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Course Name: Financial & Cost Analysis
Course Number: BA 528 – Fall
2008
Course Credits: Three;
BA 528 meets once per week in two hour and fifty minute blocks on
Tuesdays. Section 1 meets from
Course Description: BA 528 has two modules: Financial Accounting and Managerial Accounting. The Financial Accounting module covers the financial accounting reporting environment and the information provided by financial statements. The Managerial Accounting module covers budgeting techniques; cost measurement for performance evaluation of products, projects, managers and divisions; and the role of accounting information in aligning managerial incentives with organizational objectives.
Prerequisites: BA 213
and graduate standing, or BA 515.
Professors:
Financial Accounting Module: Roger Graham
Office: 204 Bexell Hall
E-mail:
roger.graham@bus.oregonstate.
Phone: 737-4028
Office Hours: Monday and Wednesday 10:00 – 11:00; Wednesday 1:30 – 2:30
Managerial Accounting Module Dennis Caplan
Office: 218 Bexell Hall
E-mail: capland@bus.oregonstate.
Phone: 737-2727
Office Hours: Monday
Learning Resources:
Required:
- BA 528 Course Packet (available from the OSU Bookstore)
- Management Accounting Concepts and Techniques, by Dennis Caplan. This on-line text is available on the web at www.IntroToCost.info. A Word file of the text, suitable for printing, is available from the instructor. The solutions to the end-of-chapter problems are available from the following link: EOC Solutions.
Optional:
- Any Principles of Financial Accounting text.
- Any recent edition of Cost Accounting: A Managerial Emphasis, by Horngren, Datar and Foster, published by Prentice Hall. The 11th edition of this textbook is sufficiently current, but is now out of print, and copies are available on the web for approximately $20.
Measurable Student Learning Outcomes: BA 528 is designed for students with a basic foundation in financial and managerial accounting concepts which are obtained in the prerequisite courses, BA 211 and BA 213. The course will provide a framework to help understand the nature, purpose and importance of decision-useful and decision-facilitating financial and managerial accounting information; appreciate the limitations of financial accounting information; understand how economic transactions map into financial statements; and understand how cost information is generated and used within organizations for operating and strategic decision-making.
Evaluation of Student Performance: Course requirements include attendance and participation, writing assignments, quizzes and exams. The weighting on the course requirements follows.
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|
Points |
|
|
|
Financial Accounting Module |
Managerial Accounting Module |
|
Attendance and class participation |
15 |
10 |
|
Case write-ups @ 15 points each |
60 |
30 |
|
Management Accounting homework |
|
10 |
|
Financial Accounting Final Project / Exam |
25 |
|
|
Management Accounting Midterm Quiz |
|
10 |
|
Management Accounting Exam (finals week) |
|
40 |
|
Total points per module |
100 |
100 |
|
Total Course Points |
200 |
|
Grading: Your course grade will be determined by your performance based on total points earned with the assurance that the curve will be no higher than shown below. The curve may be lowered depending on the distribution of the total points for the class.
A 170 - 200 B 140 - 169 C below 140
All University regulations
regarding academic honesty apply to
Students with disabilities: Accommodations are collaborative efforts between students, faculty and Services for Students with Disabilities (SSD). Students with accommodations approved through SSD are responsible for contacting the faculty member in charge of the course prior to or during the first week of the term to discuss accommodations. Students who believe they are eligible for accommodations but who have not yet obtained approval through SSD should contact SSD immediately at 737-4098.
SCHEDULE
Weeks 1-5: Financial
Accounting
Week 1: September 30
Topics: (1)
Introductions and Course Structure
(2) The
Accounting Environment and the Information in Financial Statements
Readings
(2) Maria Hernandez & Associates
Lecture: Financial Accounting, the Financial Reporting
Environment, and the Financial Statements.
Some review of previously learned material. Focus on foundational knowledge.
Case 1: Maria Hernandez & Associates (in-class – break
out sessions)
Maria Hernandez is a two page HBR case that asks students to determine the profitability of a one-person consultancy company. The case provides a basic exercise in financial statements.
Case 2: Kansas
City Zephyrs Baseball Inc (introduction)
The Zephyrs case illustrates the philosophical difference between “economic truth” and Generally Accepted Accounting Principles. The case provides an exercise in valuation when the parties involved have different views and interests.
Week 2: October 7
Topics: (1)
Continuation of discussion of Kansas City Zephyrs
(2)
Financial Statement Analysis
Required: Write up of Kansas City Zephyrs Baseball, Inc.
(2) Drivers of Industry Financial Structure
Lecture: Financial
Statement Analysis and the Dupont Model: Accounting
Information and Firm Performance.
Case 3: Drivers of Industry Financial Structure. (in-class – break out sessions)
Common size balance sheets and financial ratios for 10 companies illustrate the differences in companies across industries.
