Module Information

Module Identifier
Module Title
Academic Year
Semester 2
Other Staff

Course Delivery

Delivery Type Delivery length / details
Lecture 20 hours in all - 10 x 2 hours per week of lectures
Seminars / Tutorials 5 hours in all - 5 x 1 hour tutorials per semester
Lecture 10 hours in all - 10 x 1 hour of help classes per week


Assessment Type Assessment length / details Proportion
Semester Exam 2 Hours   Examination  80%
Semester Assessment Essay Assignment 1500 words  20%
Supplementary Exam 2 Hours   Examination  Repeat Failed Elements or equivalent  80%
Supplementary Assessment Essay Assignment 1500 words  Repeat Failed Elements or equivalent  20%

Learning Outcomes

On successful completion of this module students should be able to:

1. Describe, explain and illustrate the context, uses and importance of financial statement analysis.

2. List, describe, explain, illustrate, compare and contrast alternative approaches to analyzing and interpreting accounting information, employing such information in equity valuation, and employing such information in financial distress prediction.

3. Explain and discuss the drivers, methods and detection of earnings management.

4. Explain and discuss the link between financial accounting and market-based information.

5. Cite, explain, select and apply appropriate theory and models to solve related questions and numerical problems, and perform pertinent analysis; and interpret the results.

6. Assess and criticize selected theoretical models.

7. Integrate different forms of analysis in order to generate a well-reasoned and holistic assessment of a firm’s performance, position and prospects.


This module is optional on SMB’s N400 (Accounting and Finance) and its “major” and "minor” variants; and on N310 (Business Finance).

The module covers topics in analysis of financial accounting information, accounting-based valuation, and financial distress prediction; and bridges between accounting information and market-based information. The availability of this subject matter is essential to any high-quality undergraduate degree in accounting and/or finance; as subject to:

• Honours Degree Subject Benchmark Statement: Accounting (2007), Quality Assurance Agency for Higher Education

• Honours Degree Subject Benchmark Statement: Finance (2007), Quality Assurance Agency for Higher Education

Further, the module contributes to the maintenance of (or is anticipated to contribute to the achievement of [further]) accreditation from professional accountancy bodies, including:

• Institute of Chartered Accountants in England and Wales
• Association of Chartered Certified Accountants
• Chartered Institute of Management Accountants
• Institute of Chartered Accountants of Scotland

Brief description

This module aims to provide students with a thorough treatment of: (i) the demand for and supply of public financial information by firms; (ii) the analysis and interpretation of financial accounting and other public financial information; (iii) the link between accounting-based information and market-based information; and (iv) accounting-based valuation and distress prediction models.


1. Context for financial statement analysis

2. Analysis and interpretation of financial statements
• Cross-sectional analysis
• Time series analysis
• Forecasting earnings and cash flows
• Forecast accuracy

3. Accounting policy choice and earnings management

4. Financial accounting and market-based analysis

5. Accounting-based valuation models

6. The prediction of financial distress

Module Skills

Skills Type Skills details
Application of Number Develop an easy familiarity with numerical data sources and numerical data. Apply numerical data to problem solving with care and accuracy. Assess the reasonableness of and interpret numerical solutions. Support assertions/arguments with appropriately developed and presented numerical data.
Communication Develop confidence in and clarity of oral communication via tutorial participation. Develop clarity and focus of written communication via: assignment production, development of answers to tutorial questions, Develop and use appropriate subject-specific particulary in oral and written communication
Improving own Learning and Performance Identify and distil the key issues covered by lectures, tutorials and self study. Identify and use a range of learning resources. Investigate benefits of small group working on self study. Structure study to accommodate intensive learning.
Information Technology Use a variety of electronic web- and library-based resources to review available information and retrieve pertinent information. Use various software packages for the production of the assignment (text, numerical tables and analysis, graphics)
Personal Development and Career planning • Develop knowledge and skills of interpretation of financial statement and other public financial information which is useful/essential in a number of different occupations • Identify potential career opportunities within the financial and professional services sector
Problem solving Identify the precise problem to be solved. Assess which data are pertinent to the problem. Recognize that alternative solution methods might be available. Select and apply appropriate methods for solving the problem. Assess the reasonableness of problem solutions and interpret those solutions.
Research skills Identify which information sources are available to: facilitate module study (understanding, wider reading). provide information to facilitate financial statement analysis. provide raw input to the production of the assignment. Select the most pertinent information for retrieval. Retrieve information. Re-assess the pertinence and assess the credibility of retrieved information. Properly reference/attribute information sources.
Subject Specific Skills • Develop competence in understanding and analyzing financial accounting and other public financial information; and in understanding the limitations thereof
Team work Develop experience of team work and develop team working skills via small group working on self study

Reading List

General Text
In addition to the above texts students are required to read a number of articles. A full reading list and module outline is available via Blackboard ( and will be distributed in the first lecture Barker, Richard Determining value : valuation models and financial statements Key texts Pearson Education Primo search Mulford, Charles The Financial numbers game : detecting creative accounting practices Key texts Wiley Primo search Rees, William Financial Analysis Key texts 2nd edition Prentice-Hall Primo search Scott, William R. Financial Accounting Theory Key texts 3rd edition Prentice-Hall Primo search Watts, Ross L. Positive Accounting Theory Key texts Prentice-Hall Primo search


This module is at CQFW Level 6