PGDM 321 FINANCIAL STATEMENT ANALYSIS (FSA)
(4 Credits, 40 Hrs., 100 Marks)
Course Objectives:
The objective of this course is to create awareness for the scope of FSA in real
world, the various financial statements and its linkage with various accounting
standards. To develop an understanding of Ind AS and IFRS framework for the
preparation of financial statements. To analyze the cash flow statement and also the
relationship among financing, investing and operating activities. To demonstrate
equity analysis and different valuation approaches. To analyze the various aspects
such as liquidity, working capital, solvency, profitability, growth and sustainable
earnings.
Learning Outcome(s)
CO-1: Students will be able to develop an understanding of Ind AS and IFRS
framework for the preparation and presentation of financial statements.
CO-2: Students will be able to analyze the cash flow statement and also the
relationship among financing, investing and operating activities.
CO-3: Students will be able to integrate equity analysis and valuation with different
valuation approaches.
CO-4: Student will be able to analyze the various aspects such as liquidity,solvency,
profitability, growth and sustainable earnings.
Course Content(s)
Unit-1 Introduction to Financial Statements & IFRS
Income Statement-Introduction, Revenue Recognition, Expense Recognition,
Comprehensive Income, Accrual Concept, Balance Sheet-Introduction, Components,
measurement base of balance sheet, Cash Flow Statement-Format (Indirect Method
only), Analysis of Cash Flow Statement. Auditor’s report’s, IFRS framework;
Comparison of IFRS with other accounting standards: Comparison of IFRS with
IndAS and USGAAP;
Unit-2 Financial Ratios
Introduction, Financial Analysis tools and techniques, Internal Liquidity ratios,
operating Profitability ratios, Return on Investment Ratios, Financial Risk ratios,
growth potential ratios, return on equity and du Pont system, Basic earnings per
share, dilutive earning per share, uses and limitations of ratio analysis.
Unit-3 Analysis of Assets
IND AS-Valuation of inventory-conversion of inventory methods, IND AS-Plant
Property Equipment-Long term assets capitalizing vs expensing, capitalizing
intangible assets, Asset impairment, natural asset.
Unit-4 Analysis of Liabilities & Applications of FSA
Introduction, Income Tax-Terminology, Deferred tax accounting, Leases-operating vs
financing leases, determining the value of leases and lease assets. Evaluating past
financial performance; Projecting future financial performance as an input to market-
based valuation; Projecting Multi-period performance; Assessing Credit Risk;
Screening for potential equity investments.Segement Reporting.
Recommended Textbook(s)
• Financial Statement Analysis and Security Valuation, Mc Graw Hill Education,
Stephen H. Penman.
• Gibson, Charles. Financial Statement Analysis. New Delhi: Cengage, 2014.
• Subramanyam, K.R. Financial Statement Analysis. Chennai: 11 th Edition, Mc
Graw Hill, 2020.
• Narshiman, M. S. Financial Statement Analysis. New Delhi: Chennai, 2016.
• CFA® Schweser Notes on Financial Statement Analysis, CFA (2020).
• Kieso, D., Weygandt, J., Warfield, T., Young, N., Wiecke, I., & McConomy, B –
Intermediate Accounting 12th edition Volume I by wiley publication
Suggested Reading(s)
• Financial Statement Analysis: Procter and Gamble 1, Stephen H. Penman,
Page 334338
• Kwality Ltd.: the banker’s dilemma, Emerald (2020)
• Dog Concierges, LLC: Transaction Analysis and Statement of Cash Flows
Preparation, Emerald 2017
