Introduction to Module 1This module introduces and explores the concept of financial statements analysis. The learner is expected to be able to analyse, interpret and use financial statements in their daily activities pertaining to policy and regulatory issues in the ICT sector. Knowledge from other courses is equally important. This module takes a minimum of fifteen (16) hours of study. The module contents are as outlined in Chapter 5-9 in Chapter 1 of this course. The hours for each course are as indicated in each session. At the end of each chapter, discussion questions are presented. The discussion questions are important for the learner to understand the chapter and to relate the basic concepts in the chapter. Module Learning Objectives
The main objective of the module is to offer the learner knowledge on how to analyse and interpret financial statements for the telecommunication operator and regulatory body and related the firm’s effects to the regulatory and policy issues in ICT. Specifically the module aims at giving the learner an understanding of: - Basic differences among finance, accounting and economics
- Basic types of statements and principles in preparation of financial statements and how telecommunication and other policies and regulations affect the results presented in financial statements.
- Factors affecting demand for and supply of financial statements in the telecommunication sector.
- Analysis and interpretation of financial statements in the telecommunication sector.
Module Learning Outcomes
After completion of this module the learner will be able to: - Explain the differences among finance, accounting and economics and the different concepts and principles used in the different disciplines
- Analyse, compare and contrast financial performance of a telecommunication firm and a regulatory body within an industry and a firm, and over time.
- Explain the effects of the agency problem and how it affects the firm’s performance.
Module Learning Activities
A number of activities will be performed including class discussions, accessing different websites etc. Ongoing class discussions facilitate your understanding of the issues. Some of the review activities will be: - Review basic concepts and methods applicable in finance, accounting and economics
- Preparation and Analysis of Financial Statements
- Preparation of a list of specific demanders of Financial Statements and the Issues they demand.
- Listing regulatory bodies which have demands for the financial statements and identifying factors which lead to the Demand for and Supply of Financial Statements
- Explain the Agency Problems faced between telecommunication regulators operators and the owners of the firm.
Another form of e-learning activity will be accessing the NetTel site and participation in the discussion forums. Learning activities which will constitute part of the course work/continuous assessment are as follows: • Individual Learning Activities (i) Learning exercise by summarizing an important reading in a module/session/chapter. Put it on the Website/discussion board and other students should comment on the summaries. (ii) Discuss and present specific financial analysis issues of telecommunication companies and regulatory bodies. (iii) Structure discussion board interaction on current hot topics in ICT financial analysis. (iv) Review and Comment on Financial Analysis Case Studies. • Group Learning Activities Collect Financial Statements of the regulatory bodies and companies. Analyse, interpret and compare the financial statements. Summary Concepts
• What are finance, economics and accounting?
• Financial Analysis techniques
• Internal and external users of financial statements
• Demand for financial statements
• Supply of financial statements
• Market efficiency
• Agency problems and Conflict of interest Core Reading Materials and Reference
A. Books
1. Bernstein, L. A & Wild, J. J (1998): Financial Statement Analysis: Theory, Application and Interpretation, 6th ed. McGraw – Hill, New York: NY
2. Foster, G (1986): Financial Statement Analysis, 2nd ed. Prentice – Hall, Englewood-Cliffs, NJ
3. Brigham, E. F and Houston, J. F (1998): Fundamentals of Financial Management, 8th ed. Dryden Press, New York: NY
4. Van Horne, J. C and Wachowicz, J (1995): Fundamentals of Financial Management, Prentice-Hall, Englewood-Cliffs, NJ
5. Block, S.B and Hirt, G.A (1994): Foundations of Financial Management, 7th ed. Richard D. Irwin Inc.
6. Brealey, R & Myers, S (2000): Principles of Corporate Finance, 6th ed. McGraw Hill, New York: NY
7. Pandey, I. M ( 1996): Financial Management, 7th ed. Vikas Publishing House PVT Ltd. B. Papers and Journals
Accounting Journals
Below is the list of Accounting and Finance Journals Available online. Some require subscriptions. 1. Accounting Horizons < http://www.aicpa.org/>
2. International Journal of Accounting <www.business.uiuc.edu/ciera/journal/ ->
3. Accounting, Organizations and Society <www.elsevier.nl/inca/publications/store/4/8/6/>
4. Journal of Accounting and Finance <http://www.blackwellpublishing.com/404.asp?404;http://www.blackwellpublishing.com/asp/journal.asp>
5. Accountant Magazine < www.accountancymag.co.uk/> Note: other related journals can be found by use of google at www.google.com search or any other search engine. This list is not exhaustive. Accounting Associations
<http://directory.google.com/Top/Business/Accounting/Associations/?il=1> Dictionaries
Accounting Dictionary - Financial Glossary (from Ventureline.com)
http://www.ventureline.com/glossary.htm Accounting Terms and Glossary
http://www.finet.com.hk/accounting/a.ht
C. Links to the Web
1. www.webcrawler.com a search engine which searches between several search engines such as google, yahoo, about, find what, etc, to give you more links to the issues related to financial statements analysis.
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