FINANCIAL STATEMENT ANALYSIS (ACCTG 663)
FALL 2014
Professor Gun Joh
Teaching Assistants: Lydia Wu
E-mail: acctg663@gmail.com
OFFICE HOURS:
Tuesdays
1:30 P.M. – 2:30 P.M. and by
appointment
COURSE DESCRIPTION AND OBJECTIVES
Financial statement analysis relies on the application and interpretation of accounting and
economic concepts. In this course, we will develop skills and abilities in analyzing a
company's financial position and performance as shown in published information,
primarily focusing on financial statements to facilitate such decisions as: credit,
investment, employment, merger, performance evaluation, financial budgeting, etc. To do
so, this course will focus on alternative accounting treatments and the "range of ordinary"
interpretations. Further, each student (through individual assignments as well as a group
project) will analyze financial statements in detail throughout the semester as we seek to
understand the operating and financial objectives of the company through an analysis of
published accounting and other reports.
STUDENT LEARNING OUTCOMES (SLOs)
After finishing this course successfully, students should be able to
1. evaluate the quality of financial statements by
a. investigating management's strategic accounting choices and
b. adjusting accounting numbers to improve the quality,
2. analyze financial statements by
a. preparing analytical financial statements and
b. computing and interpreting financial ratios.
3. research accounting issues using computerized databasis.
4. write an analysis report for business decisions (e.g., loan, merger, strategic
planning).
PREREQUISITE
This course is designed for students that have a working knowledge of financial
accounting. The minimum pre-requisites for this course are the core course in financial
accounting (Acctg 620, BA650 or Acctg 201).
WHO SHOULD TAKE THIS COURSE?
This course should be of interest to students pursuing the following careers:
 Financial accounting and reporting (from staff accountants to analysts,
controllers, CFOs)
 External and internal auditing
 Equity research (sell-side, buy-side)
 Merger/acquisition
 Credit evaluation
 Investment banking
 Management consulting
TEXT AND MATERIALS
 Whalen, Baginski, and Bradshaw. Financial Reporting, Financial Statement
Analysis, and Valuation, 7th Edition. South-Western, Cengage Learning.
 Blumberg© on-line real time databasis, Wells Fargo Financial Markets Lab, SDSU Love

Library (Room LL 261)
Mergent© and Lexis/Nexis© databases
Assignments
 Readings, cases and/or problems are assigned for each class. You should come to
class prepared to discuss your analysis of the cases and problems. Regular class
participation is important to the learning process for you and your classmates.

Ten percent of your grade will be based on “class preparation.” You can receive
these points either from actively discussing the cases and problems in class or
handing in the assignment at the beginning of the class. No late assignments will
be accepted nor will I accept e-mailed or faxed assignments.

All assignments should be prepared using word processing software with font size
no smaller than 12 point with Office 2003 default margins (1” at top and bottom
sides and 1.25” at right and left sides). You can include tables or spreadsheets as
well, as long as they are carefully labeled and defined.

You may work in groups to discuss homework assignments. However, each
person should prepare his/her own individual homework solutions to be
submitted. Ideally, you should work through each day’s assignment on your own
before discussion it with anyone. You can then make changes to your solution
based on your learning in any discussion. Interpretations of the analysis should be
in your own words.

Additional assignments either will be discussed in class or are extra problems for
your benefit. I will tell you the assignments that will be discussed in class prior to
that class.
Group Project
You will self-select yourselves into groups of 4 or 5 in class on September 25. On
October 7, each group will choose an industry to analyze, for example, fast food or
women’s clothes. Each person in the group will choose his/her own firm in the industry.
Your group will present orally a 15 minute industry analysis using the firms in your
industry, followed by 5 minutes of Q &A. You will be on the clock and cut-off after the
15 minutes strictly. There will be three presentation dates: November 18 & 25 and
December 2.
On October 16, each group will choose the presentation date (tie breakers will be decided
in class). The analysis should cover the relevant topics discussed up to the presentation
date. You are to summarize the economics and current conditions in the industry and
each firm in your industry. Describe the strategies each of the firm pursues, perform a
profitability and risk analysis, a cash flow statement analysis, and talk about any other
relevant items. The oral presentation will be accompanied by either your power point
slides or a 5-10 page report. Each person will attach a 1-2 page analysis of his/her firm
including tables and graphics – attached to that put the firm’s most recent annual report.
More details of the project will be given as the semester progresses.
Timetable
Select group of 4-5 in class
Select industry and firms
Select presentation date
September 23
October 7
October 14
Examinations
There will be two examinations: one on October 21 and the other on December 16.
Grading
Grading will be based on the following weights:
Class Preparation
Exam 1
Oral Presentation/Industry Report
Firm Analysis
Exam 2
20%
20%
15%
5%
40%
In addition, I will be taking attendance on group presentation dates.
Seating Chart
I will be using a seating chart to get to know your names. I will bring the chart to class
on September 2, so please select your seat on that date. You must remain in that seat for
the entire class – unless you expressedly ask me for a changed seat.
Assignments and cases. The class assignments (QEs, Problems and Cases) serve as a
basis for class discussion and/or in-class activities. The assignments vary in length and
are not all equally weighted. Careful and thoughtful completion of the assignments will
contribute to your understanding of the material and performance on the exams and final
project. All QE assignments (see schedule below) should be completed before class and
hardcopies should be brought to each session, as indicated. All homework (QE and other
assignments MUST be handed in at the beginning of class to receive credit). Please bring
a second hardcopy for your own review during that week’s lecture and for exam
preparation etc. Generally, there are two intensively graded cases. All of this factors into
your class preparation grade. My independent evaluation of your classroom participation
is also factored in.
Exams. There will be two in-class exams during the course. The exams are individual
work and are to be completed without any assistance.
ACADEMIC HONESTY
The SDSU Standards for Student Conduct (http://www.sa.sdsu.edu/srr/conduct1.html)
states that unacceptable student behavior includes cheating, plagiarism, or other forms of
academic dishonesty that are intended to gain unfair academic advantage.
Unprofessional conduct adversely impacts your fellow students, the accounting faculty,
the Charles W. Lamden School of Accountancy, SDSU, and the accounting profession.
The Charles W. Lamden School of Accountancy takes academic honesty very seriously
and vigorously enforces university policy related to any such infractions. Any student
suspected of academic dishonesty will be reported to the SDSU Center for Student Rights
and Responsibilities; if found responsible, the student will receive an F in ACCTG 663.
The following examples illustrate how the SDSU Standards for Student Conduct applies
to this course:




