Enterprise Analysis in the Context of Accounting Principles

Master's seminars

The aim of the M.A. seminar is to empower students to prepare a M.A. thesis on the topic related to enterprise analysis with particular focus on accountancy and accounting rules (Polish Accounting Standards, IAS and IFRS and USGAAP). The topic of the M.A. thesis should be chosen after careful consideration and discussion of the lecturer. The seminar is intended for II cycle II year students. In order to obtain credit for the first semester (fall) students are required to make an in class presentation which must include thesis title, table of content, bibliography and methodology of the work. To receive credit for the second semester (spring) students should submit a completed M.A. thesis no later by the end of April.

1. Methodology of M.A. thesis – discussion on how the work should be correctly structured, how to appropriately formulate hypotheses, important issues in economic research.

2. Context and methodology of enterprise analysis – the aim of enterprise analysis, overview of analytical tools, sources of data.

3. Structure of financial statements – general overview of financial statements (balance sheet, income statement, cash flow statement, statement of changes in equity and notes to financial statements) and their main elements (assets, liabilities, revenues, expenses, gains, losses, cash and cash equivalents).

4. Advanced accounting concepts – calculating deferred income tax, operating and financial leases, valuation of financial assets.

5. Difference between creative accounting and financial fraud – practical examples of creative accounting and fraudulent financial behaviours.

6. Preliminary analysis of financial statements – common-size analysis of balance sheet and income statement, sign analysis of cash flow statement.

7. Liquidity analysis – concepts of liquidity vs. solvency, analysis of working capital (gross and net).

8. Performance analysis – dependency on performance ratios on the sector company operates in.

9. Profitability analysis – profitability ratios divided into profitability of assets, profitability of sales, profitability of capital, DuPont analysis.

10. Solvency analysis – criteria of type of financing used by enterprises, level of debt, ability to pay back debt, bankruptcy forecast models.

11. Enterprise on the capital market – market value ratios, enterprise market value vs. enterprise book value.

12. Types of common malpractices used in financial statements – ways to improve the bottom line, influence cash flows and improper presentation of data

Students shall make presentation on assigned dates during the course in order to demonstrate thesis progress.

1. Wędzki, D. “Analiza wskaźnikowa sprawozdania finansowego”, Wolters Kluwers, Kraków 2006

2. Kalwasińska E., Maciejowska D. “Rachunkowość finansowa w teorii i praktyce” autorstwa, Warszawa, 2008.

3. Bednarski L., Analiza finansowa w przedsiębiorstwie, PWE, 2007

4. Czekaj J., Dresler Z., Zarządzanie finansami przedsiębiorstw. Podstawy teorii, PWN, 1998

5. Grzenkowicz N., Kowalczyk J., Kusak A., Podgórski Z., Analiza ekonomiczna przedsiębiorstwa, WZ UW, 2007

6. Jerzemowska M. (red.), Analiza ekonomiczna w przedsiębiorstwie, PWE, 2006

7. Kopiński A., Analiza finansowa banku, PWE, 2008

8. Micherda B. (red.), Sprawozdania finansowe i ich analiza. Analiza finansowa, Stow. Księg. w Polsce, 2005

9. Pomykalska B., Pomykalski P., Analiza finansowa przedsiębiorstwa, PWN, 2007

Supplementary reading agreed individually with each student depending on the topic of M.A. thesis.

The anticipated learning outcome is a completion of M.A. thesis on the topic chosen by the student and agreed with the supervisor in the general area of enterprise analysis. During the seminar students will be able to expand their knowledge in the area of financial accounting, including financial reporting, fundamental enterprise analysis and discuss difference between creative and aggressive accounting.

Student has an in-depth knowledge regarding elements of financial statements (balance sheet, income statement, cash flow statement, statement of changes in equity and notes to financial statements) that can have an important impact on information presented in financial statements and thus decisions taken by stakeholders based on financial statements. Student has knowledge about conducting enterprise analysis applying common-size and ratio analysis.

1. Student understands the mechanisms which govern enterprise’s operations in the context of the sector and the marketplace in which it functions. (S1A_07)

2. Student is able to connect the results of enterprise analysis with sectoral and marketplace phenomena. (S1A_06)

3. Student has knowledge about how to properly conduct enterprise analysis applying ratio analysis and is able to appropriately interpret results of ratios taking into consideration qualitative factors which have an impact on the enterprise. (S1A_06), (S1A_07)

4. Student has knowledge about Du Pont and similar types of analytical tools. (S1A_07)

Student can independently conduct enterprise analysis and assess the functioning of the enterprise in context of its profitability, performance, solvency, market value and liquidity. Moreover, the student is able to conduct independent literature research in the area of economy of enterprise as a background to empirical research.

1. Student can conduct analysis of financial statements applying ratio analysis and DuPont analysis. (S1A_U01), (S1A_U02), (S1A_U03)

2 Student is able to interpret results of common-size and ratio analyses. (S1A_U01), (S1A_U02), (S1A_U03), (S1A_U04)

3. Student can formulate basic recommendations in order to improve financial ratios of an enterprise. (S1A_U03), (S1A_U04)

4. Student can independently conduct literaturę research in the area of her/his interest. (S1A_U01), (S1A_U02), (S1A_U03), (S1A_U04)

5. Student can independently critically analyse literature. (S1A_U01), (S1A_U02), (S1A_U03), (S1A_U04)

6. Student can choose appropriate empirical method needed to analyse a given phenomenon and apply the method correctly. (S1A_U01), (S1A_U02), (S1A_U03), (S1A_U04)

Student is aware how chosen accounting policies and accounting methods influence information presented in financial statements of enterprises. Student is able to make investment decisions regarding analysed enterprises.

1. Student is aware how chosen accounting policies and accounting methods influence information presented in financial statements of enterprises and understands how companies can influence their external assessment. (S2A_K04), (S2A_K07)

2. Student is able to prepare M.A. thesis. (S2A_K03, S2A_K06)

Presence in class is obligatory. Two unexcused absences during a semester are allowed. In order to obtain credit for the first semester (fall) students are required to present thesis title, table of content, bibliography and methodology of the work. To receive credit for the second semester (spring) students should submit a completed M.A. thesis no later by the end of April and present it during the seminar.