introduction to International Financial Reporting Standards (IFRS).
3. Introduction to Accounting Analysis: Need for accounting analysis, Accounting
distortions, Earnings Management, Incentives that might induce the company
management to manipulate earnings and mechanics of earning management.
4. Analyzing Financing Activities: Identify and access the principal characteristics of
liabilities and equity, Analyze and interpret lease disclosures, Analyzing the impact of
operating and capital leases, Explain implications and adjustments of lease disclosures to
financial statements, Identify off-balance sheet financing and its consequences to risk
analysis.
5. Important IAS and IFRS
6. Analyzing Investing Activities: Inter-corporate Investments: Analyze financial
reporting for inter-corporate investments, Analyze financial statement disclosures for
investment securities, Interpret consolidated financial statements, Analyze implications of
the purchase (and pooling) method of accounting for business combinations, Interpret
goodwill arising from business combinations.
7. Return on Invested Capital and Profitability Analysis: Usefulness of return measures
in financial statement analysis, Return on invested capital and variations in its
computation, Relation between profit margin and asset turnover, Analyze return on
common shareholders’ equity and its role in analysis.
8. Prospective Analysis: Importance of prospective analysis, Process of projecting the
income statement, the balance sheet, and the statement of cash flows. Cash flow
forecasting with pro forma analysis.
9. Software application of Ratio Analysis.

Final Project:
Company’s Past Financial Performance Evaluation and Finding Company’s Strategy
reflected in Past Financial Performance. Following contents should be incorporated in final
project report.
1. Executive Summary
2. Preliminary Business Analysis (Evaluating the Business Environment of Company
and Strategies)
3. Financial Health of Company (Based upon Common Size and Trend Analysis of
Financial Statements and Ratio Analysis [short-term liquidity, Capital Structure and
Solvency, Return o Invested Capital, Analysis of Asset Utilization, Analysis of
Operating performance and profitability])
4. Evaluation and Inferences
5. Recommendation and Conclusion
TEXT BOOKS/READINGS (LATEST EDITIONS)
The course is delivered through lectures and class discussions. All the readings assigned are
from the following textbook:
Financial Statement Analysis by John J. Wild, K.R Subramanyam and Robert F.
Halsey.

However, additionally following books/readings are also recommended:

1. Readings and Notes on Financial Accounting: Issues and Controversies by Stephen
A. Zeff, Bala G. Dharan
2. The Analysis and Use of Financial Statements by Gerald I. White, Ashwinpaul C.
Sondhi, Haim D
3. Ralph Dale Kennedy, Stewart Yarwood McMullen, Financial statements Form,
analysis, and interpretation.
4. Fundamentals of Financial Management by James C. Vanhorne
5. Financial Statement Analysis by Charles J. Gibson
6. The Analysis and Use of Financial Statements, by Ashwinpaul C. Sondhi and Haim
D. Fried
7. Accounting, the basis for business decisions by Meigs& William Haka, Bettner