COURSE SYLLABUS

School of Management
The University of Texas at Dallas

Course: AIM 6344 – Financial Statement Analysis

Instructor: Dr. Mark Anderson
Semester: Summer 2005

| Course Information | Technical Requirements | Course Access | Communications |

| Student Assessment | Scholastic Dishonesty | Course Evaluation | Course Outline |

Course Information
Course Description

Welcome to AIM 6344 with Dr. Mark Anderson. My objective is to help you prepare to
use financial statements and other information resources of the financial markets to
make business decisions.

Instructor Information

You should normally contact me through WebCT e-mail. Here is my other contact
information:

e-mail: mark.anderson@utdallas.edu

Office: SM 4.813 Telephone: 972-883-2056 Fax: 972-883-6811

I am typically in my office for consultation from 2:00 PM to 4:00 PM Monday and

Wednesday.

Teaching assistants will also be available to help you. They will introduce themselves
and provide you with contact information through the main discussion board.

Course Materials

The required text for this class is:

Financial Statement Analysis (Eighth Edition) by Wild, Subramanyam and Halsey.

Published by McGraw-Hill Irwin. ISBN#0-07-253651-9.

Textbooks and some other bookstore materials can be ordered online through MBS Direct
Virtual Bookstore. They are also available in UTD Bookstore and Off-Campus Books.

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Important, Time-Sensitive Requirement
Study teams will be formed immediately at the start of the course. To facilitate the
process, the following information, formatted as shown below, must be sent to the
instructor immediately upon logging in to the course via WebCT e-mail.

1. Last Name; First Name; UTD Degree Program and Expected Graduation Semester
2. Day-Time Telephone Number and FAX Number; Day and Evening e-Mail Addresses
3. Collegiate Degree(s) Earned; Year(s) Earned; Name(s) of the Granting Institution(s)
4. Number of Earned Collegiate Semester Hours of Accounting; Where Earned
(Institution)
5. Name of Current Employer; Your Position or Title; Months with Employer
6. Short Summary of Prior Business Experience with Most Recent Experience First
7. A Short Statement of Career Objectives and How You Expect This Course to Help
8. Times and Days of the Week that You Are Available to Work on this Class

Technical Requirements
In addition to a confident level of computer and Internet literacy, certain minimum technical
requirement must be met to enable a successful learning experience. Technical requirements
include but not limited to:

Hardware
• A Pentium processor or equivalent Mac system; Windows 98/Me/2000/XP or Mac OS
9.x or OS X 10.1.
• Internet access with modem (56.6 minimum) or preferably with other faster connections.
• 32 MB system Ram; 200 MB free disk space or sufficient storage
• Sound card
• CD-ROM capabilities
Software
• Netscape Navigator 6.2.x (see notes) and 7.0 (4.78, 4.79 and 6.0-6.1 not supported), or
Internet Explorer 5.0 to 6.0 (but 5.5 SP1 not supported), or AOL 7.0 and 8.0. See
browser configuration info below.
• MS Office 97/98 is the minimum standard. (Microsoft software is available at a nominal
cost from UTD Microsoft Program. For more information, visit Global MBA Online
Student Service web page at:
http://som.utdallas.edu/globalmba/gmba_online_services.htm).
• Virus detection/protection software such as McAfee
• “Plug-ins” tools such as current version of RealPlayer/RealOne Player (available at:
http://www.real.com/realone/index.html) and Adobe Acrobat Reader (available at:
http://www.adobe.com/products/acrobat/readstep2.html)
• A zip file expansion tool such as WinZip or Stuffit Expander (available at:
http://www.download.com).
Web Browser Configuration

For the WebCT courses to work properly, you need one of the WebCT supported
browsers listed above with JavaScript enabled and cookie enabled. It is also important
that you set the cache settings of your browser to verify web documents “Every
Time”. The methods for configuring these settings vary among browsers. Please follow
this web link provided by WebCT to tune-up your browser:http://www.webct.com/tuneup/.

