4FK3 - Winter 2013 - 1 of 7
C OURSE O BJECTIVE
This course is designed to provide you with advanced conceptual background and analytical tools necessary to evaluate financial statements issued by publicly held enterprises. The course is meant to complement related studies in accounting, finance, economics, business policy, and statistical analysis. It focuses on understanding the uses and the limitation of both the financial statements and the traditional and non-traditional methods used in analyzing them. We will discuss the financial statements, the accounting disclosure rules, the differential effects of alternative accounting principals, and the interpretation of financial information. Students motivation and skill development will be enhanced by using problems and cases for actual companies. You will ultimately be better able to make judgments about the cash flows, earnings quality, hidden assets and liabilities, and the overall performance of the enterprise.
I NSTRUCTOR AND C ONTACT I NFORMATION
Course Website:
UserID/Password:
C
OURSE
E
LEMENTS
Mr. Kevin Brewer
Instructor kbrewer@mcmaster.ca
Office: DSB 313
Office Hours: by appointment
Tel: (905) 525-9140 xTBA
Friday 14:30-17:20 KTH/B105 http://www.business.mcmaster.ca/courses/kbrewer/4FK3.html
Credit Value: 3
Avenue: Yes
Participation: Yes
Evidence-based: Yes
Leadership: No
Ethics: Yes
Innovation: No
Experiential: No
IT skills: Yes Global view: Yes
Numeracy: Yes Written skills: Yes
Group work: Yes Oral skills: Yes
Final Exam: No Guest speaker: No www.degroote.mcmaster.ca

4FK3 - Winter 2013 - 2 of 7
C
OURSE
D
ESCRIPTION
This course will look at the Accounting Policies which can affect the profit activity of a corporation.
Prerequisite:
It is assumed that all students have a basic knowledge of accounting principles comparable to the materials covered in Com 2AA3 (Financial Accounting). If you do not, you should catch up as quickly as possible.
R
EQUIRED
C
OURSE
M
ATERIALS AND
R
EADINGS
Financial Reporting, Financial Statement Analysis And Valuation: A Strategic perspective, 7 th
Edition; Wahlen, Baginski, Bradshaw; Thompson South Western
An acceptable substitute
Financial Reporting, Financial Statement Analysis And Valuation: A Strategic perspective 6 th
Edition, Stickney, Brown, Wahlen; Thompson South Western
E VALUATION
Learning in this course results primarily from the lectures, the related readings, case presentations and in-class discussion. The balance of the learning results from the term project.
The examination and participation will be evaluated on an individual basis, the cases and project will be done as group work. In these cases group members will share the same grade adjusted by peer evaluation. Your final grade will be calculated as follows:
Cases
Project
Midterm
Participation
Total
30%
30%
30%
10%
100%
NOTE: The use of a McMaster standard calculator (Casio FX-991) is allowed during examinations in this course. See McMaster calculator policy at; http://www.mcmaster.ca/policy/Students-AcademicStudies/examinationindex.html www.degroote.mcmaster.ca

4FK3 - Winter 2013 - 3 of 7
At the end of the course your overall percentage grade will be converted to your letter grade in accordance with the following conversion scheme.
L
ETTER
G
RADE
P
ERCENT
L
ETTER
G
RADE
P
ERCENT
A+
A
A-
B+
B
B-
90 - 100
85 - 89
80 - 84
77 - 79
73 - 76
70 - 72
C+
C
C-
D+
D
D-
67 - 69
63 - 66
60 - 62
57 - 59
53 - 56
50 - 52
F 00 - 49
Students that are uncomfortable in directly approaching an instructor regarding a course concern may send a confidential and anonymous email to the respective Area Chair or Associate Dean: http://www.degroote.mcmaster.ca/curr/emailchairs.aspx
Students who wish to correspond with instructors or TAs directly via email must send messages that originate from their official McMaster University email account. This protects the confidentiality and sensitivity of information as well as confirms the identity of the student.
Emails regarding course issues should NOT be sent to the Administrative Assistant.
Instructors should conduct an informal course review with students by Week #4 to allow time for modifications in curriculum delivery. Instructors should provide evaluation feedback for at least
10% of the final grade to students prior to Week #8 in the term.
Students who wish to have a course component re-evaluated must complete the following form: http://www.mcmaster.ca/policy/Students-AcademicStudies/Form_A.pdf
In order for the component to be re-read:
 the component must be worth 10% or more of the final grade in the course
 students pay a fee of $50 in Gilmour Hall #209 (receipt is then brought to APO)
 the Area Chair will seek out an independent adjudicator to re-grade the component
 an adjustment to the grade for the component will be made if a grade change of three points or greater on the 12 point scale (equivalent to 10 marks out of 100) has been suggested by the adjudicator as assigned by the Area Chair
 if a grade change is made, the student fee will be refunded www.degroote.mcmaster.ca

