Financial Statement Analysis module (BU40003)

Learn how to analyse financial statements, use financial statement data for predicting risk as well as forecasting future earnings.

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Whether private, public, charity or third-sector, having an understanding of the company's financials is important.

It can help when making important short and long term business decisions.

By understanding the financial statements of companies, you can decide:

  • who to do business with
  • who to invest in
  • and who to consider for employment

Having an understanding of financial statements will also make it easier if required, to prepare annual reports in the future and understand the language of business.

What you will learn

In this module, you will:

  • analyse the financial statements of companies using different analytical techniques
  • use financial statement data to forecast when a company is close to collapse or at risk of financial failure
  • use financial statement data to predict the risk of a company's shares and bonds
  • use financial statement data to evaluate a company's credit risk and the likelihood of it getting a loan from a bank
  • forecast the future earnings of a company from historic financial statement data
  • analyse the financial statements of not-for-profits and banks in order to assess these organisations' performances as these statements are different in structure and content from those of companies
  • log in and use the Refinitiv DataStream system to show students how to access online financial data about UK and international companies

The Refinitiv DataStream online database is used by analysts to source financial data in practice.

Assignments / assessment

The coursework comprises the following:

Group Coursework (20%)

  • submitted during semester 1
  • to analyse the performance of a company using financial statement and other data

A final exam (80%)

Teaching methods / timetable

  • three 1-hour sessions per week on campus;
  • split between lectures and tutorials
  • one lab session using the Refinitiv DataStream system
Week Topics covered
1 Analysing a set of financial statements using ratio analysis
2 The Du Pont method of ratio analysis and investigating segmental reports
3 Cross-sectional and time series analysis of financial statements
4 Discriminant analysis with financial statement data
5 Financial distress prediction using financial statement data
6 Reading Week
7 Predicting equity and bond risk using financial statement information
8 Predicting credit decisions with financial statement and other, information
9 Income smoothing and the forecasting of company earnings
10 Analysing the financial statements of a Not-for-profit organisation
11 Analysing the financial statements of a bank



This module is available on following courses: