Financial Analysis course syllabus

Financial Analysis

Financial Analysis course covers the following 

1- Financial Statement

a.     Balance Sheet

b.     Income Statement

c.      Statement of Cash Flow

2- Financial Statement analysis

a.     Cross Sectional analysis

b.     Time Series

3- Balance Sheet Analysis

a.     Liquidity Analysis (Working Capital Management)

b.     Assets Management

                                                              i.      Current Asset Management (Activity Management)

                                                            ii.      Fixed Asset Management

c.      Capital Budgeting

d.     Capital Structure

4- Income Statement

a.     Margin Ratios

b.     DuPont Analysis

c.      EPS

                                                              i.      Basic EPS

                                                            ii.      Diluted EPS

5- Other Issues

Financial Analysis

1-    Balance Sheet Analysis.

Balance Sheet of Company

ABC Company
Assets			Liabilities & Equity
Current Assets			Current Liabilities
Cash on hand	1000		Accounts Payable	2000
Checking Account	1000		Accrued Expenses	1200
Saving Account	2000		Unearned Rent	1000
Trading Securities	1000		Unearned Revenue	2500
Marketable Securities	1500		Current Portion of long-term debt	2000
Accounts Receivable	2000		Interest payable	1000
Trading Receivables	2000		Line of Credit	1300
Other Receivables	3000		Total Current Liabilities			11000
Inventory	2500		Long Term debt
Prepaid Expenses	4000		Bonds	100000
Total Current Assets		20000	Total long Term Debt			100000
Fixed Assets			Total Current & Long term Debt			111000
Office & Computers	40000		Shareholders' Equity
Machines & Equipments	20000		Common Stock, $1 Par Value	200000
Land	100000		Common Stock Excess of Par	100000
Patent	250000		Preferred Stocks	10000
Good Will	200000		Preferred Stocks - Cumulative	10000
Buildings	220000		Retained Earnings	308000
Total Fixed Assets		830000	Total Equity			628000
Total Assets		850000	Total Equity & Liabilities			850000

Note the Following

1-    Assets = Liabilities + Shareholders' Equity

2-    Total Assets = Current Assets + Fixed Assets

3-    Total Liabilities = Current Liabilities + Long term Debt (Loans)

4-    Owner's Equity (Shareholders Equity) = Assets – Liabilities

Also Note In Balance Sheet the following

Assets	OE & Liabilities
Current Assets	STL (Short Term Liabilities)
Fixed Assets	LTD (Long Term Debt)
	OE (Owners' Equity)
Total Assets	Total OE & Liabilities

Note The Following

-         Current Assets & Short term Liabilities is Working Capital Management (Liquidity Management)

-         Fixed Assets & Long term Debt + OE is Capital Budgeting 

-         OE & LTD is Capital Structure.

-         Total Asset Management Consists of

o   Current Assets Management (Activity Management Such as Inventory Management, Accounts Receivable & Payable Management)

o   Fixed Asset Management (Investment Decision Analysis)

And you have to notice that

-         Always Current Assets such as investment in Accounts Receivable (To increase Sales) or investment in Inventories or Short term Securities has low risk & Low return

-         Investment in Fixed Assets leads to higher return & higher risk.