BUSINESS FINANCIAL ANALYST

It was really an interesting exercise getting to the topic of introduction to corporate financial accounting.

Our learning outcome was very insightful, and it was eye-opening into how the activities of different postings are recognized in an accounting entry. The postings are not just entered into those accounts but recognized for why and how they should be recognized in any accounting entries.

We went through the account equations: assets = liabilities + owner equity. An exercise already undergone previously was concluded, and a new case was introduced. The posting of accounting transactions and events and their preparation for the financial statements were eye-catching. The financial statement introduction and the systematic flow of transactions into the various accounting ledgers were explained.

We had the privilege of learning and understanding the business and financial statement analysis, its evaluation, and execution. The statement of financial position was extensively discussed, and entries affecting the accounts were pointed out with increases or decreases in any aspect of the financial position. The double-entry effect of transactions was well stated to help with better understanding. The common examples are the cash transaction, which is the current asset of a business, and its double entry effects on the other equations of the balance sheets.

The cases of J. Prep and Union Bank of Nigeria Plc were taught. As for the case against J. Prep Inc., we concluded the pending solution. The Union Bank of Nigeria Plc case was analyzed as of December 31st, 2010, and the financial analysis of the bank and hence what led to its business and financial restructuring was carried out. Those financial transactions that effected the financial statement led to its restructuring.

The bank was insolvent as of the last day of business activity in 2010, and we looked at each individual item in the statement of financial position to see what we could do to make the bank solvent again or wait for the regulatory sanctions and possibly the withdrawal of the banking license if no solution could be brought to the attention of the Central Bank at the next business day after the holidays.

The scenarios painted by the participants were sincere and genuine ones. The solutions proffered by the participants in class are as follows:

1. To the issuance of additional shares to some selected shareholders
2. Getting institutional investors to immediately inject funds into the bank
3. Approaching high-net-worth customers to inject or convert their deposits into equity
4. Approaching the top suppliers who are owed by the bank to defer the payment due dates as well as some select high-network customers to defer withdrawals from the accounts with the bank
5. Letting all depositors know about the events was strongly rejected as it would create panic and a subsequent, huge, expected withdrawal.
6. The suggested solution agreed upon was that the bank should carry out a capital restructuring exercise where the shareholders lose a substantial part of their shareholding with the bank.

The whole context of this exercise was very well explained and understood by the participants. I felt well satisfied and could not hide my excitement after the exercise was concluded.

The joy of analyzing a financial statement, drilling down on all financial transactions, and helping me achieve my dream of being a financial analyst cannot be contained.

I am tutored by the experts in the field, and I try to give my best attention to the class. #MMBA-4 – Charles O