# 2004 University of South Africa All rights reserved Printed and published by the University of South Africa Muckleneuk, Pretoria ACN318-6/1/2005-2007 ACN308-4/1/2005-2007 97577979 ACN Style 3b2
AIM OF THIS MODULE PART I FINANCIAL ANALYSIS AN OVERVIEW OF FINANCIAL ANALYSIS STUDY UNIT 2 RATIO ANALYSIS: ANALYSIS OF THE PROFITABILITY OF AN ENTERPRISE STUDY UNIT 3 RATIO ANALYSIS: ANALYSIS OF RISK LINKED TO AN ENTERPRISE STUDY UNIT 4 ANALYSIS OF RISK BY MEANS OF A FAILURE PREDICTION TO ASSESS THE GOING CONCERN PROSPECTS OF AN ENTERPRISE STUDY UNIT 5 ANALYSIS OF RISK BY ANALYSING THE CASH FLOW OF AN ENTERPRISE STUDY UNIT 6 SELF-ASSESSMENT QUESTIONS PART II THE VALUATION OF BUSINESS INTERESTS AN OVERVIEW OF THE VALUATION PROCESS STUDY UNIT 8 RISK AND A FAIR RATE OF RETURN STUDY UNIT 9 OTHER CONCEPTS AND DETERMINANTS OF VALUE ACN318-6/1/2005 ACN308-4/1/2005
(v) 1 2
STUDY UNIT 1
44 47 49 50 51 64
STUDY UNIT 7
STUDY UNIT 10 METHODS FOR THE VALUATION OF BUSINESS INTERESTS STUDY UNIT 11 THE VALUATION OF DIFFERENT KINDS OF BUSINESS INTERESTS STUDY UNIT 12 COMPREHENSIVE QUESTIONS AND ANSWERS PART III 76 74 65
LIQUIDATIONS, REORGANISATIONS, CONVERSIONS, MERGERS AND TAKEOVERS 77 LIQUIDATIONS 78 85 89 97
STUDY UNIT 13 STUDY UNIT 14 REORGANISATIONS STUDY UNIT 15 CONVERSIONS STUDY UNIT 16 MERGERS AND TAKEOVERS
AIM OF THIS MODULE
Once you have studied and completed this module, you should be able to . give financial advice based on the results of the analysis and interpretation of financial statements . value business interests and financial securities . indicate how transactions are recorded in respect of changes in equity and shareholdings . give advice to businesses on the most advantageous way to overcome financial problems, either by means of reorganisation, reconstruction, merger, conversion or liquidation . convert one form of enterprise into another
LAYOUT OF STUDY MATERIAL
The study material for ACN318±6 and ACN308±4 is presented in a single study guide, the contents of which are arranged as follows: PART I: PART II: PART III: FINANCIAL ANALYSIS THE VALUATION OF BUSINESS INTERESTS LIQUIDATIONS, REORGANISATIONS, CONVERSIONS, MERGERS AND TAKEOVERS
Steyn, BL, Jonker, WD & Warren, BO. 2000. Analysis, valuations and restructuring. Pretoria: Renall. (You may also use a later edition of this work.) Since this is the only prescribed book for this module it is essential for you to obtain a copy. The study guide merely serves as a guide on the level of knowledge you need to achieve at in studying the book.
PART I Financial analysis
After studying this part of the syllabus, comprising study units 1 to 6, you should be able to give financial advice based on the results of the analysis and interpretation of financial statements.
1 2 3 4 5 6 An overview of financial analysis Ratio analysis: analysis of the profitability of an enterprise Ratio analysis: analysis of risk linked to an enterprise Analysis of risk by means of a failure prediction to assess the going concern prospects of an enterprise Analysis of risk by analysing the cash flow of an enterprise Self-assessment questions
An overview of financial analysis
In this study unit we focus on the following:
. . . .
the objectives of financial analysis the users of financial statements the limitations of financial analysis techniques used in financial analysis Ð Ð Ð Ð Ð Ð Ð comparative financial statements indexed financial statements common size statements trend analysis ratio analysis failure prediction cash flow statements
the effect of inflation on financial analysis
INTRODUCTION TO FINANCIAL ANALYSIS
One of the main sources of information for the purposes of making decisions about a particular enterprise is an analysis of its financial statements. Information...
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