Class Learnings Reflection (8)

Corporate Financial Accounting, CFA

We delved further into the analysis of financial statements. We looked at further ratio analyses like Return on Net Operating Assets, RNOA, Net Operating Profit Margin, NOPM and Net Operating Asset Turnover, NOAT as expressed below and their implications.

NOAT = RNOA/NOPM

RNOA = NOAT x NOPM

NOPM = RNOA/NOAT.

We understood the higher the NOAT, RNOA and NOPM, the better the financial performance of an organisation.

Analysis of Caterpillar Inc Financial Statements

The class was divided into four groups and was asked to analyse the balance sheet and income statement of Caterpillar Inc.

Each group was asked to do seventeen analyses on the financial statements and the class regrouped to do the classwork together to have a common understanding.

Most of the mistakes my group made showed that we needed to work on understanding the meaning of operating and nonoperating assets and operating and nonoperating liabilities and be able to identify them on the financial statements.

Although there are several formulas to be used in calculating ratios and measures, it is encouraging to learn that we do not have to cram the formulas.

We only needed to know the basic formulas, especially those covered by the capstone project with a major emphasis on the implications and interpretations of the values. The online tools can be leveraged in real-life situations for application.

Analysis of Business Problems, ABP

The mid-semester review of the course was done to recapitulate the key learnings from the classes.

We understood the place of paying attention to details, contexts and essence of each case, and the need to reason through logic which requires connecting and making the best of pieces of information.

We also looked into the need to critically analyse every case.

To arrive at the correct conclusions in every case, the following points were reiterated;

1. Strong arguments and positions are very vital

2. Avoid distraction and be ruthlessly focused when analysing a case

3. We must understand and separate relevant from irrelevant information in the cases

4. We must establish precise criteria to help prove beyond reasonable doubt our conclusions and prevent us from jumping to conclusions.

5. Information is the raw material for decision making and the ability to process information is key to making effective decisions, such abilities can be influenced ultimately by how we think.

6. The necessary details for analysing the cases may not be made plain at times, we must be able to infer and extrapolate the details to synthesise the required details.

Students’ Feedback on the Course

Much of our feedback to Dr Yetunde Anibaba centred around our inability to determine the criteria and difficulties in analysing the cases with numbers.

She made the following suggestions;

1. Be clear about the criteria

2. Brush up on simple and basic accounting terms

3. Make a habit of doing calculations

4. Ensure a sound state of mind before approaching any case, pierce through the numbers and have your brain work

5. Engage with things like games, movies, readings and scenarios that make you think.

6. Assume a can-do state of mind and do not be scared at the first sight of numbers in any cases

In conclusion, although subjects are becoming more analytical across all, I see a need to commit more time to fill the vacuum in my knowledge through personal research and group supports.