Institute of Management Technology, Ghaziabad

PGDM PROGRAM
Term – I (July ’08 – September ‘08)

COURSE OUTLINE

Financial Accounting for Managers

Instructor: Dr. Sachin Choudhry

sachin_choudhry@rediffmail.com
 Financial Accounting for Managers
Objective:
Primarily the course is expected to build a strong foundation for prospective
core & elective finance courses. It also aims to equip students to be able to
understand corporate financial statements, analyze & interpret them
correctly to arrive at the right financial decisions.

Course Content:
# Topics Session
No.
I Introduction to Financial Accounting 1-2

Meaning & functions of Accounting; Generally Accepted Accounting

Principles: Entity, Dual Aspect, Going Concern, Accounting Period,
Money Measurement, Cost Concept, Revenue Recognition,
Matching, Accrual, Objectivity, Disclosure, Materiality, Consistency,
Conservatism.
II Accounting Cycle 1 3

Nature of Accounts; Rules for Debiting & Crediting; Journalizing the the
transactions; Posting from the Journal to the Ledger & preparation of
Trial Balance.

III Accounting Cycle 2 4-5

Final Accounts – preparation of financial Statements – Profit & Loss

Account, and Balance Sheet; Adjustments.

IV Depreciation 6-7

Methods of calculating the periodic depreciation charge – Straight Line

Method; WDV Method. Methods of recording depreciation in the
accounting books. AS-6.

V Understanding Corporate Financial Statements 8 - 11

Component wise dissection of a corporate balance-sheet, and Profit &

Loss Account.
Case: Nestle India Ltd.

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VI Interpreting the Financial Statements – Financial Ratio Analysis 12 – 17

Calculation of and Interpretation of financial ratios.

The following ratios would be considered pertinent for the above purposes:
Current Ratio, quick ratio, inventory turnover, receivables or debtors
turnover, creditors turnover, total assets turnover, fixed assets turnover,
current assets turnover, capital turnover, defensive-interval ratio, Debt-
Equity ratio, Debt to capital ratios, interest coverage, dividend coverage,
total coverage, gross profit margin, net profit margin, expenses ratios,
ROA, ROCE, ROE, EPS (AS-20), DPS, Dividend pay-out ratio, P/E
ratio, Earnings yield, Net Worth.
The Du Pont Approach.

Cases: 1. Infosys Technologies Ltd., 2. Tube Investments of India

Ltd.

VII Cash Flow Statement 18

Purpose of a cash Flow Statement. Components of a Cash Flow

Statement. AS-3.

Case: Tube Investments of India Ltd.

VIII Project Presentations 19-20

Evaluation:

• Quizzes: Four quizzes of 5 marks each (Two pre mid-term and two
post mid-term): 20
• Group Assignments/Cases/ Project: 20
• Mid term: 20
• Final Exam: 30
• Class Participation: 10

Suggested Text Readings / References:

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1. Banerjee Ashok, Financial Accounting for Managers, Excel Books

2. Narayanswamy R., Financial Accounting – A Managerial Perspective,

PHI

3. Gupta R.L., Radhaswamy M., Advanced Accountancy, Vol I, II, III,

IV, Sultan Chand & Sons, Delhi

4. Stice, Stice, Financial Accounting - Reporting & Analysis, Cengage

Learning

5. Weygandt Jerry J., Kieso Donald E., Kimmel Paul D., Financial
Accounting, John Wiley & Sons