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Course Access and Navigation

This course is developed using a web course tool called WebCT. It is to be delivered entirely
online. You will be notified by email about the course access information at the start of the
course. You’ll need to have a UTD NetID and password (your UTD Unix/Email ID and
password) to access the course. If you have not used a UTD NetID account yet, you can go to
http://netid.utdallas.edu to initiate your account shortly before or at the start of the semester.
Your UTD NetID is your WebCT ID to be used to log on to the UTD WebCT courses. For more
information, please check out this NetID FAQs page. The URL for the course login page is:
http://webct.utdallas.edu. You can login to the course whenever you want. You are required to
meet any deadlines for the assignments and exams and also any schedules for class activities
or tasks the course requires. You should login to the course site regularly to check course
updates, discussion board messages and so on.

You’ll access “My W ebCT” page after you login. The page listed all the courses you’ve
registered. You can click the course title to access the course Home page which displays
several icon links. Clicking each icon link will take you to different subsidiary pages containing
the course content elements or built-in course tools. Some navigation components such as the
Navigation Bar with Course Menu on the left side, the Menu Bar and the path link on the top and
the Action Menu on the content page can help you navigate within the course site.

To get started with a WebCT course, please see Getting started: Student WebCT Orientation.
For more information about WebCT tool usage, please see the WebCT’s Student Help Index.
Within the course site, you can always click HELP on the WebCT Menu Bar to find information
and answers. You can also check out the Orientation Center to Online Learning and WebCT
provided on WebCT’s web site. For more WebCT information and its learning resources, visit
http://www.webct.com.

If you have any problem with your UTD account or connection to the UTD WebCT server, you
may email to: assist@utdallas.edu or call UTD computer help call center at: 972-883-2911. If
you encounter any technical difficulties with the course, you can send an email to
gmbasupport@utdallas.edu.

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Communications
WebCT built-in communication tools: There are four built-in communication tools to facilitate
learning, communication and collaboration. A course conferencing system, the Discussion,
allows the communications among all course participants. Discussion topics or groups can be
set up for topic discussions and homework assignments. You can use course Mail tool to
communicate privately with instructor and classmates. The Chat tool can be used for real time
communication among course participates. Please see specific information for accessing Chat
tool. Finally there is a Whiteboard tool that allows real-time interaction among course
participants using a graphical interface. Instructor may schedule times to use the Chat and/or
Whiteboard tools for office hours and/or class discussion sessions. Small groups may also use
Chat for group discussions.

Interaction with Instructor: Instructor will communicate with students mainly using course
Discussion boards. Students may send personal concerns or questions to the instructor using
course Email tool. Instructor will reply to student emails or Discussion board messages within 2
working days under normal circumstances.

The Discussion boards are information areas where students communicate with
each other, the instructor and teaching assistants. Anytime you would like to ask
other students in this course a question or discuss a particular issue you should use
the Discussion boards. Be sure to visit often (at least twice a week).

NOTE: Email sent to the instructor asking questions that would more
appropriately be answered in the general discussion area will not be
answered. Only send Email if you have a private issue, such as a question about
your grades. Soft skills that you should learn in this class include skills in
communication and the use of technology to communicate as a member of a
community. Take advantage of this opportunity to learn skills that will benefit you in
the workplace.

MeetingPlace TeleConference System: UTD maintains a telephone conferencing system from

Latitude Communications. Online instructors can use the system for class teleconference
sessions during the semester. Participants can access a meeting by dialing a “972” area code
number using any touch tone phone and entering a meeting code. If any teleconference is
scheduled for the course, students will be posted for times and access instructions. A class
teleconference is usually recorded and can be reviewed over the phone after the conference.
Please see TeleConference Guide for general conference participation and review instructions.

While different online programs in the School of Management make regular use of the system
for class discussions, conferencing is also available for smaller groups of students for group
discussions or group assignment preparations. If a group wants to reserve a time slot during the
workweek of Monday through Friday, please send an email one week in advance to
gmbasupport@utdallas.edu with course name, student names and email addresses, choice of
date, and start and end times. Once a reservation has been made, students will receive a
confirmation and participation instructions.

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Student Assessment
There are three ways for you to interact in this class. One is to learn by interacting
individually with the basic course content and the professor. The second is to interact
with fellow students and the professor as you work on challenging exercises, problems
and cases from the text. The third is to interact with students and the professor in
projects that utilize the information resources of the financial community.

