The module aims to enable students to use and evaluate financial statements in company investment appraisal and understand the relationship between financial reporting and market-based information.

A     Knowledge and Understanding)

• Show a systematic knowledge of how financial reporting information can be used in fundamental valuation models.
• Show a systematic knowledge of the empirical research into the relationship between financial reporting data and stock market data.
• Distinguish between operating and financing items in financial reporting information.
• Discuss how financial reporting information can be used in the analysis of credit risk.
• Understand how to assess the quality of financial reporting information.

B     Intellectual Skills

• Synthesise and evaluate primary and secondary data.
• Solve problems, including the ability to manipulate financial and other numerical data and to apply statistical concepts at an appropriate level.
• Exercise powers of inquiry, logic, and critical analysis, interpretation and evaluation of arguments and evidence.
• Sustain a critical argument in writing

C     Discipline Specific Skills

• Use various types of financial reporting information as inputs to fundamental accounting valuation models.
• Apply corporate failure prediction models using financial reporting data.

D     Transferable Skills

• Communicate ideas, principles and theories effectively by oral and written means.
• Exercise initiative, self reliance and time management skills and work independently.
• Appreciate alternative viewpoints.
• Exercise numeracy, problem solving and IT skills.
• Access and analyse information using a variety of research resources both traditional (e.g. library) and IT (e.g. statistical programs and databases).

The module will be delivered through a mix of large & small group face-to-face sessions, including, where relevant, supporting digital learning activities and/or recordings

The examination paper is designed to enable students to demonstrate their intellectual skills of analysis, synthesis and evaluation and the extent to which they have met the module learning outcomes.  The paper will include questions of two types: first, problem questions requiring students to use the theoretical and technical material from the module to solve problems and to evaluate their solutions; second, essay questions designed to enable students to demonstrate their understanding of the theoretical, technical and empirical material covered on the module. 

Informal assessment is provided through the class problems (for which solutions are provided) which enable students to self-assess the extent to which they are meeting the module learning outcomes.  In addition the module coordinator is available at advertised times throughout the module to answer queries and discuss progress with students.

Assumptions and limitations of financial ratio analysis. Prediction models and financial reporting information.  Company valuation with financial reporting information.  Financial reporting information and stock market data.  Distinction between operating and financial items.  Assessing the quality of financial reporting information and the annual report.