Part I Financial Accounting
Week 1: Introduction to Financial Accounting, Cost Accounting, and Corporate Finance
Lecture 1 : Introduction to Financial Accounting and Cost Accounting
- Distinctions Between Financial and Cost/Management Accounting.
- Processes of Recording business Transaction
- Users of Financial and Cost/Management Accounting Informations
- Decision-Making Through Cost/Management Accounting
Lecture 2: Introduction to Corporate Finance
- Meaning of corporate finance and its major functions
- Fundamentals of time value of money
- Summary of Financial Accounting, Cost/Management Accounting & Corporate Finance
Lecture 3: Contents of Income Statement and Balance Sheet Part I
- Process of recording, classifying, and summarizing transactions
- Journal, Ledger, and Trial Balance
- Contents and Format of Income Statement: Revenue and Expenses
- Financial Year and Auditing of Financial Statements
Lecture 4: Contents of Income Statement and Balance Sheet Part II
- Accrual Concept in Financial Accounting.
- Contents and Format of Balance Sheet: Assets, Liabilities, and Equity.
- Entity Concept in Financial Accounting
Lecture 5: Interaction between Income Statement and Balance Sheet
- Interaction effect of transactions on the income statement and balance sheet
- Dual effect concept or double-entry system of bookkeeping.
- Various examples of assets, liabilities, equity, expenses, and income.
- Retained earnings, dividends, capital gain, and the net worth of the firm.
- Accounting equation
Week 2: Preparation of Income Statement and Balance Sheet
Lecture 6: Preparation of Income Statement and Balance Sheet: Example Part I
- Basis of classifying items as assets, liabilities, equity, revenue, and expenses.
- Applications of the double-entry system of bookkeeping.
Lecture 7: Preparation of Income Statement and Balance Sheet: Example Part II
- Concept of the landed cost of an asset.
- Credit notes and purchase returns.
- Treatment of income received in advance, prepaid expenses, and accrued interest on loans.
- Concepts of depreciation
Lecture 8: Preparation of Income Statement and Balance Sheet: Example Part III
- Three forms of borrowing by directors: drawings, loans, and dividends.
- Treatment of investment in securities.
- Unexpired insurance
- Depreciation: Methods and examples
Week 3: Preparation of Income Statement and Balance Sheet: Cases
Lecture 9: Preparation of Balance Sheet: Lone Pine Cafe A Part I
- Preparation of opening and closing balance sheets
- Meanings of non-performing assets
- Concept of expenses write-off and abnormal losses
- Basic idea about partnership firms
- Treatment of rent, borrowing from banks and inventory
Lecture 10: Preparation of Balance Sheet: Lone Pine Cafe A Part II
- Understanding sources and applications of funds and their interaction
- Value creation in companies
- Allocation of profits among partners
- Concept of efficient utilization of funds
Lecture 11: Preparation of Income Statement : Lone Pine Cafe B
- Preparation of income and expenditure statements based on opening and closing balance sheets
- Calculation of inventory consumption
- Basis for considering an item as an expense or asset.
Lecture 12: Cash Flow Statement : Concept and Example (Direct Method) - Lone Pine Cafe
- Preparation of cash flow statement using the direct method
- Identification of cash flows from operations, investing, and financing activities
- Understanding cash and cash equivalents
- Analyzing cash flow from the income statement and balance sheet
Lecture 13: Classification of Balance Sheet Items: Maynard Company A
- Broad classification of assets, equity and liability sections of the balance sheet
- Differentiating between long-term and short-term assets
- Distinguishing between current and non-current liabilities
- Understanding the concept of accumulated depreciation
- Calculating gross block and net block
- Treatment of capital stock, accrued expenses, notes receivable, and payables
Week 4: Preparation of Cash Flow Statement (Direct and Indirect Method)
Lecture 14: Preparation of Income Statement: Maynard Company B
- Preparation of income statement
Lecture 15: Preparation of Cash Flow Statement : Lone Pine Cafe (Indirect Method)
- Direct and indirect methods of preparing cash flow statements.