The class assessment system is set up to encourage you to participate in all three of
these types of interactions. Your knowledge of the basic content will be tested through
quizzes based on the text reading and review questions. Your ability to apply the
concepts will be evaluated based on your team’s submissions of assigned exercises,
problems and cases. Your ability to extend your analysis skills to real situations will be
evaluated based on team presentations of projects that evaluate real companies. The
exams will be based on assigned exercises, problems and cases. The value of your
individual contribution to team assignments and projects will be assessed by your fellow
team members.

The course is organized into 8 modules. After the first two shorter modules, we will
progress at a rate of one module every two weeks. There will be a quiz and a team
assignment for modules 1 through 4 and modules 6 and 7. Modules 5 and 8 consist of
preparation and evaluation of team presentations of cases where companies have been
accused of financial manipulation (module 5) and comparative analyses of two
companies that compete in a product market (module 8).

Module 1: Introduction and Overview (chapter 1)

Module 2: Financial Reporting (chapter 2)
Module 3: Accounting Analysis of Financing Activities (chapter 3)
Module 4: Accounting Analysis of Investing Activities (chapters 4 & 5)
Module 5: Project I: Manipulation Case
Module 6: Accounting Analysis of Operating Activities (chapters 6 & 7)
Module 7: Financial Analysis of Profitability and Risk (chapters 8, 9 and 11)
Module 8: Project II: Comparative Analysis

Modules 1-4 and 6-7 consists of the following components:

1. Text reading: You should read through the assigned readings for each chapter
and then review by working through the questions at the end of the chapter.
Solutions to the questions will be available throughout the course. A discussion
board is specifically designated for discussion related to the text readings and the
review questions.

2. PowerPoint and Instructor: A PowerPoint presentation has been developed for

each module. I discuss concepts and focus your attention on ideas and
techniques that I want to emphasize. A discussion board is designated for
questions related to the PowerPoint discussions.
 3. Quizzes: Quiz questions are based on the text readings and questions at the end
of each chapter. Quizzes for all modules will be available for the duration of the
module. Don’t fall behind!

4. Team Exercises and Problems: A set of team exercises, problems and cases will
be due at the end of the designated period for each module. Each team submits
one set of solutions. A discussion board is designated for questions related to
the exercises and problems.

Modules 5 and 8 consist of team preparation and presentation of cases and evaluation
of case presentations made by other teams.

Project I: Each team will analyze a situation where alleged financial manipulation has
occurred.

Project II: Each team will select two companies that compete directly with each other
and prepare a comparative analysis of the two companies based on profitability and
risk.

Detailed information about the projects is provided below. Projects will be presented (in
written form) to the class and must be submitted on time. You should not wait until the
designated module to prepare the team projects. Teams should begin working on
projects as soon as possible.

For each project, two other teams will be assigned to evaluate your team’s project.
Each team of students making an evaluation of another project will be required to ask a
minimum of three substantive questions about the analysis through the discussion
board. The presenting team will respond to the questions. The evaluating teams will be
scored based on their interaction with the presenting teams.

Exams: The exams will be based on the assigned exercises, problems and cases.

Grading Information

Element Evaluations Total

Quizzes Best 5 @ 2% each 10%
TEAM assignments 6 @ 2% each 12%
TEAM projects 2 @ 15% each 30%
Evaluation of Peer Projects 4 @ 2% each 8%
Exam 2 @ 15% 30%
Contribution to team 10%
Total available 100%

You can check your grades by accessing “My Grade” icon on Student Tools page after the
grade for each assessment task is released.
Group Assignments

Groups wi ll be assigned at the beginning of the class. Please see the Groups icon for groups
lists. Each group can also use the group area for file exchanges within the group. Please click
the WebCT Help menu on how to use the features of the group tool. A private discussion forum
will be set up on Discussions board for each group for group communications.

Online Tests/Quizzes

You can access quizzes by clicking the Online Quizzes icon and then clicking the available quiz
title links. Each quiz is timed and can only be accessed once within the scheduled time window.
Please read the on-screen instructions carefully before you click the Begin Quiz button. After
each quiz is graded and released for reviewing, you may go back to the quizzes page and click
the “View scores” button of the quiz to review your quiz results and any feedbacks from the
instructor.

