Corporate Financial Analysis

Syllabus

Thematic definition of lectures: 1. Input information and general instruction about the subject. The position and tasks of financial analysis in business management. Analysis functions - cognitive, evaluative and decision-making. Methods used in financial analysis of the company. Indicators and systems of indicators. Analytical model and its construction. Content and structure of business analysis in a market environment. Analysis of summary and partial results. 2. Financial statements of a company - a source of information for financial analysis. Presentation of financial statements (financial statements) as a source of data for financial analysis of the company. Financial statements according to Slovak legislation and international legislation (IFRS). Types of financial statements, their characteristics. Specifics of financial statements divided according to the size of the enterprise (financial statements of the micro-accounting unit and of small and large accounting units). 3. Analytical value of the system of financial statements. Three / four balance sheet system of financial statements. The informative value of the system of reports of the Central Bank. Characteristics of links between financial statements. Elementary methods of financial analysis - horizontal and vertical analysis of statements. 4. Analytical value of the balance sheet. Characteristics of the formal and content adjustment of the balance sheets of a small, large entity and a micro entity. Conversion of "accounting" balance sheet to "financial" balance sheet. Golden balance rule, golden financing rule. Analysis of compliance with the golden rules of financing in the company. 5. Analytical value of the Income Statement. Characteristics of the formal and substantive adjustment of the income statement of a small, large entity and a micro entity. Analysis of the "quality" of the economic result. Analysis of profit creation and use. Analysis of reduced and non-reduced volume indicators, characteristics of their informative value. Analysis of the adequacy of the dynamics of volume indicators. Analysis of the cost-effectiveness of the company's transformation process. 6. Analytical value of the cash flow statement. Characteristics of the formal and content adjustment of the cash flow statement. Analysis of changes in cash. Cash-flow indicator, its importance for the company's management practice and informative value. Possibilities of quantification of cash flow indicator. Use of cash flow indicator in ratio financial indicators. 7. Ex post financial analysis. Standard ex post financial analysis procedure. Characteristics of the basic set of financial ratios. Specifics of quantification of liquidity, activity, indebtedness, profitability and market value indicators of the company. Knowledge of the financial situation of the company using ratios. Analysis and evaluation of the development trend of ratio indicators. 8. Procedures for objectifying the conclusions of the "ex post" analysis. Analysis of relationships between indicators. Characteristics of Du Pont's equations of decomposition of profitability indicators. Methods of analysis of deviations of indicators. Quantification of the influence of determining factors - the central task of the analysis. Factor relationships in analytical models - additive, multiplicative and combined. Impact quantification methods - chain substitution method, logarithmic method, functional method, integral method. 9. Analysis of the company's position on the market from a financial point of view. Comparison of business and industry indicators. Conditions of comparability, selection of indicators for comparing companies. Methods of comparing enterprises - arithmetic average, quantiles, methods of multicriteria evaluation of enterprises (method of weighted sum of orders, scoring method, method of standardized variable, method of distance from fictitious object). 10. Ex ante financial analysis. The essence, possibilities and importance of forecasting. Selection of well "distinguishing" indicators. Methods of selection of well-distinguishing indicators - median test, statistical methods. 11. Basic division of methods for predicting the financial situation of a company - point, mathematical-statistical methods. Characteristics of the Rapid Test, Tamari risk index, methods of discriminant analysis, logistic regression. 12. Financial statements of an enterprise prepared in accordance with IFRS. Purpose, structure and content of financial statements according to IFRS. Formal and material differences in financial statements compiled according to Slovak standards and IFRS standards. Consequences of differences in financial statements on the conclusions of the financial analysis of the company. Thematic definition of seminars: 1. Conditions for obtaining credit, functions of financial analysis of the company, characteristics and representation of three (four) - balance system of financial statements, adjustment of accounting and reporting in the Slovak Republic, acquaintance with the register of financial statements, Home assignment: study the current financial statements of the selected company. 2. Formal adjustment of the Balance Sheet, reading of the financial statement Balance sheet of the selected company, procedure of analysis of property and capital structure in the balance sheet, explanation of terms: long-term / short-term and non-current / current assets, explanation of correction, reserves, horizontal balance sheet analysis. Homework: preparation of balance sheet analysis. 3. Presentation on the economic interpretation of the results of the analysis of property and capital structure. Procedure for conversion of "accounting" balance sheet to "financial" balance sheet, significance of this conversion, characteristics of golden rules of financing, characteristics of golden balance rule, net working capital (NWC), procedure of analysis of compliance with golden financing rules, verification of adequacy of NWC creation. Homework: quantification of golden rules and net working capital of the selected company, analysis of golden rules and net working capital, verification of the adequacy of net working capital creation. 4. Presentation on the economic interpretation of the results of the analysis of net working capital and golden rules. Formal adjustment of Income Statement, reading of accounting Income Statement of selected company, procedure of analysis of creation of economic result Profit/Loss analysis, analysis of creation and structure of added value, analysis of creation of newly created value. Homework: elaboration of analysis of Profit/Loss structure of selected company. 5. Presentation on the economic interpretation of the results of Profit/Loss analysis, analysis of added value formation and structure. New topic: the procedure of analysis of the total cost indicator of the company, the procedure of the analysis of operating costs, the procedure of the analysis of wage costs Homework: elaboration of analysis of total cost, operating and wage cost of selected company. 6. Presentation on the economic interpretation of the results of the analysis of individual indicators of the company's cost. New topic: formal adjustment and reporting of the cash flow statement, explanatory power of the cash flow statement, operating cash flow (CF) indicator - procedures for its quantification and analysis, confrontation of the CF indicator with the cash flow statement. Homework: elaboration of CF indicator analysis. 7. Presentation on the economic interpretation of the results of the analysis of the operational CF indicator. New topic: systems of indicators, characteristics of a parallel system of indicators, relative financial indicators - their construction and termination. Homework: quantification and analysis of financial ratios of a selected company. 8. Presentation on the economic interpretation of the results of the analysis of financial ratios. New topic: ways of objectifying the results of financial analysis - analysis of the development of financial ratios of the company over time, comparison of business results with the results of the industry. Homework: elaboration of trend analysis of financial ratios, comparison of ratios of selected company with relevant industry. 9. Testing the continuous level of students' theoretical knowledge. Presentation on the economic interpretation of the results of objectification of financial indicators of a selected company. New topic: methods of quantification of the influence of factors on the synthetic business indicator. 10. Possibilities and conditions of application of the chain substitution method, logarithmic and functional method. Du Pont's equations of decomposition of indicators ROA, ROE - simple and extended model, decomposition of cost indicator of the company. Homework: elaboration of the analysis of the decomposition of ROA, ROE indicators and the decomposition of the cost indicator of the selected company. 11. Presentation on the economic interpretation of the results of the breakdown of ROA, ROE and business cost ratio, New topic: comprehensive assessment of the financial situation of the analyzed company, summary of its strengths and weaknesses, proposal of measures to improve the financial condition of the company. 12. Recapitulation of semester knowledge, final semester written work.