My name is Oluwatosin Ayokunle-Olubunmi. The CFA class this semester has been refreshing and informative.
The learnings were really simplified for non- finance managers. The Accounting equation A=L+E was broken down to the basics. Once you can understand this simple equation, then you are on the path to being an accountant.
The second session was mind blowing. To me, it was more of corporate finance class than accounting. The Statement of Financial position was dissected. Union Bank Plc was used as a case study, and we were able to analyze what went wrong with the business. We analyzed how the Shareholders capital was eroded and proffered solution on funding gap.
We were also made to know that when reviewing the financial statement of a bank. It is best we start from the right-hand side which is the Owner’s Equity and Liability to the Assets of the equation.
I also learnt that the asset can be analyzed from a position of income generating asset and non-income generating assets.
We also reviewed the statement of profit or loss using Tantalizers as an example. We used some basic ratios to try to determine if there was a need for the organisation to even go on a capital raise by the way of private placement.
I had to unlearn a few concepts such as retained profits. Some of us believe once there is profit, then the sum must have been ploughed back into the business.
I learned to be sure that this was done by analysing the cash flow.
I also learned that we were not in class to learn how to post as that role was for the junior analyst. Our role as managers is to be able to interpret financial statements and make informed decisions from this.
I also learnt about financial ratios and the methods to use in analysing financial information.
• Trend analysis: Trend analysis is an analysis of the trend of the company by comparing its financial statements to analyse the trend of market or analysis of the future based on results of past performance.
• Common size: A common-size analysis is a tool financial managers use to learn more about a company over time
• Vertical analysis: Vertical analysis is a method of financial statement analysis in which each line item is listed as a percentage of a base figure within the statement.
• Horizontal analysis: Is an approach used to analyze financial statements by comparing specific financial information for a certain accounting period with information from other periods.
• Ratio analysis: Ratio analysis is a quantitative method of gaining insight into a company’s liquidity, operational efficiency, and profitability by studying its financial.