- Concept of non-cash expenditure in cash flow and relevant examples.
- Operating expenditure.
- Cash flow from operating activities.
- Cash flow from investing activities.
- Cash flow from financing activities
Lecture 16: Preparation of Cash Flow Statement : Lori Crump (Indirect Method)
- Preparation of cash flow statement using indirect methods using example
Lecture 17: Preparation of cash flow statement: An example (Direct Method)
- Treatment of interest and dividends received and expended, extraordinary items, insurance for trading losses, income taxes, tax deducted at source, issuance of share capital, repayment of long-term debt.
- Concept of marketable securities
Lecture 18: Preparation of cash flow statement: An example (Indirect Method)
- Indirect method of preparation of cash flow statements.
Week 5: Analysis of Financial Statements - Ratio Analysis
Lecture 19: Ratio Analysis Part I - Analysis of financial statements
- Analysis of financial statements
- Ratios relevant to capital providers (debt and equity)
- Debt to equity ratio, interest coverage ratio, basic earnings per share, and price/earnings multiple
- Interpretation of ratios in various industry contexts
Lecture 20: Ratio Analysis Part II - Profitability Ratios
- Profitability ratios: Return on equity, return on assets, return on capital employed, return on investment
- Concept of interest tax shield
- Gross profit margin and net profit margin
Lecture 21: Ratio Analysis Part III - Dividend and Liquidity Ratios
- Dividend-related ratios: Dividend yield, dividend payout ratio
- Concept of face value of a share
- Ratios to evaluate liquidity position
- Liquidity ratios: current ratio, quick ratio, average collection period, and average payable period
- Calculation of working capital requirements
- Components of current assets and current liabilities
- Concept of factoring
Lecture 22: Ratio Analysis Part IV - Efficiency Ratios
- Efficiency ratios: Fixed assets turnover ratio, current assets turnover ratio, total assets turnover ratio, Invested capital turnover ratio, equity turnover ratio, working capital turnover ratio, Inventory turnover ratio, accounts receivable turnover ratio, payable turnover ratio
- Concept of operating cycle
Part II Cost / Management Accounting
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Week 6: Introduction to Cost Accounting and Preparation of Cost Sheet
Lecture 23: Cost, Costing and Cost Accounting
- Difference between financial accounting and management/cost accounting
- Introduction to decision-making using cost/management accounting information
- Purpose of cost classification
- Managerial accounting - meanings and process
- Introduction to cost terms and classifications
- Definition of cost with examples
- Concept of notional cost
- Meanings of costing
Lecture 24: Classification of Costs
- Kinds of costs: notional cost, opportunity cost, sunk cost, relevant cost
- Important classification of costs: fixed cost and variable cost, direct and indirect cost
- Assigning cost to cost objects
- Concept of common cost
- Advantages of cost accounting
- Types of fixed cost: committed and discretionary fixed cost
- Fixed cost and the relevant change
- Multiple classifications of costs with examples
Lecture 25: Preparation of Cost Sheet Part I
- Classification of manufacturing cost: direct materials, direct labor, manufacturing overhead
- Concept of direct expense
- Prime costs and conversion costs
- Preparation of cost sheet
- Calculation of prime cost with examples
- Calculation of works or factory cost
Lecture 26: Preparation of Cost Sheet Part II
- Calculation of cost of goods manufactured, cost of production, cost of goods sold, cost of sales
- Concept of product and period cost
- Non-manufacturing costs: Selling and administrative overhead
Week 7: Allocation and Apportionment of Overhead
Lecture 27: Allocation and Apportionment of Cost
- How to divide or apportion the cost among products.
- Conventional and scientific systems of apportionment of cost.
- What is allocation and apportionment of cost.
- Concept of primary and secondary distribution of overhead.
- Examples of secondary distribution.
Lecture 28: Primary and Secondary Distribution of Overhead
- How to divide or apportion the cost among products.
- Conventional and scientific systems of apportionment of cost.
- What is allocation and apportionment of cost.
- Concept of primary and secondary distribution of overhead.
