Approved in UUV-case 86/12 Valid from academic year Amended

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1 Course Description BØA2100/BØA2100B Business Financial Analysis Elective course 1. Degree Bachelor of Hotel Management Bachelor of Human Resource Management Bachelor of Innovation and Entrepreneurship Bachelor of Marketing Bachelor of Marketing and Sales Management Bachelor of PR and Communication Bachelor of Tourism (spring 2013 spring 2014) Bachelor of Travel and Tourism Management (spring 2015) 2. Semester 4th semester 3. Credits Course instructor Assistant Professor Terje Grann 5. Contact hours 144 hours 6. Learning outcomes The course consists of three main parts: Investment, finance and financial management. Together these will give the following learning outcomes: Knowledge This course will provide the student with knowledge so he/she will be able to: Explain the basic theories relevant to understanding financial markets tasks in a modern market economy Elaborate on key financial concepts relevant to understanding and describing investment projects and financing projects as financial activities Describe the theoretical foundation behind the methods used to calculate the profitability of investment projects Explain the relationship between methods for analysing profitability and owners financial interests Describe the various sources of funding available and how each funding structure affects the risk and returns Explain the main theories and controversies in financial economics Give an account of the relevant empirical data for Norwegian financial markets Further, the student will acquire: BØA2100 Business Financial Analysis Page 1 of 5

2 Knowledge of why accounting is necessary Knowledge of the record keeping for and closing of accounts Basic knowledge of the relevant laws and regulations governing accounting Knowledge of the standard chart of accounts Awareness of the need for accounting analysis and how it is done Knowledge of the contents of a cash flow analysis Knowledge of the usefulness for economists of using spreadsheets In addition, the student will acquire: Broad knowledge that forms the basis for developing and using relevant financial management data and control systems in the continuous monitoring of operations as well as in specific decision-making systems Knowledge of various financial and non-financial performance goals, and will develop the ability to assess the advantages and disadvantages of these Knowledge of traditional tools for calculations and budgeting Knowledge of newer ideas and tools for planning, monitoring and control Skills After completing the course the student will be able to: Budget decision-relevant cash flow to total assets and equity in investment projects Use financial mathematics to discount cash flows Calculate risk-adjusted yield requirements using the capital asset pricing model Conduct profitability analysis of investment projects based on present value, internal rate, modified internal rate and repayment method Perform sensitivity analyses to examine the risk of investment projects Estimate the economic life of investment projects Calculate the effective interest rate and use it in various financing decisions Take account of tax and inflation in investment and financing decisions Calculate the expected return and the standard deviation BØA2100 Business Financial Analysis Page 2 of 5

3 of returns for risk projects Calculate the expected return and the standard deviation of returns for portfolios, and find the minimum-variance portfolio Calculate the Value-at-Risk for risk projects and portfolios Use regression analysis to reveal credit risks Use software tools for analysing profitability and risk in investment and financing projects Further, the student will be able to: Perform simple record-keeping and finalise an account Arrive at a final account balance for regular accounts with standard account numbers, and with this as a starting point set up an income statement and a balance sheet Read and understand the contents of a statement of cash flow Post the most common transactions Make periodic postings in relation to a period ending Explain the relationship between transactions and their impact on the income statement and balance sheet Produce annual financial statements for limited companies, with simple posts and allocation of profits Set up grouped results and balances in accordance with the provisions of the Accounting Act Manage key accounting measurement and assessment issues Analyse a cash flow statement Implement adaptation and correction of accounting figures for analytical purposes Calculate key figures in connection with a financial analysis and make an assessment of a company s profitability, liquidity and solvency In addition, the student: Can allocate costs from items via cost placement/activity for the costing object Can perform a product calculation in relation to the full costing and contribution principle for companies in various industries, including activity-based costing, and understand the fundamental prerequisites for and weaknesses of the various methods of calculation Understands the idea behind normal cost calculation, knows the conditions and purpose of a statement of operations based on the normal cost and is able to draft a BØA2100 Business Financial Analysis Page 3 of 5

4 normal cost account Perform calculations using the standard cost method, activity-rectify the organisation s budget and prepare management accounts based on standard cost, including a flexible budget Can calculate and explain the performance impact of inventory changes Can perform variance analysis, explain the reasons for discrepancies and propose necessary measures Be able to identify decision-relevant costs and revenues and solve various decision-related problems Be able to discuss the purpose of budgeting and prepare master budgets for liquidity, result and balance, and understand how budget processes can be organized General competence Students can: Reflect critically on ethical issues related to investment and financing projects Communicate subject matter in line with current requirements for the use of headers, footers, page numbering, and images and items from worksheets, and is able to use styles Develop his/her own models in a spreadsheet using the skills described above In addition to having knowledge of traditional management accounting, also has knowledge of recent ideas for planning, monitoring and control 7. Course contents The first part of the course deals with financial management, and provides insight into the issues and methods related to business investment and financing decisions. Students will learn to set up relevant cash flows, and how they are handled and valued in a consistent manner. The course also gives an insight into capital markets and the markets for various securities. Students will gain insight into the valuation of various assets, and risk management. Students will also develop their skills in using spreadsheets focusing on economic models and analyses. Part two provides in-depth knowledge of financial accounting so that students will be able to carry out simple accounting on their own. After completing the course, they should also be able to explain the content of financial accounts, accounting principles and valuation rules, and they should be able to analyse and assess a company s financial performance and position. BØA2100 Business Financial Analysis Page 4 of 5

5 The part on financial management provides an introduction to the basic methods and techniques of management accounting and budgeting. Students will acquire knowledge and skills about the provision, analysis and communication of relevant decisionmaking information. 8. Method of instruction Teaching of theory will be linked to case work. The course also includes lectures, group work and individual study. Students will be given the opportunity to submit assignments and exercises (not compulsory), and they will receive feedback on these. 9. Assessment Part 1: Business Administration. 5-hour written individual examination, which counts for 30% of the total assessment. Part 2: Accounting. 5-hour written individual examination in mid-semester, which counts for 30% of the total assessment. Part 3: Investment and finance. 5-hour written individual final examination, which counts for 40% of the total assessment. 10. Course syllabus 1 Bredesen, Ivar Investering og finansiering. 4th ed. Oslo: Gyldendal akademisk. ISBN: Pages: 629. Price c. NOK 559. Hoff, Kjell Gunnar Driftsregnskap og budsjettering. 5th ed. Oslo: Universitetsforl. ISBN: Pages: 488. Price c. NOK 589. Hoff, Kjell Gunnar and Jan Erik Hoff Arbeidsbok til driftsregnskap og budsjettering: Oppgaver og løsningsforslag. 5th ed. Oslo: Universitetsforl. ISBN: Price c. NOK 319. Sending, Aage Grunnleggende regnskap. 4th ed. Bergen: Fagbokforl. ISBN: Pages: 384. Price c. NOK Recommended reading Bredesen, Ivar Hjelper til investering og finansiering. 4th ed. Oslo: Gyldendal akademisk. ISBN: Subject to price changes. BØA2100 Business Financial Analysis Page 5 of 5