AIR UNIVERSITY SCHOOL OF MANAGEMENT

Spring- 2019

Course Information

Course Title: Financial Statement Analysis/Analysis of Financial Statements

Class: Credit Hours: 03
Pre-requisite: Introduction to Business Finance, Principles of Accounting
Instructor: Mr. Imran Yousaf
Email : [Link]@[Link] Tel No: 0313-6496922

Course Objective:

The main goal of this course is to develop a foundation of financial statement analysis
concepts. This will enable the student to understand how financial statements of
corporations, banks and mutual funds are analyzed by different stakeholders. This course
covers wide range of topics including ratio analysis, horizontal, vertical analysis,
forecasting, cost-volume-profit analysis. Moreover, it covers financial ratios analysis of
banks and mutual funds as well. The case themselves depict a wide range of financial
problems and business situation to analyses financial statements. So, because of the
practical importance of the material and as an illustration of the relevant theory, we will discuss
examples and cases.

Learning Outcomes
If you complete the course successfully, you should be able to:

1. interpret the ratios of no-financial, banking and mutual funds-based firms

2. do horizontal and vertical analysis of financial statements
3. forecast/project the financial statements
4. do cost-volume-profit based analysis

Lecture Plan:
Readings Quizzes &
Classes Topics Assignme
nts
01 Introduction to Financial Statements Material # 1 Assignment # 1
 Purpose of Financial Reporting (Harvard (Returned after
 Main accounting Principles Source) one week)
 Financial statements and its users
 Introduction to Financial Ratios Material # 2
 Why need to analyze financial statements? (Harvard
02
 Methods of comparing ratios Source)
 Advantages and disadvantages of ratio analysis
Categories of financial Ratios Material # 2
 Liquidity and Debt Ratios (Harvard
03, 04
 Profitability & Activity Ratios Source)

 Market and Dividend Ratios Material # 2 Quiz # 1

05, 06  Du-Pont Model and its application (Harvard (Returned after

Source) one week
Comprehensive Problem on Ratio Analysis (Pakistani
07
Firm)
Case Study 1: Anandam Manufacturing Company-Analysis Attached in
08
of Financial Statements course Folder
09 Ratio analysis of different industry-based companies Assignment # 2

Case Study 2: The Financial Detective 2016 Attached in (Returned after

10 one week)
(Using financial ratios to identify Industry) course Folder
Case Study 3: CSI Financial Statements 2014 using Attached in
11
financial ratios to identify companies course Folder
12 Horizontal and Vertical Analysis of Balance Sheet

13 Horizontal and Vertical Analysis of Income Statement Quiz # 2

Forecasting of Financial Statements (Returned after

14, 15
one week
Case Study 4: Tire City, Inc Attached in
16
course Folder
Analysis of Operational Results Assignment # 3
17, 18  Break Even Analysis (Returned after
 Cost-Volume-Profit Analysis one week)
Case of Break Even and CVP Analysis: Attached in
19 Case Study 5: NIPPONPLY-Analyzing the feasibility of course Folder
Geographical Expansion
Financial Statement Analysis of Banks Material # 3 &
20, 21  Note on How to analyze a Bank (Harvard Note) 4
 CAMEL Analysis
 Practice Camel Framework (Using Financial data from Quiz # 3
22
Pakistani Bank) (Returned after
23 Case Study 6: -------------------
one week

24, 25 Project Presentations

Financial Statement Analysis of Mutual Funds Material # 5

 Type of Funds
26, 27
 Guide for investing mutual funds in Pakistan
 Risks of Investing in Mutual Funds
28  Measuring Risk- Mutual Funds specific ratios

Practice Mutual Funds Ratios (Using Financial data from

29 Pakistani Funds)

30 Revision

General Guidelines:

1. Reading Material from serial 1-5 is available in course folder (received through e-
mail).
2. Readings/Material and cases are attached in course pack.
3. Students must bring text book and Scientific Calculator in the Class. Students are
required to have studied the relevant topics in advance from the course book.
4. Each written assignment should be prepared on separate sheet of paper in
handwriting. The front page of each assignment should contain the following
information: -Course Title -Name of the student -Assignment number -Date
prepared -Date submitted. The assignments should be submitted to class CR before
the start of the class. The class CR should ensure to submit them together to the
teacher at the very start of the class.
5. There will be surprise Quizzes. A total of ‘03’ quizzes shall be taken, and 3-m shall
be considered for grading. ‘m’ will be at the discretion of the teacher. Quizzes and
Assignments will be returned after one week.
6. A term project may be included in your course. Detailed guidelines for term project
will be provided to you.
7. Class participation marks shall be announced frequently after specific period.
Active class participation will be rewarded by the good CP.
Follow these steps to understand Finance
Step 1: Just overview the chapter in advance before coming in class.
Step 2: Attend lecture attentively (Ask question in case of any ambiguity during class)
Step 3: Read topic from book and solve exhibits of the chapter on lecture day.
Step 4: After solving all exhibits, solve the “Self-Test Problem” of the chapter.
Step 5: Solve exercise questions and problem of the chapter individually.
 Step 6: Then match your answers with your group fellow and discuss chapter issues in
class group; Moreover, you can take help from google, YouTube Tutorials and from
Finance website as well.
Step 7: After following all upper instructions, if you have any query then discuss with
me.
Follow these steps to solve case

Step 8: Follow all upper 7 steps, then just read full case on weekend 2 times.
Step 9: Find out the main issues of the case then pick relevant data related to main issues.
Step 10: Solve the case on your register and prepare answers of possible questions
individually at Home. Write your queries on register. Read and solve case on weekend.
Step 11: Do group discussion before case class and discuss your queries with group
members.
Step 12: Come in class with case in hard form, solution of case on register, calculator,
name tag.