Investment Analysis 1
| Module title | Investment Analysis 1 |
|---|---|
| Module code | BEAM032 |
| Academic year | 2024/5 |
| Credits | 15 |
| Module staff | Dr Jiaoshan/ Sophie Li (Convenor) |
| Duration: Term | 1 | 2 | 3 |
|---|---|---|---|
| Duration: Weeks | 9 |
| Number students taking module (anticipated) | 150 |
|---|
Module description
Summary:
This is the first module of two in Investment Analysis. Its principal function is to ensure that you are able to use the tools available for equity valuation using annual reports. You will learn how to critically assess the content of annual reports.
Additional Information:
Pre-requisite
Basic understanding of accounting and financial statement articulation.
Internationalisation
This module uses International Financial Reporting Standards (IFRS) which apply to more than 100 countries around the world, and, therefore, prepares you for an international career.
Sustainability
Presentations, PowerPoint slides and tutorial notes are all made available on the ELE (Exeter Learning Environment).
External Engagement
The content helps familiarise you with financial reporting concepts and terminology which are essential to operate in the corporate world.
Employability
Students learn to synthesize information from public sources, to evaluate a firm’s performance and financial position. These analytical skills will be directly applicable to roles such as equity or credit analysts and professional investors.
Module aims - intentions of the module
During this course you will study how financial statements are prepared and then explore the nature and use of accounting information relating to business entities. The underpinning conceptual framework is that of ‘decision usefulness’; i.e., that the primary purpose of accounting (and financial reporting) is to provide useful information to the stakeholders of enterprises. The economic framework within which such information is produced is reviewed, as are the strengths and limitations of published financial statements.
The financial information a company discloses is used by investors and analysts to determine how to assess a company in the marketplace. We therefore adopt a user perspective, rather than a preparer one, because most participants will become users of financial statements, internal (managers, executives) or external (investors, analysts), rather than preparers of financial statements. Knowledge of basic rules that govern the production of financial statements is essential, as this will underpin your ability to analyse reported numbers.
Intended Learning Outcomes (ILOs)
ILO: Module-specific skills
On successfully completing the module you will be able to...
- 1. explain how financial statements are prepared;
- 2. develop a framework for assessing a firms financial performance;
- 3. master the different tools used to perform a financial statement analysis;
- 4. explain the discretion available to managers in preparing financial statements;
- 5. develop an awareness of the limitations of financial statements and recognise what information they can and cannot provide.
ILO: Discipline-specific skills
On successfully completing the module you will be able to...
- 6. read, analyse and interpret a firms financial performance and position from its annual reports;
- 7. explain and demonstrate the effects of various events on a company's financial statements.
ILO: Personal and key skills
On successfully completing the module you will be able to...
- 8. apply a set of structured techniques to reach a well-defined decision within a noisy environment, where a clearly defined unique solution does not exist;
- 9. communicate a detailed and convincing company assessment, appropriate both to a practitioner as well as an academic audience;
- 10. work effectively in a group setting.
Syllabus plan
The following is an indicative of the topic we will aim to cover in this course. Some topics may not be covered if time does not allow us to learn them.
Part 1: Introduction to financial statements
i) Users and uses of accounting information; the basic accounting equation; articulation and purpose of financial statements.
ii) Accounting principles; accruals.
iii) Understanding the balance sheet/statement of financial position and income statement/profit & loss statement.
Part 2: Analysis of financial statement components
i) Fixed Assets, Intangible Assets, Asset Impairments, Financial Assets and Debt.
i) Revenue Recognition, Inventories and Accounting Provisions.
iii) Introduction to Consolidation and Business Combinations
Part 3: Financial statement analysis
i) Cash Flow Statement.
ii) Business analysis, Porter’s five forces common sized balance sheet and income statement
iii) Ratio analysis
Learning activities and teaching methods (given in hours of study time)
| Scheduled Learning and Teaching Activities | Guided independent study | Placement / study abroad |
|---|---|---|
| 36 | 114 | 0 |
Details of learning activities and teaching methods
| Category | Hours of study time | Description |
|---|---|---|
| Scheduled Learning and Teaching Activity | 30 | Lectures (10 x 3 hours) |
| Scheduled Learning and Teaching Activity | 6 | Tutorials (3 x 2 hours) |
| Guided Independent Study | 114 | Reading, preparation for classes and assessments |
Formative assessment
| Form of assessment | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|
| Review exercises | Each session is accompanied by a review exercise. | 1-9 | Correct answers |
| Tutorial exercises | Each tutorial will have several questions. | 1-9 | Correct answers |
Summative assessment (% of credit)
| Coursework | Written exams | Practical exams |
|---|---|---|
| 30 | 70 | 0 |
Details of summative assessment
| Form of assessment | % of credit | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|---|
| Examination | 70 | 2 hours | 1-9 | Suggested solutions on ELE |
| Group Assignment (including 5% peer evaluation) | 30 | 2000 words | 1-10 | Written |
Details of re-assessment (where required by referral or deferral)
| Original form of assessment | Form of re-assessment | ILOs re-assessed | Timescale for re-assessment |
|---|---|---|---|
| 2 hours written examination (70%) | 2 hours written examination (70%) | 1-10 | August/September Reassessment Period |
| Group assignment (30% of which 5% peer-evaluation) | Individual coursework 1,000 words (30%) | 1-10 | August/September Reassessment Period |
Indicative learning resources - Basic reading
Required reading:
Financial Accounting with International Financial Reporting Standards, by Weygandt, Kimmel and Keiso, 4th Edition, Wiley, 2019
Supplementary reading:
Financial Accounting and Reporting, A Global Perspective, by Stolowy, Ding and Paugamm 6th Edition, Cengage, 2020.
Indicative learning resources - Web based and electronic resources
ELE – http://vle.exeter.ac.uk/course/view.php?id=146
| Credit value | 15 |
|---|---|
| Module ECTS | 7.5 |
| Module pre-requisites | None |
| Module co-requisites | None |
| NQF level (module) | 7 |
| Available as distance learning? | No |
| Origin date | 17/07/2014 |
| Last revision date | 09/09/2021 |
