Tribhuvan University
Faculty of Management
Office of the Dean
Bachelor of Business Management (BBM)
Course Description
:This course aims to provide exposure to financial analysis. It helps to analyze different financial aspects for making decisions. It covers income under marginal costing, CVP analysis, and investment analysis . It also deals with behavioral aspects of cost and the interpretation of financial statement analysis.
Course Objective
:The objectives of this course are to provide in-depth knowledge of financial analysis tools and techniques in planning and decision-making processes. Course Description This course aims to provide exposure to financial analysis. It helps to analyze different financial aspects for making decisions. It covers income under marginal costing, CVP analysis, and investment analysis . It also deals with behavioral aspects of cost and the interpretation of financial statement analysis.
Course Contents:
Lecture hours show the approximate classroom time allocated to each unit.
Unit 1. Introduction
- Financial analysis: concept, objectives, importance, and types of financial analysis
Unit 2. Cost Management and Reporting
- Cost concept and classification
- Segregation of semi-variable cost using two point method and regression method
- Measurement of correlation, coefficient of determination, testing of significance with ‘t’ value
- Reporting based on marginal costing.
Unit 3. Cost Volume Profit Analysis
- Application of cost -volume-profit for breakeven analysis and profit planning including multiple products with interpretation
- CVP a nalysis under the condition of uncertainty
- Cost-volume-profit analysis under resource constraints: Allocation of single resource constraint, Allocation of multiple resource constraints using linear programming model
Unit 4. Interpretation of Financial Statement
- Concept and interpretation of: Statement of Profit and Loss account, Statement of Financial Position, Statement of Cash Flow Statement and different financial indicators i.e. liquidity (current ratio and quick ratio), leverage (debt to total capital ratio, interest coverage ratio and debt coverage ratio), efficiency (receivable turnover ratio including collection period, payable turnover ratio including payable period, total assets turnover ratio), profitability ( income/sales per employee, operating profit ratio, net profit increase rate, net profit ratio, employee expenses to total operating expenses ratio, return on equity, return on total assets and return on common shareholders equity) and earning evaluation ratios (EPS, DPS, BVPS and price -earnings ratio) for evaluating the financial performance of the business.
Unit 5. Investment Analysis
- Concept and need of capital budgeting
- Investment analysis techniques:
- discounted PBP, NPV , PI and IRR
- Economic analysis of project: cost benefits analysis
- Risk analysis in capital budgeting: sensitivity, standard deviation, scenario analysis, probability distribution approach
Unit 6. Financial Measures of Performance
- Return on Investment (RO I), Residual Income (RI) and Economic Value Added (EVA): concept, objectives, importance, calculation and interpretation of ROI, RI, and EVA
- Differences between RI and EVA
- Differences between ROI and ROA
Suggested Readings:
Hilton, R.W., Ramesh, G., & Madugula, J. (2008). Managerial Accounting , Tata McGraw-Hill Education Pvt. Ltd. Lal, J. (2003). Advance Management Accounting, S. Chand and Company Ltd. Kaplan, R.S. & Atkinson, A. A. (2005). Advance Management Accounting, Prentice Hall of India.