Examinations

The examinations will be available on-line during the time specified in the course schedule
below.

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Scholastic Dishonesty
The University has policies and discipline procedures regarding scholastic dishonesty. Detailed
information is available on Scholastic Dishonesty web page. All students are expected to
maintain a high level of responsibility with respect to academic honesty. Students who violate
University rules on scholastic dishonesty are subject to disciplinary penalties, including the
possibility of failure in the course and/or dismissal from the University. Since such dishonesty
harms the individual, all students and the integrity of the University, policies on scholastic
dishonesty will be strictly enforced.

Course Evaluation
As required by UTD academic regulations, every student needs to do an evaluation for each
enrolled course at the end of the semester. An online instructional assessment form will be
made available for your confidential use. Please look for the course evaluation link on the
course Homepage towards the finishing of the course. Your feedback and comments are greatly
appreciated.

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Course Outline/Schedule
Module Reading Team Assignment (Date Due) Quiz/Exam
(Dates) (Date Due)
Module 1 Chapter 1 (pp. 1-35 Problem 1-10 and Quiz (5/22)
(5/16 to 5/22) and 39-42) Cases 1-5 and 1-8 (due 5/22)
Module 2 Chapter 2 (all) Problem 2-13 Quiz (5/29)
(5/23 to 5/29) Case 2-1 (due 5/29)
Module 3 Chapter 3 (all) Problem 3-7 Quiz (6/5)
(5/30 to 6/5) Case 3-3 (a & b) (due 6/5)
Module 4 Chapter 4 (all) and Exercise 4-13 Quiz (6/12)
(6/6 to 6/12) chapter 5 (pp. 264- Problem 4-14 (a & c)
281 and 285 to end) Case 4-4 (due 6/12)
Module 5 Project I (due 6/19)
(6/13 to 6/26) Evaluations (due 6/26)
Exam #1
(6/23 to 6/26)
Module 6 Chapter 6 (all) and Exercise 6-11 Quiz (7/3)
(6/27 to 7/3) chapter 7 (all) Cases 6-4 and 7-2 (due 7/3)
Module 7 Chapters 8 (all), 9 Problems 8-6 and 11-7 Quiz (7/10)
(7/4 to 7/10) (all) and 11 (all) Case 9-3 (due 7/10)
Module 8 Project II (due 7/17)
(7/11 to 7/24) Evaluations (due 7/24)
Exam #2 Exam (7/24)
(7/21 to 7/24)

Supplemental Questions, Exercises, Problems, Cases (not to be handed in)

Solutions will be made available for the following questions, exercises, problems and
cases. These are not assigned for hand-in purposes but to provide you with additional
learning opportunities and examples to be used at your own discretion.

Chapter Questions Exercises Problems Cases

1 All 3,4,5,6,7,8, 8,9,11 2,3
2 All 5,10,12 7,10,11,12 3
3 All 10,14,15 1,9 2
4 All 5,10 3,4,7 4
5 All except 7&9 None 1 None
6 All 2,8,9,10,13 None 2,3
7 All 1,5,6,9 10 1
8 All 6,7,8,10 2,4 3
9 All 3,4,5,6,7 1,4 1
11 All 2,3 1,9 -

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 Module 5: Project I - Earnings manipulation/management: understanding a case

Objective: The objective of this project is to provide you with an opportunity to reconstruct and
understand the economic events for a case where earnings manipulation has been suspected
or proven. You may choose a company and topic in financial reporting that is of interest to you.

Sources: Choose a company where earnings manipulation is suspected based on (a) articles
in the business press such as the Wall Street Journal; or (b) Stanford Law School database of
Complaints with respect to securities litigation: http://securities.stanford.edu/index.html

Suggested Approach:
• Identify a company and get the relevant financial statement data and supporting articles
(see instructions for project II for sources of financial statements and other information).
• Reconstruct / understand the nature of the economic events that led to the manipulation and
the reporting choices.
• Describe the effects of the reporting choices on the income statement and balance sheet
and on key financial ratios.
• Consider the incentives for management to engage in the manipulation behavior.
• Evaluate whether there were warning signs, such as changes in financial statement
relationships or differences between the firm's performance and industry performance, that
would have made you wary of the financial reports before the manipulation was uncovered.

