METROPOLITAN COMMUNITY COLLEGE

COURSE OUTLINE FORM

COURSE TITLE _________________FINANCIAL STATEMENT ANALYSIS___________
COURSE PREFIX AND NO.__FINA 2240 LEC__3__ LAB __0__ CREDIT HOURS__3.0__
COURSE DESCRIPTION:
This course presents the characteristics of financial statements and procedures for analysis. It
covers goals, methods and tools of analysis; analysis of profit and loss, accounts receivables,
inventories and balance sheets; relationship of balance sheet accounts to sales; and projected
statements of cash budgets.
COURSE PREREQUISITES:
ACCT 1110
RATIONALE:
This course is a broad overview of financial statement analysis. This course replaces BAF 225,
which is no longer being offered. It is a required course in the Credit Management and Financial
Services concentrations, and may be used in place of BAF 225 by students seeking to complete
the former Banking and Finance concentration. It will help students in all of these areas use
financial statements and the related analytical methods to make sound credit and investment
decisions. It will also enable students too identify areas of concern in the financial activities of a
business enterprise.
REQUIRED TEXTBOOKS and/or MATERIALS:
Title:

Financial Reporting & Analysis

Edition:

9th

Author:

Charles H. Gibson

Publisher:

Southwestern

Materials:
Attached course outline written by:

Date:

Reviewed/Revised by:

Date:

Lori Lothringer

Effective quarter of course outline: 05/FA

Dean

Date:
M. Jane Franklin

10/02

Course Objectives, Topical Unit Outlines, and Unit Objectives must be attached to this form.

DISCLAIMER
Your instructor in this class will be a teacher and facilitator. Your instructor will help you gain
knowledge in you quest to become an informed and possibly skilled investor. However your
instructor WILL NOT act as a financial or investment counselor or advisor. While numerous
investment techniques and philosophies will be discussed and analyzed in the course, your
instructor will not make specific investment suggestions or offer investment advice to students.
Nothing your instructor may say or do should be interpreted as making an investment
recommendation. Neither your instructor nor the College are or will be responsible for nay
investment decisions you may make during or after the completion of your attendance in the
course. You assume any and all risks regarding any investment decisions you may make.
COURSE OBJECTIVES
The student will:
1. Describe traditional assumptions underlying financial statements.
2. Prepare blance sheets, income statements, and statements of cash flow.
3. Prepare and use financial rations to evaluate liquidity.
4. Prepare and use financial ratios to evaluate profitability.
5. Analyze and project cash flows.
6. Identify the uses of financial analysis in the commercial loan function and the
investment function.
7. Apply financial analysis techniques in the financial services industry, other
specialized industries, and for individuals.
TOPICAL UNIT OUTLINE
Upon completion of this course the student will be able to:
Unit 1:

An Overview of Financial Statements.

A. Define traditional assumptions of the accounting model.
B. Identify and describe the elements of the financial statements
C. Prepare balance sheets, income statements, and statements of cash
flow.

Unit 2:

Basic Analysis of Financial Statements.

A. Create vertical and horizontal financial statements ratios and
Common size statements.
B. Make comparisons using: trend analysis, industry averages, and
Comparisons with competitors.

Unit 3:

Liquidity Analysis

A. Identify current assets and current liabilities.

B. Identify liquidity concepts and concerns from the point of view of
the business and the creditors of the business.
C. Prepare and describe the uses of financial ratios and statistics
related to: accounts receivable and inventory.
D. Identify and explain the effect of alternative inventory methods on
liquidity analysis.
E. Prepare and describe the ratios related to working capital and the
operating cycle.
Unit 4:

Analysis of Profitability
A. Calculate and describe net profit margin, operating income margin,
Gross profit margin, return on investment, return on equity, and
asset turnover.
B. Use the Du Pont method to explain profitability and rate of return.
C. Identify profitability by segements and prfitability trends.
D. Identify and describe the effects of inflation on financial statements
and financial statement analysis.
E. Identify, describe, and compute the effects of financial leverage on
earnings.
F. Describe and compute basic earnings per share information.
G. Identify, describe, and comute the price earnings ratio and the
dividend yield.

Unit 5:

Analysis of Cash Flows

A. Prepare a cash flow statement using the cash format.
B. Calculate cash flow per share, operating cash flows compared to
current maturities of long-term debt, and operating cash flows
compared to total debt.

Unit 6:

Using Financial Analysis

A. Identify commercial loan department uses of financial ratios.
B. Identify financial ratios appearing most frequently in loan
agreements.
C. Identify key financial ratios included as corporate objectives.
D. Identify financial ratios fequently found in annual reports and their
significance for the investor.
E. Use financial analysis to forecast financial failure.

Unit 7:

Specialized Applications of Financial Analysis.

A. Identify the unique characteristics of financial statements of
Financial institutions.
B. Identify and describe ratios and statistics used by financial
Institutions.
C. Identify the unique characteristics of financial statements in the

Utilities, oil & gas industry, insurance industry, and the

transportation industry.
D. Identify and describe ratios and statistics used in the utilities
Industry, oil & gas industry, insurance industry, and the
transportation industry.
E. Identify the unique characteristics of personal financial statements.
COURSE OBJECTIVES/ASSESSMENT MEASURES
COURSE OBJECTIVES

ASSESSMENT MEASURES

1. Describe traditional assumptions

underlying financial statements.

Objective exam, short essay exam.

2. Prepare balance sheets, income statements,

and statements of cash flows.

Objective exam, short essay exam, objective

preparation of financial statements.

3. Prepare and use financial rations to

evaluate liquidity.

Objective exam, short essay exam, problems.

4. Prepare and use financial ratios to evaluate

profitability.

Objective exam, short essay, problems.

5. Analyze and project cash flows.

Objective exam, short essay exam, case

analyses.

6. Identify the uses of financial analysis in the

commercial loan function and the
investment function.

Objective exam, short essay exam.

7. Apply financial analysis techniques in the

financial services industry, other specialized
industries, and for individuals.

Objective exam, short essay exam, problems,

case analyses.

8. Objectives 1-7

OPTIONAL: Case analyses, homework

assignment, oral and written reports, team
projects.