Certificate In Financial Reporting And Analysis Agenda

Agenda

• Describe why financial statements are important and how they are used
• Describe the four financial statements and explain how they differ
• List the 5 basic questions, in order, that cover the concepts measured by the financial statements
• Use actual dollar values from actual financial statements to answer the 5 basic questions
• Describe the economic forces that influence the preparation, use and analysis of the financial statements
• Define the concept of corporate governance and how it relates to the financial statements
• Describe the key areas of running a business and how they relate to how capital flows through the business
• Link the key areas of running a business and their results to the financial statements

• After completing the course you should be able to:State the basic accounting equation and explain how it relates to the financial statements
• Apply the basic accounting equation to transactions that lead to a simple balance sheet
• Apply the basic accounting equation to transactions that lead to a complete set of financial statements
• Describe the structure and role of journal entries and ledgers
• Use journal entries and ledger accounts to prepare a simple balance sheet
• Use journal entries and ledgers accounts to prepare a complete set of financial statements
• Explain how closing entries transition the financial statements from one period to the next
• Define contra accounts and the role they play on the financial statements
• Define treasury stock and describe where it can be found on the financial statements
• Demonstrate how the sale of non-inventory assets affects the financial statements
• Discuss and illustrate the difference between the accrual-basis and cash basis of accounting
• Demonstrate using several examples how net income on the income statement can be reconciled with net cash from operating activities on the statement of cash flows

• Explain what a balance sheet measures and describe the basic balance sheet classifications and accounts
• Explain what an income statement measures and describe the basic classifications and line items
• Explain what the statement of cash flows measures and describe the three basic classifications, especially the operating section prepared under the indirect method
• Explain what the statement of shareholders’ equity measures and describe the different accounts that appear on it
• Assess Home Depot’s financial condition and performance by reviewing its financial statements
• Describe the key areas of business performance and link them to the measures provided by the financial statements
• List, compute and interpret a set of ratios that link to the key areas of business performance
• Analyze the differences in the financial condition and performance of Home Depot vs
• Lowe’s using a set of financial ratios
• Explain how return on equity can be broken down into its determinants and link this model to the measures of the key areas of business performance
• Analyze the differences in the financial condition and performance of Home Depot vs
• Lowe’s using the ROE model

• Define the concept of time value of money
• Explain how to compute the future value of a variety of cash flows
• Explain how to compute the present value of a variety of cash flows
• Explain how to compute the internal rate of return of a variety of cash flows
• Demonstrate how the concept of time value of money is applied to various savings plans and the valuation of assets and liabilities on the balance sheet

• Describe the key measurement issues addressed by the financial statements and explain how the current classification is used
• Define the concept of a contingent liability and explain how contingencies are accounted for
• Define what a bond is and explain how bond issuances are accounted for using the effective interest method
• Explain how the effective interest method is used to account for bond investments and describe how management’s intention determines how changes in bond market values are accounted for
• Describe the difference between short-term and long-term (financing and operating) leases and how both kinds of leases are reflected on the financial statements of the lessee
• Summarize the shareholders’ equity section of the balance sheet and describe the transactions leading to each line item within that section

• Describe how receivables appear on the balance sheet and explain how bad debts are accounted for
• List and describe the four basic issues involved in accounting for merchandise inventory
• Differentiate raw materials, work in process and finished goods, and explain how costs are attached to the inventory account as products move through the manufacturing process and are eventually sold
• List and define the three primary inventory cost flow assumptions and how they affect both the balance sheet and the income statement
• List and describe the basic asset valuation approaches and explain how each approach affects the financial statements

• Differentiate the market value method from the equity method and describe the conditions under which each is used
• Briefly describe the fundamental issues involved when one company acquires a controlling interest in another company and explain how goodwill appears on the financial statements and is subsequently accounted for
• List and describe the major issues involved when accounting for long-lived assets and briefly explain how the accounting methods for each issue affect the financial statements

• Define earnings management
• Differentiate between real earnings management and accruals earnings management
• Identify the four general areas where accruals earnings management is practiced and be able to recognize examples of each
• Explain why earnings management is practiced
• List and identify the popular strategies used by companies to practice earnings management

• Describe the major elements of the accounting professional code of ethics
• Define earnings management and link it to the elements of the code of ethics
• Explain why earnings management is practiced
• List and describe the two basic forms of earnings management: real and reporting
• Identify common situations when earnings management is practiced

• Use the concept of interest and time value of money
• Define value creation
• Link value creation to return on equity and how it is affected by management’s operating, investing, and financing decisions
• Use a spreadsheet-based valuation model using ROE inputs
• Compute the inherent value of Best Buy
• Describe how this valuation framework should be interpreted and used, which includes conducting sensitivity analysis on the model’s key inputs

• Prepare a statement of cash flows under both the direct and indirect formats from two balance sheets and an income statement
• Identify the key elements of cash flow analysis and how they relate to each other
• Identify various cash flow profiles and describe what these profiles mean concerning the firm’s cash management strategy
• Read and thoughtfully analyze the statements of cash flow published by well-known companies from various industries