Financial accounting is concerned with the preparation and public dissemination of financial reports designed to reflect corporate performance and the financial condition of the firm. By providing timely, relevant, and reliable information, these reports facilitate the decision-making of investors, creditors, and other interested parties. Financial markets depend on the information contained in these reports to evaluate executives, estimate future stock returns, assess firms’ riskiness, and allocate society’s resources to their most productive uses. The purpose of this course is to introduce you to the concepts of financial accounting and its underlying assumptions. We will discuss the uses and limitations of the financial statements. Procedural aspects of accounting will be discussed to enhance your understanding of the content of the financial statements. However, the emphasis of the class is on using accounting information in the evaluation of business performance and risk.

The course is designed to provide students with conceptual background and analytical tools necessary to evaluate financial statements issued by private and public companies. It focuses on understanding the uses and the limitation of both the financial statements and the traditional and non-traditional methods used in analyzing them. We will discuss the financial statements, the different effects of alternative accounting principles on reported performance, and the interpretation of financial information. The course consists of lectures, working and analyzing case studies, and class discussions. Every participant of the course is supposed to contribute actively to an interactive dialogue and a positive learning environment. Students will be able to make judgements about the firm’s financial position, analyze cash flows and earnings quality, and assess the overall performance of a firm.

The course is designed to provide students with the background and tools that will enable them to read, interpret, and understand financial statements. Furthermore, students will be able to evaluate the financial health and performance of public firms based on their financial statements.

The text for the course is Financial Accounting, 10th Edition, by Libby, Libby and Hodge published by McGraw-Hill Education, 2020. The book is available through the Luiss library.

Classes will be held on campus. The lectures will be hybrid, containing theoretical material and practical issues. Students may be required to work in groups of students to solve questions during class

All students are considered “Attending”. If you qualify for an exemption from attendance, please communicate this to me via email no later than ONE WEEK AFTER CLASS STARTS, this must also be approved by the course administrators. Information on the construction of your grade can be found below. Deliverables A. Case Assignments The course has 3 case assignments. These assignments focus on various companies’ financial statements. They will be available on the course website. These are due before the class meeting date shown in the Class Schedule. The assignments are to be prepared and submitted in groups of up to 5 students (you may work in smaller groups, but not larger), and one submission per group is sufficient. A submission box will be provided to submit your case on Luiss Learn. Solutions to the assignments should be typed and submitted electronically. The case assignments will be graded on a scale of 1 to 5. Late submissions will result in a deduction of points, based on how late the submission is received. The following cases will be examined: (1) Case 1: Amazon Inc. – Becoming familiar with financial statements (2) Case 2: Best Buy – Intermediate issues in financial statements (3) Case 3: Caterpillar Inc. – Advanced issues in financial statements B. Final Exam Final Exam: The course has one final exam (date to be communicated). It will be pen and paper based and held in person. It will be closed book; you may bring a calculator and one A4 sheet of paper with formulas. I highly recommend you prepare the formula sheet yourself, the process of preparing it helps the studying process. The final exam will consist of a set of financial statements of a publicly traded company along with questions on said statements. When answering a question, make sure to write out your calculation, a wrong answer along with calculations may receive a partial score while a wrong answer without a calculation will receive 0. IV. Class Participation Students are expected to review the required material before class and to participate in the class. Students are encouraged to ask questions during class and will be given the chance to answer questions. Participation is not limited to providing the correct answers and students should not fear making mistakes in class. V. Course Grade: Attending Students Your final grade in the course will be determined as follows: portion of Course Grade Case Assignments 3 points each (9 points) Final Exam 21 points Class Participation 1 point 31 points Course Grade: Non-Attending Students Your final grade in the course will be determined as follows: portion of Course Grade Final Exam 30 points 30 points

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