4FK3 - Winter 2013 - 4 of 7
Groups will be formed on a volunteer basis with 4-7 students in each group. Each group is required to submit a list with the names and student numbers for all the group members. Your individual mark for group work will be based on a combination of the mark assigned to the group’s hand-in cases and term project and your contribution to the group work as evaluated by your peers and yourself. You will be given the opportunity to make your confidential peer evaluation in writing.
The cases are used to reinforce, integrate and supplement the course material, and to provide practice in its application. A total of 6 cases will be analyzed throughout the semester. Only your best 5 will be counted towards your grade. Each case will be assigned to groups: one group will be responsible for presenting the case and the other groups will critique the analysis of the presenting group. The presenting group will have up to 45 minutes to present the highlights of its solution to the case and the other groups will have at least 15 minutes critique. Questions posed by the non-presenting groups will be an important part in the participation component. If there are more groups than cases, the other groups will be presenting their projects.
During the class, all groups will hand in their written analysis. The maximum length of a hand-in case will not exceed 8 pages of double-spaced typed text (inclusive of exhibits and figures).
The midterm will be held during regular class time with the location to be announced. The midterm is tentatively scheduled for March 15 th
.
The project involves in-depth analysis of a firm’s financial statements and its industry. You may select the firm to be analyzed. It must be a publicly-traded Canadian or American (i.e., U.S.) firm in the manufacturing or merchandising sectors. Obtain the two most recent annual reports, and any other reports (quarterlies etc.) posted since that time. It is possible to obtain the annual reports on many company’s web sites. In order for the analysis to be meaningful, you will need at least 5 years of data. The analysis should include, among other things, risk and profitability evaluation for the company and its primary industry and an estimate of net assets for the most recent balance sheet date, which considers such items as inventories, marketable securities, pensions, and leases. The project may be presented in class before the due date depending on the number of groups. The project is due April 9 th
, on Avenue and must be accompanied by copies of the latest annual report used in the analysis. The expected length is 15 double-spaced pages
(including appendices but not attachments).
You are expected to be prepared for each class by reading the assigned material and be a willing participant in discussions. Name cards and class pictures are used to help give credit for your participation. You must have a name card with your full first and last name clearly written and displayed in front of you for every class. A photograph of the class will be taken during class.
This photograph will be used by the instructor to evaluate your participation. www.degroote.mcmaster.ca

4FK3 - Winter 2013 - 5 of 7
A CADEMIC D ISHONESTY
It is the student’s responsibility to understand what constitutes academic dishonesty. Please refer to the University Senate Academic Integrity Policy at the following URL: http://www.mcmaster.ca/policy/Students-AcademicStudies/AcademicIntegrity.pdf
This policy describes the responsibilities, procedures, and guidelines for students and faculty should a case of academic dishonesty arise. Academic dishonesty is defined as to knowingly act or fail to act in a way that results or could result in unearned academic credit or advantage.
Please refer to the policy for a list of examples. The policy also provides faculty with procedures to follow in cases of academic dishonesty as well as general guidelines for penalties. For further information related to the policy, please refer to the Office of Academic Integrity at: http://www.mcmaster.ca/academicintegrity
R EQUESTS F OR R ELIEF F OR M ISSED A CADEMIC T ERM W ORK
1. Students may request relief from a regularly scheduled midterm, test, assignment or other course component in the following two ways: a) For absences from classes lasting up to five (5) days
Students must use the MSAF (McMaster Student Absence Form). This is an on-line, selfreporting tool, for which submission of medical or other types of supporting documentation is normally not required. Students may use this tool to submit a maximum of one (1) request for relief of missed academic work per term as long as the weighting of the component is worth 29% of the final grade or less (cases only). Students must follow up with their course instructors regarding the nature of the relief within two days of submitting the form. Failure to do so may negate the opportunity for relief. It is the prerogative of the instructor of the course to determine the appropriate relief for missed term work in his/her course.
If the value of the component is worth 30% or more, students must report to the APO to discuss their situation and will be required to provide appropriate supporting documentation. b) For absences from classes lasting more than five (5) days
Students cannot use the MSAF. They MUST report to the APO to discuss their situation and will be required to provide appropriate supporting documentation.
2. Students who wish to submit more than one request for relief of missed academic work per term cannot use the MSAF. They must report to the APO and discuss their situation with an academic advisor. They will be required to provide supporting documentation and meet with the
Director. www.degroote.mcmaster.ca

4FK3 - Winter 2013 - 6 of 7
3. The MSAF cannot be used during any final examination period.
4. Students who require accommodations to meet a religious obligation or to celebrate an important religious holiday must make their requests in writing within three weeks of the start of term to the APO.
5. Students seeking relief due to: work-related (for part-time students only) commitments; representing the university at an academic or varsity athletic event; and/or conflicts between two
(or more) overlapping scheduled midterm exams, have the option of applying for special exam arrangements. Such requests must be made to the APO at least ten (10) working days before the scheduled exam along with acceptable documentation. There will be only one common sitting for the special exam. Instructors cannot themselves allow students to unofficially write make-up exams/tests. Adjudication of the request must be handled by the APO.
S TUDENT A CCESSIBILITY S ERVICES
Student Accessibility Services (SAS) offers various support services for students with disabilities. Students are required to inform SAS of accommodation needs for course work at the outset of term. Students must forward a copy of such SAS accommodation to the instructor normally, within the first three (3) weeks of classes by setting up an appointment with the instructor. If a student with a disability chooses NOT to take advantage of an SAS accommodation and chooses to sit for a regular exam, a petition for relief may not be filed after the examination is complete. The SAS website is: http://sas.mcmaster.ca
P OTENTIAL M ODIFICATIONS TO THE C OURSE
The instructor and university reserve the right to modify elements of the course during the term.
The university may change the dates and deadlines for any or all courses in extreme circumstances. If either type of modification becomes necessary, reasonable notice and communication with the students will be given with explanation and the opportunity to comment on changes. It is the responsibility of the student to check their McMaster email and course websites weekly during the term and to note any changes. www.degroote.mcmaster.ca

4FK3 - Winter 2013 - 7 of 7
C
OURSE
S
CHEDULE
(7 th
Ed.)
Chapter 1
1 Jan. 11
Organizational Issues & Introduction:
Reading Between the Lines, Economic
Environment, Accounting Reports, Institutional
Framework, The Financial Accounting Process
2
3
4
5
6
Jan. 18 Statement of Cash Flows
Jan. 25
W.T. Grant Case
Income Recognition
Feb. 1
Arizona Land Development Company Case
(modified, see cases on the website)
Inventory Valuation, cost vs. physical flows
Feb. 8
Feb. 17
Champion Spark Plug Case (online)
Long Lived Assets
Depreciation at Delta and Pan Am Case (online)
Income Taxes and reserve accounts
Chapter 3
Chapter 8 p 632-650
Chapter 8 p 650-657
Chapter 7 p 524-549
Chapter 8 p 661-672
7
8
9
10
11
12
March 1
Common size statements, Ratio Analysis:
Assessment of Risk
A guide to Earnings Quality
March 8
International Paper Case (online, from 6th Ed.)
Kroger Company Case (online, from 4th Ed.)
March 15 Midterm Exam
March 22
Leasing & Post-Retirement Benefits
Forecasting
March 29 Valuation Models
April 5 Group Presentations
Chapter 4, Chapter
5, Z-Score Models p
661-672, Chapter 6,
Chapter 9
Chapter 6 p 474-493
Chapter 10
Chapter 11, 12, 13 &
14 www.degroote.mcmaster.ca