Read between the lines.
Everything you need to know about an organization’s financial health may be found in its annual report. You will probably find an income statement, balance sheet, statement of cash flows, and other financial documents. Now it’s up to you to understand it all.
The information that makes its way to managers in the form of financial reports can be used, analyzed, and interpreted to plan and control a company’s activities and enhance the decisions made by senior executives, investors, and lenders but only if they understand the accounting “language” used to compile the reports.
In ACC 502, you’ll increase your fluency in the “language of business” by building on your existing knowledge of accounting. Through exercises, discussions, quizzes and a team project, you’ll acquire the ability to analyze a company’s annual financial statements.
To refresh your understanding of the accounting cycle, you’ll review the series of steps taken to prepare reports at the end of an accounting period, from the very first transaction of the period through the post-closing trial balance. You are reminded of the purpose of each financial statement and how they are integrated into an annual report. The importance of GAAP — Generally Accepted Accounting Principles — will become apparent as will the significance of the independent auditors’ report.
You’ll examine the concept of financial assets, including cash, marketable securities, accounts receivable, and many types of financial instruments — the categories reported in the balance sheet at net realizable value. How is cash used, credit advanced, and excess cash invested? It’s a company’s managers who make critical decisions involving these assets. That’s why it is important to understand asset management from an accounting standpoint.
Non-financial assets such as merchandise inventory, supplies, land, buildings, equipment, intellectual property and more — categories reported at historical cost less amounts depreciated, amortized or depleted, if appropriate — will also be considered. You’ll consider the difference between tangible and intangible assets (think a building versus a patent). The difference between capital and revenue expenditures will also be examined.
Over the course of your term, you’ll complete a team project that is comprised of a thorough analysis of an existing company’s corporate annual report and a final presentation of your analysis.
Conversely, you’ll look at various types of financial obligations or liabilities, such as notes payable, interest payable, payroll, and more. As you understand the distinction between current and long-term liabilities, you’ll also explore the proper accounting methods used to report liabilities, and how they affect financial statements. You’ll learn to prepare an amortization table that allocates payments between interest and principal and you’ll become familiar with the concepts of discounts and premiums on company’s bonds.
A corporation is owned by its stockholders — the individuals and/or institutions (pension plans, mutual funds, other companies, etc.) that own stock in the company. You’ll view the effect stockholders’ equity has on financial statements. After all, issuing new shares of stock can raise cash, but at what price? You’ll examine the impact of a stock issuance on financial reporting and on the organization as a whole. With an understanding of stockholders’ equity, you’ll be aware of many of the advantages and disadvantages of organizing a business as a corporation. You’ll gain insight into the rights of stockholders and the roles of corporate directors and officers.
The Statement of Cash Flows, which records the inflows and outflows of cash during a reporting period, provides vital information to stockholders and creditors alike and you’ll gain an appreciation of its use. As you become more skilled at annual report analysis during this course, you’ll perform an in-depth evaluation of the case company's liquidity, profitability, and solvency. The skills you’ll develop during this course will enable you to also gauge the quality of a company's earnings, assets, and working capital.
Discuss this and more in ACC 502
Sample Course Topics
- Review of the Accounting Cycle and Financial Reporting Process
- Financial Assets
- How to Account for Financial Assets
- Accounting for Inventories and the Cost of Goods Sold
- Plant and Intangible Assets
- Accounting for Stockholders’ Equity
- Changes in Retained Earnings
- Statement of Cash Flows
- Financial Statement Analysis
What You’ll Learn
In ACC 502, you’ll explore a full range of accounting topics in order to understand information commonly synthesized into annual reports.
- Identify the form and purpose of each of a company’s financial statements.
- Understand the series of steps in the “accounting cycle” involved in preparing financial statements.
- Be able to analyze the annual reports of publicly traded companies.
- Know how to assess a company’s profitability, liquidity, and solvency using annual report information.
Annual reports are a treasure trove of valuable information if you understand the language of financial reporting. For more information about The University of Scranton’s online Master of Business Administration degree, request more information or call us today toll-free at (866) 373-9547.
The content presented on this page is representative information for example purposes and is subject to change as course and student needs change over time.