Page 58 - CAPE Financial Services Syllabus Macmillan_Neat

UNIT 2
MODULE 3: FINANCIAL REPORTING (cont’d)
SPECIFIC OBJECTIVES
Students should be able to:
4. *prepare financial statements;
5. *calculate common size balance
sheet and income statements;
6. explain the importance of ratio
analysis; and,
7. *calculate and interpret ratios.
CXC A38/U2/16
CONTENT
Engage the students in preparing financial
statements (simplified bank balance sheets and
income statements) according to the IAS 30.
Common size statements.
(Use formulae to calculate).
(a) Ratio analysis.
(b) The importance of ratio analysis:
(i) Benefits of ratio analysis:
eliminates the issue of size -
compare large companies to small
companies; simple to calculate.
(ii) The limitations of ratio analysis:
the historical data; variation of
standards used to prepare financial
statements.
(a) Calculate Ratios (liquidity, profitability,
efficiency, asset quality, market-based and
capital adequacy).
(Use formulae to calculate).
(b) Interpret using trend and peer analysis.
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