- Examples of secondary distribution.
Lecture 29: Activity Based Costing Part I
- Concept of activity-based costing.
- Concept of cost drivers.
- Impact of activity-based costing: advantages and disadvantages.
- Transition from traditional approach to activity-based costing - Examples.
Lecture 30: Activity Based Costing Part II
- Examples for activity-based costing.
- Activity drivers.
- Concept of just in time manufacturing.
- Comparison between conventional, refined conventional costing systems and activity-based costing.
- Applications of activity-based costing.
Lecture 31: Break-Even Analysis
- Introduction to decision-making using cost accounting information.
- Break-even point: concepts and calculations.
- Contribution analysis.
- Calculation of sales to break even, profit volume ratio, contribution margin ratio and sales to achieve a desired profit.
- Cost volume profit analysis.
- Calculation of margin of safety.
- Break-even with taxes.
- Operating leverage and degree of operating leverage.
Week 8: Decision Making using Cost Accounting Informations
Lecture 32: Decision Making using Cost Accounting Informations - Examples - Part I
- Numericals on decision-making using Cost Accounting Information
Lecture 33: Decision Making using Cost Accounting Informations - Examples - Part II
- Numerical on decision Making using Cost Accounting Information
Lecture 34: Decision Making using Cost Accounting Informations - Examples - Part III
- Decisions to drop or keep the product
- Make or Buy decisions
- Relevant costing
- Sunk costs and Opportunity costs
- Decisions on profit maximization in different manufacturing processes
- Product mix decisions
Lecture 35: Decision Making using Cost Accounting Informations - Examples - Part IV
- Incremental cost and profit analysis
- Decision-making with constraints
- Key factor analysis
Lecture 36: Decision Making using Cost Accounting Informations - Examples - Part V
- Product Mix Decisons
- Decions making in the presence of contraints
Week 9: Preparation of Budgets: Concepts and Examples
Lecture 37: Introduction to Budgeting: Preparation of Budgets - Part I
- Concept of Budget
- Types of Budget
- Self-imposed budget
- Master budget
- Purpose of preparing various types of budget
- Concept of cash budget
- Preparation of schedule of cash collections and disbursements, merchandise budget, and cash budget
- Preparation of budgeted income statement and balance sheet
Lecture 38: Introduction to Budgeting: Preparation of Budgets - Part II
- Preparation of schedule of cash collections and disbursements
- Preparation of merchandise budget
- Preparation of cash budget
- Preparation of budgeted income statement and balance sheet
Lecture 39: Introduction to Budgeting: Preparation of Budgets - Part III
- Preparation of schedule of cash collections and disbursements
- Preparation of merchandise budget
- Preparation of cash budget
- Preparation of budgeted income statement and balance sheet
Lecture 40: Flexible Budget and Variance Analysis
- Concept of flexible budget and variance analysis
- Variance analysis cycle
- Favorable and unfavorable variance
- Characteristics of flexible budget
- Deficiencies in fixed budget
- Numericals on flexible budget and variance analysis
Part III Corporate Finance
| Week 10 - Foundations of
Corporate Finance, Time Value of Money and Bond Valuation |
Lecture 41: Foundations of Corporate Finance - Part I
- What is business or corporate finance?