Case 4: Sears, Roebuck and Co vs. Wal-Mart Stores, Inc (introduction)
The two retailers have very similar returns on equity but dissimilar circumstances. The case provides a setting for the application of financial statement analysis tools.
Week
3: Oct 14
Topics: (1) Continuation of discussion of Sears, Roebuck and Co vs. Wal-Mart Stores, Inc
(2) Accounting Information, Economics, Strategy and Managerial Decisions
Required: Write up of Sears, Roebuck and Co vs. Wal-Mart Stores, Inc
(2) Long-lived Assets
(3) Depreciation at Delta Airlines
and
Lecture: Earnings Quality and Accounting Choice
Case 5: Depreciation at Delta Airlines and Singapore Airlines (in-class – break out sessions)
Depreciation policies of the two airlines are compared against a summary of operating data. The case has implications for earnings quality and implications for the economic basis for accounting information.
Case 6: Boston Automation Systems, Inc (introduction)
The
Week
4: Oct 21
Topics: (1) Continuation of discussion of Boston Automation Systems, Inc
(2) Accounting Information, Economics, Strategy and Managerial Decisions, cont.
Required: Write up of Boston Automation Systems, Inc
(2) Introduction to Shareholders Equity
(3) Microsoft’s Financial Reporting Strategy
Lecture: Earnings Quality and Accounting Choice:
continued
Case 7: Microsoft’s Financial Reporting Strategy
Microsoft’s conservative accounting policies are presented in the context of software capitalization and revenue recognition and the interplay between managers, analysts, and the capital markets.
Case 8: PolyMedica Corporation (introduction)
PolyMedica
is another SEC investigation case. This
time the firm is being criticized for capitalizing instead of expensing its
direct response advertising costs.
.
Week 5: Oct 28
Topics: (1) Continuation of discussion of PolyMedica Corporation
(2) Current Issues in Accounting
Required: Write up of PolyMedica Corporation
Lecture: International
Accounting Standards, Fair Value Accounting, Asset Securitizations
Case 9: Land Securities Group: Choosing Cost or Fair Value on Adoption of IFRS
A
A take home final project/exam for the financial accounting module will be handed out at the end of class. The final project/exam is due by 12 noon on November 4.
Weeks 6-10: Managerial
Accounting
Week 6: Nov 4
Topics: (1) Introduction to Management Accounting
(2) Relevant Costs for Decision-Making, Part I
(3) Operating Budgets
(2) Caplan: chapter 20
(3) The Barbary Pirates case
Lecture: Introduction to Management Accounting: management accounting compared and contrasted with financial accounting, the microeconomic foundations of management accounting, time-line of management accounting. Operating budgets and cash budgets.
Case
10: “John Adams, Thomas Jefferson,
and the
Week 7: Nov 11
Topics: (1) Relevant Costs for Decision-Making, Part II
(2) Capital Budgeting and Capital Budgeting in-class exercise
(3) Inventory Costing
Required: Cash budget assignment (submit a printout of the Excel spreadsheet at the beginning of class, and send the electronic file as an attachment to an email to the instructor prior to class)
(2) “Variable Costing: A Closer Look,” by Schiff
Lecture: Capital budgeting. Inventory costing techniques.
Case
11: “Joe and the Peanut Rack”
Week 8: Nov 18
Topics: (1) Introduction to HBS Case “Polysar Limited”
(2)
Budgets as Motivational Tools
(3) Midterm Quiz
Required: Inventory costing assignment (this assignment as been cancelled)
(2) “Tie Salesmen’s Bonuses to their Forecasts,” by Gonik
(3) HBS Case “Polysar Limited”
Lecture: Budgets as motivational tools. A quick review of cost accounting concepts and techniques required to complete the Polysar case: flexible budgets, cost variances for direct costs and fixed overhead, standard costing, transfer pricing.
Case 12: “Polysar Limited”
Week
9: Nov 25
Topics: (1) HBS Case: Polysar Limited
(2)
Divisional Performance Measures and The Balanced Scorecard
(3) Corporate Social Responsibility
Required:
Write up of Polysar Limited
(2) “Implementing Corporate Sustainability: Measuring and Managing Social and Environmental Impacts,” by Epstein
(3)
Statement of Management Accounting (SMA): The
Evolution of Accountability: Sustainability Reporting for Accountants
(available from the
(4) Summary of The Balanced Scorecard: Translating Strategy into Action, by Kaplan and Norton, at http://maaw.info/ArticleSummaries/ArtSumKaplanNorton1996Book.htm
Lecture: Divisional performance measures. Corporate social responsibility.
Case 12, cont: “Polysar Limited”
Week 10: Dec 2
Topics: (1) Activity-Based Costing
(2) Case: Celiant Corporation
Required: Write up of Celiant Corporation
(2) “Applying ABC to Healthcare,” by West and West
Lecture: Activity-Based Costing
Case 13: “Applying ABC to Healthcare”
Case 14: “The Short Happy Life of Celiant Corporation”
Final Exam: Dec 9