Exams are individual work only. No collaboration of any kind is allowed.
Collaboration is permissible and encouraged on any group assignments.
However, the final write-up of cases or other assignments should be exclusively
your own (as required). For example, after discussing a case with your in-class
group, you should form your own opinion and submit your own analysis.
All course materials are for your use only. It is a violation of the student conduct
policy to share these materials with other class members or others outside the
class, especially future ACCTG 663 students.
If at any time you are unclear about the any aspect of your responsibilities
pertaining to the student conduct policy, please contact me rather than make
assumptions.
MEDIA AND TECHNOLOGY
Class materials (e.g., lecture notes) will be posted on the Blackboard course site
(http://blackboard.sdsu.edu). Some of the work for this class requires the use of word
processing (e.g., MS Word), spreadsheet (e.g., MS Excel), and Internet (e.g., Firefox)
software applications. Also, you must have your own email account and check it on a
regular basis. Make sure that you have the correct email address listed in Blackboard.
All emails will be sent to the address listed in Blackboard.
STUDENTS WITH DISABILITIES
If you are a student with a disability and believe you will need accommodations for this
class, it is your responsibility to contact Student Disability Services at (619) 594-6473.
To avoid any delay in the receipt of your accommodations, you should contact Student
Disability Services as soon as possible. Please note that accommodations are not
retroactive, and that I cannot provide accommodations based upon disability until I have
received an accommodation letter from Student Disability Services. Your cooperation is
appreciated.
CHANGES
You are expected to check your email and the Blackboard site for any changes. If you
are not in class when changes to the course or schedule are made, you are still responsible
for new/updated material. Changes can be made any time at the discretion of the
instructor.
Class Schedule
NO.
1
2
date
8
9
ch.
26
2
1
3
4
9
16
1
1
5
23
3
6
7
8
30
10
7
14
Assignments
to discuss
to collect
Topic
Introduction to course
3
4
4
P3.23,
C1.1~q
Group selection
Patterns of cash flows (pp.155-165)
P3.15,P3.18,
P3.19,P3.20
Q3.9,P3.10,P3.11
ROA and its components
(pp. 259-294)
ROCE and ROA
(pp.295-298, pp.299-305)
Q4.12,
Q4.13,P4.15
P4.20
Midterm Examination
21
28
11 4
18
13
25
7
Investing Activities
(pp.526-533 &549-564),
presentation of 2 groups
2
8
Operating Activities (pp.632-662),
presentation of 2 groups
9
16
9
14
15
16
12
5
6
Case 1.1 -a) and b)
P1.12,
C1.1 c) through k)
Statement of Cash Flows
-indirect method (pp.172-201)
9
10
11
12
5
Overview
Starbucks Annual report(pp.72-77)
-CEO's letter to shareholders
Overview of Financial Reporting
Common size Statements and
percentage changes (pp.42-49)
Risk Analysis
Profitability and Risk
Financing Activities(pp.459-493),
presentation of 2 groups
Q4.10,C3.3
Select Industry
Q4.11,
presentation dates
P4.23,P5.12
C4.2 (Parts A and B)
Q6.10,Q6.12,
Q6.13,P6.20
P7.15, C7.1
P6.20
P7.19
Q8.7,P8.21,
P8.22,P8.23
Accounting Quality
C9.1
P9.9,P9.11,P9.13
Final Examination (chs. 3,4,5,6,7,8,9 and presentations)