- Balance sheet model of the firm
- Three major financial functions or financing decisions
- Structure of finance function
- Capital structure decisions
- Working capital management
Lecture 42: Foundations of Corporate Finance - Part II
- Forms of business organization
- Financial markets
- Cash flow between firms and financial markets
- Goals of financial management
- Basics of capital structure
- Introduction to time, value of money
Lecture 43: Time Value of Money: Present Value and Future Value in Single and Multiperiod case
- Present value, future value, and net present value: single and multi-period case
- Present value and discounting
- Future value and compounding
- Time value of money
- Simplification of cash flows
- Perpetuity, growing perpetuity, annuity, and growing annuity
Lecture 44: Simplification of Cash Flows: Annuity, Growing Annuity, Perpetuity and Growing Perpetuity
- Perpetuity: concept and examples
- Growing perpetuity: concept and examples
- Annuity: concept and examples
- Growing annuity: concept and examples
Lecture 45: Bond Valuation - Part I
- Definition and features of a bond
- Bond value and yield
- Premium and discount bonds
- Yield to maturity (YTM) - Bond's yield
- How to value bonds
- Pricing of the bonds
Lecture 46: Bond Valuation - Part II
- Bond Concepts
- Computation of yield to maturity and current yield
- Pure discount bonds (zero-coupon bonds)
- Valuation of zero coupon bonds
- Bond prices and yield maturity calculation using Excel functions
Week 11 - Stock Valuation, Making Capital Investment Decisions and Risk and Return
Lecture 47: Stock Valuation Part I
- Present value of common stock
- Cash flows from stock ownership
- Valuation of different types of stock: zero growth, constant growth, differential growth
- Calculation of different parameters of present value: discount rate and growth
- Sources of growth
- Equity valuation using comparisons: PE multiple and EV to EBITDA multiple
Lecture 48: Numericals on Bond and Stock Valuation
- Numericals on bond and stock valuation:
- Calculation of bond values, yield to maturity (YTM), and current yield using Excel functions and manually
- Calculating the present value of stock using different types of stock
Lecture 49: Technique of Evaluating Capital Investment Decisions
- Concept of capital investment decisions
- Various techniques of evaluating capital investment decisions
- Net present value: decision rules, merits, demerits, and calculations
- Payback period and discounted payback period method: merits and demerits
- Internal rate of return (IRR): decision rules and examples, merits and demerits
- Comparison between NPV and IRR
Lecture 50: Numericals on Technique of Evaluating Capital Investment Decisions
- Numericals on net present value, payback period, discounted payback period, internal rate of return, profitability index
Lecture 51: Risk and Return - Part I
- Risk and return: insights from the stock market
- Rupee return and percentage return
- Dividend and capital gain yield
- Total return of the investment
Lecture 52: Risk and Return - Part II
- Holding period return
- Historical return
- Average return
- Risk-free return
- Historical equity risk premium
- Variability in return
- Variance and standard deviation of returns
- Introduction to beta, Sharpe ratio, Treynor ratio, and Jensen's Alpha
Week 12: Cost of Capital, Valuation, Capital Structureand Dividend Decisions
Lecture 53: Risk and Return: Individual Securities
- Characteristics of individual securities and their calculation:
- Expected return
- Variance
- Standard deviation
- Covariance
- Correlation
Lecture 54: Risk and Return: Portfolio
- Interpretation of covariance and correlation
- The risk and return for a portfolio
- Expected return of a portfolio
- Variance and standard deviation of a portfolio
- Construction of a portfolio
- Effect of diversification
- Systematic and unsystematic risk
- Measures of systematic risk
Lecture 55: Cost of Capital and Valuation - Part I
- Calculation of beta: Insights from the stock market
- Risk-free rate
- Government bonds and treasury bills
- Risk premium
- Calculation of expected return using Capital Asset Pricing Model (CAPM)
- Cost of capital - cost of equity
Lecture 56: Cost of Capital and Valuation - Part II
- Revisiting CAPM
- Dividend Discount Model (DDM) of cost of equity
- Determinants of beta
- Comparison between CAPM and DDM
- Cost of debt and preferred stock
- Weighted Average Cost of Capital (WACC)
Lecture 57: Valuation and Capital Structure
- Valuation with WACC
- Firm valuation
- How to choose debt and equity
- Costs of financial distress
- Agency cost of equity and agency problems
Lecture 58: Dividend and Other Payouts
- Different types of payout: Regular cash dividend, Stock dividend (bonus share), Stock splitsStock repurchase
- Standard method of cash dividend
- Concept of dividend per share, dividend yield, and dividend payout
- Procedure of paying dividend
- Price behavior during the declaration of dividend
- Dividend vs repurchase
- Dividend signaling
- Real-world factors favoring high dividend
- Pros and cons of paying dividend
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