Financial Statement

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Module EC7095 – Financial Statement Analysis

Assignment – Semester 1 2012/13

“The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an entity that is useful to a wide range of users in making economic decisions”

(IASB Framework)

Do current published financial statements achieve this objective?

In order to answer the above question you will need to obtain the financial statements of some companies, analyse them and then interpret them so that you can determine whether you are in a position to make economic decisions based on your analysis.

The assignment must be done individually and I expect to see analysis of at least 2 companies. All companies analysed must be FTSE companies with financial statements prepared using International Accounting Standards. You should NOT choose companies that have been used as examples in lectures or seminars.

The analysis should be well explained and cover:

1. Profitability

2. Liquidity

3. Gearing

4. Shareholder Interests

Further Information:

You are required to present well structured answers in the form of a report to a potential new investor who is looking to invest in one of the companies that you have analysed. The report should use approximately 3000 words (excluding calculations) and should make appropriate and justified conclusions that include an answer to the question above.

Learning outcomes assessed:

* Understand the functioning of the financial reporting system

* Understand the components of financial statements and the relationships between them

* Evaluate the relevance of the information contained in a firm’s financial statements

* Use financial ratios to evaluate a company’s performance

Assignments will be graded according to the following criteria:

* Evidence of critical judgement in selecting, ordering and analysing content in order to present a sound...