Presentation: You will be responsible for preparing a presentation that can be communicated
electronically. This may be a written report prepared in a Word document or a PowerPoint
presentation accompanied by a script or audio. Your report should be sufficiently long to make
for meaningful discussion but should not be too long. If you were to prepare a written report, an
executive summary of 5-7 pages [typewritten, 1.5 or double spaced] would be sufficient. You
may supplement the written pages with appendices that include financial statements, or
schedules. Your report should demonstrate an understanding of the accounting issues and the
effects of the manipulation/management on the financials. A key question is whether financial
analysis could have detected the manipulation. Appendices should be used to demonstrate the
effects of the manipulations on financial statements and stock prices over the relevant periods
(when the manipulations occurred and when they were exposed). Your presentation should
stimulate discussion. Please submit one copy per group.

Evaluation: Evaluation of individual contribution to your group will be made along the following
dimensions:
A. Share of work
B. Helpful in understanding difficult topics
C. Helpful with ideas, questions and discussion
D. Quality and timeliness of work performance
E. Leadership and overall collegiality

Evaluation of presentations by other teams will be based on the content, presentation (style,
readability, impact), and discussion stimulated by your presentation.
 Module 8: Project II - Industry Analysis

Objective: The objective of this project is to analyze the performance of competing companies.
You will become acquainted with the usefulness and limitations of ratio analysis and other
techniques.

Suggested Approach:
Ø Choose two U. S. firms that are traded in the stock market and compete with each other in
some markets. Obtain the two or three most recent annual reports for each firm. If possible,
obtain three years of income statement and four years of balance sheet data for each firm.
Ø Prepare an analysis of the industry and the two companies' strategies for competing in the
industry. Information about the firms’ strategies may be obtained from press releases and
the Management Discussion & Analysis section of annual reports.
Ø Read the financials, identify data issues and make appropriate adjustments to the financials.
You should adjust for non-recurring items, differences in accounting for inventories
(LIFO/FIFO) if material, off-balance sheet financing through operating leases, differences in
tax rates, and other differences in accounting between the two companies.
Ø Perform a profitability and risk analysis using the adjusted statements.
Ø Compare the firms based on their success in implementing their strategies.
Ø Given the firms’ strategies and financial performance (trends of key ratios), make predictions
about the future performance of the companies.

Sources:
Ø Annual reports may be obtained from the SEC’s EDGAR database of company filings or
from the company directly. Please do not go to databases such as COMPUSTAT or
VALUELINE to get this data, because adjustments are already made to some items.
Company filings are available through the SEC at
http://www.sec.gov/edgar/searchedgar/companysearch.html
They are also available through PWC’s Edgarscan at
http://edgarscan.pwcglobal.com/servlets/edgarscan

Ø For press releases you may go to the company’s homepage or use the Lexis-Nexis
database at the UTD library.

Presentation: You will be responsible for preparing a presentation that can be communicated
electronically. This may be a written report prepared in a Word document or a PowerPoint
presentation accompanied by a script or audio. Your report should be sufficiently long to make
for meaningful discussion but should not be too long. If you were to prepare a written report, an
executive summary of 5-7 pages [typewritten, 1.5 or double spaced] would be sufficient. The
objective of the presentation is to provide an opportunity for you and your peers to discuss and
evaluate corporate performance. You may assume a decision context such as a potential
lender or investor but you do not have to value the shares. You may supplement the written
pages with appendices that include financial statements, or schedules showing ratio analyses,
etc. Your presentation should stimulate discussion. Please submit one copy per group.

Evaluation: Evaluation of individual contribution to your group will be made along the following
dimensions:

A. Share of work
B. Helpful in understanding difficult topics
C. Helpful with ideas, questions and discussion
D. Quality and timeliness of work performance
E. Leadership and overall collegiality

Evaluation of presentations by other teams will be based on the content, presentation (style,
readability, impact), and discussion stimulated by your presentation.

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