Financial Accounting & Reporting

Section One: The Importance of Accounting in Business

• Business objectives and shareholder wealth maximization
• The users of financial information
• The role of accounting in financial reporting
• Double-entry accounting – the language of business
• The importance of the accounting period for measuring performance and value
• The fundamental accounting equations

Section Two: The Structure and Format of Financial Reports

• The income statement and its elements: revenues; costs
• What the income statement tells us, its purpose, and structure
• Categories of revenue and cost
• Calculation of profit
• Circumstances where judgment needs to be applied
• The balance sheet and its 3 elements: assets; liabilities; equity
• What the balance sheet tells us, its purpose, and structure
• Shareholders’ equity
• Current and non-current assets and liabilities
• Valuation of non-current assets and depreciation
• Valuation of inventory and cost of sales
• The links between asset valuation and profit
• Long-term financing
• Short-term financing and working capital

Section Three: The Statement of Cash Flows and Group Accounting

• The statement of cash flows
• What the statement of cash flows tells us, its purpose, and structure
• Cash flows from operating activities
• Cash flows from investing activities
• Cash flows from financing activities
• The cash flow forecast
• The creation of groups of companies
• Subsidiary companies, associated companies, and joint ventures
• Preparation of a group balance sheet
• The conceptual frameworks of accounting
• The development of International Financial Reporting Standards

Section Four: Analysis and Interpretation of Financial Reports

• Analysis of financial position and financial performance
• Interpretation of financial statements – key principles
• Ratio analysis
• Profitability ratios
• Efficiency and working capital ratios
• Liquidity ratios
• Investment ratios
• Financial structure ratios
• Pyramids of ratios
• Integration of ratios – the Dupont system
• Common size trend analysis
• Vertical trend analysis
• Financial distress
• The shortcomings of financial statements for analysis

Section Five: Published Financial Reports and Corporate Governance

• The annual report and accounts
• Financial reporting in the UK, USA, and GCC countries
• Recent developments in financial reporting
• Financial reporting – it is not just the numbers
• Segmental analysis
• Post balance sheet events and contingencies
• The agency problem
• International financial scandals
• The need for corporate governance