ACCT 416 Financial Reporting and Analysis Course Outline Course Description The objective of this half semester class is to provide you with a framework for analyzing a firm s past performance to provide information that is useful for estimating its future performance The course integrates key concepts from accounting finance economics and business strategy and applies them to financial decision making The course focuses on teaching you to interpret numbers in the financial statements You should leave the course with the ability to be able to read a set of financial statements and interpret financial ratios The class is case oriented You are responsible for preparing cases in advance of the class session including familiarizing yourself with the relevant accounting issue The course is practical and focusses on enabling you to apply many of the theories that you have learned in other courses in the setting of understanding a business Students planning a career in accounting the financial industry consulting or general management will find the knowledge acquired in this course relevant COURSE INFORMATION Instructor Patricia M Dechow Term period Fall 2017 Phone 213 740 9585 Class times 14105R M W 10 00 11 50 Office Hours Monday 3 00 4 30 Class times 14106R M W 12 00 1 50 or by appointment Classroom Accounting Building ACC 201 Location of My Office ACC 117 Units 2 0 Email patricia dechow marshall usc edu Course Duration Monday August 21 to Friday October 13 Final Exam Date October 11 Prerequisites As stated on USC s Schedule of classes this course requires an introductory level knowledge of finance Foundations of Business Finance BUAD 215 or Business Finance BUAD 306 and knowledge of financial accounting External Financial Reporting Issues ACCT 370 or Intermediate Accounting for Non Accounting Majors ACCT 415 Course website blackboard 1 ACCT 416 Financial Reporting and Analysis Course Outline WHAT YOU WILL HAVE LEARNED BY THE END OF THE COURSE By the end of the class you will Have a framework for analyzing a business We will incorporate key elements that you have learned in your other classes and apply this knowledge systematically to value a business Become familiar with the organization and disclosure of information reported in 10 K filings and the notes to the financial statements You will have a detailed understanding of assets and liabilities reported on the balance sheet You will also understand what assets and liabilities are NOT reported under accounting rules and determine the importance of these off balance sheet items for understanding the value of a business You will understand how accounting errors either intentional manipulation by management or unintentional mistakes impact reported income and the book value of equity in a particular year and over time Be proficient at calculating and interpreting financial ratios You will understand how to use ratios to compare a firm to its competitors and to evaluate changes in ratios over time You will also know how to use these ratios to help forecast the future Learn about earnings announcements and the reporting of GAAP and non GAAP earnings numbers COURSE MATERIALS REQUIREMENTS Lundholm and Sloan Equity Valuation and Analysis 4th edition This book is available at the USC bookstore or online at amazon com or createspace com Note I have placed a copy of the book on reserve at the Library Online Cases Available on Blackboard or http www lundholmandsloan com index html Online Software eVal http www lundholmandsloan com software html FactSet You will receive an account so that you can access FACTSET during the semester You will use Factset in your projects OFFICE HOURS You can talk to me immediately after class I have also scheduled office hours for Monday from 3 00pm 4 30pm at my office Feel free to make an appointment if you would like to meet at another time I also check my email regularly so if you have a question you can email me TEACHING LEARNING ACTIVITIES Reading and understanding financial statements is very contextual There is only so far theory e g knowing accounting rules can take us It is a bit like learning how to drive a car where you can learn the road rules but the only way you become a good driver is by driving a lot encountering different road conditions making mistakes and learning from your mistakes Financial Statement Analysis is similar the best way to learn is by actually engaging in the task 2 ACCT 416 Financial Reporting and Analysis Course Outline This means the class is very hands on and involves the use of cases that require you to read financial statements and answer questions This is hard because sometimes you do not know where to start If you haven t tried the case before class the discussion will make little sense and you will have lost the opportunity to learn The more financial statements you read the easier it gets to understand what to look for even though the issues or concerns change from one firm to another You need to dive into the details to learn how to analyze financial statements The Lundholm and Sloan website has Webcasts that many students find helpful for reviewing concepts discussed in class Often hearing the same information more than once can help consolidate your understanding Therefore if you feel that you did not quite understand something I discussed in class please check the webcasts Periodically we will work on in class exercises For these classes you will want to bring your laptop In addition financial statement materials can be very long and you will often want to read them from your computer rather than print them all out ASSESSMENT Group Cases handed in Group Project Monday September 4 Final Exam Wednesday October 11 40 20 30 10 Participating in Class GROUP CASES The Group Cases are handed in as a group with groups ranging from 3 5 students The syllabus marks cases that can be turned in for homework credit with HW The case homework is not graded on accuracy alone An honest and thoughtful effort will get most of the credit The homework should not be more than three pages with four supporting pages of tables or calculations We will organize team membership and case selection in the second class Each group member may have a different set of skills but it is important to work together and all participate Later in the course I will ask group members to let me know how the group worked out so please try and make a positive contribution to your group and if you have problems