Data Analytics and Data Visualization

New technologies are changing the landscape of accounting and financial reporting. Companies are increasingly using data analytics and visualization (charts, pictures, and graphs) to more effectively convey financial information. To familiarize students with data visualization, each module opens with a data dashboard and uses real-world data analytics and applications for student learning. Each module contains Data Analytics Insight boxes that describe how data analytics applies to the topics. Analytics and visualizations are reinforced with assignments in each module that present data graphically and require students to analyze and interpret the data visualizations. Data analytics questions are exclusively available on myBusinessCourse. We provide students with online access to author-created PowerBI dashboards where they can interact with the data and learn how to create their own data visualizations. We have partnered with Calcbench, a leading provider of data extracted from SEC filings. Calcbench data underlies each of the Data Analytics Insights and all of the end-of-module data analytics assignments. This allows instructors and students to work with actual and interesting financial statement data. These discussions and assignments are identified by the data analytics icon in the margin.

Innovative Approach

Financial Accounting for MBAs is managerially oriented and focuses on the most salient aspects of accounting. It helps MBA students learn how to read, analyze, and interpret financial accounting data to make informed business decisions. This text makes financial accounting engaging, relevant, and contemporary. To that end, it consistently incorporates real company data, both in the body of each module and throughout assignment material.

Flexible Structure

The MBA curricula, instructor preferences, and course lengths vary across colleges. Accordingly and to the extent possible, the 13 modules that make up Financial Accounting for MBAs were designed independently of one another. This modular presentation enables each college and instructor to “customize” the book to best fit the needs of their students. Our introduction and discussion of financial statements constitute Modules 1, 2, and 3. Module 4 presents the analysis of financial statements with an emphasis on analysis of operating profitability. Modules 5 through 10 highlight major financial accounting topics including assets, liabilities, equity, and related income statement items. Module 11 details the process for preparing and analyzing the statement of cash flow. Module 12 explains forecasting financial statements and Module 13 introduces basic valuation models. At the end of each module, we present an ongoing analysis project that can be used as a guide for an independent project. Like the rest of the book, the project is independent across modules. At the end of the book, we include several useful resources. Appendix A contains compound interest tables and formulas. Appendix B is a chart of accounts used in the book along with abbreviations. Appendix C is an Ongoing Analysis Project based on two companies, Parker Hannifin (PH) and Illinois Tool Works (ITW). Each module includes quantitative and qualitative questions that guide students through a company analysis.

Transaction Analysis and Statement Preparation

Instructors differ in their coverage of accounting mechanics. Some focus on the effects of transactions on financial statements using the balance sheet equation format. Others include coverage of journal entries and T‑accounts. We accommodate both teaching styles. Specifically, Module 2 provides an expanded discussion of the effects of transactions using our innovative financial statement effects template. Emphasis is on the analysis of Apple’s summary transactions, which concludes with the preparation of its financial statements. Module 3, which is entirely optional, allows an instructor to drill down and focus on accounting mechanics: journal entries and T‑accounts. It illustrates accounting for numerous transactions, including those involving accounting adjustments. It concludes with the preparation of financial statements. This detailed transaction analysis uses the same financial statement effects template, with journal entries and T‑accounts highlighted in the margin. These two modules accommodate the spectrum of teaching styles—instructors can elect to use either or both modules to suit their preferences, and their students are not deprived of any information as a result of that selection.

Flexibility for Courses of Varying Lengths

Many instructors have approached us to ask about suggested class structures based on courses of varying length. To that end, we provide the following table of common course designs.

Managerial Emphasis

Tomorrow’s MBA graduates must be skilled in using financial statements to make business decisions. These skills often require application of ratio analyses, benchmarking, forecasting, valuation, and other aspects of financial statement analysis for decision making. Tomorrow’s MBA graduates must have the skills to go beyond basic financial statements and to interpret and apply nonfinancial statement disclosures, such as footnotes and supplementary reports. This book, therefore, emphasizes real company data, including detailed footnote and other management disclosures, and shows how to use this information to make managerial inferences and decisions. This approach makes financial accounting interesting and relevant for all MBA students.

As MBA instructors, we recognize that the core MBA financial accounting course is not directed toward accounting majors. Financial Accounting for MBAs embraces this reality. This book highlights financial reporting, analysis, interpretation, and decision making. We incorporate the following financial statement effects template to train MBA students in understanding the economic ramifications of transactions and their impact on financial statements. This analytical tool is a great resource for MBA students in learning accounting and applying it to their future courses and careers. Each transaction is identified in the “Transaction” column. Then, the dollar amounts (positive or negative) of the financial statement effects are recorded in the appropriate balance sheet or income statement columns. The template also reflects the statement of cash flow effects (via the cash column) and the statement of stockholders’ equity effects (via the contributed capital and earned capital columns). The earned capital account is immediately updated to reflect any income or loss arising from each transaction (denoted by the arrow line from net income to earned capital). This template is instructive as it reveals the financial impacts of transactions, and it provides insights into the effects of accounting choices.

Innovative Pedagogy

Financial Accounting for MBAs includes special features specifically designed for the MBA student.

Focus Companies for Each Module

Each module’s content is explained through the accounting and reporting activities of real companies. Each module incorporates a “focus company” for special emphasis and demonstration. The enhanced instructional value of focus companies comes from the way they engage MBA students in real analysis and interpretation. Focus companies were selected based on the industries that MBA students typically enter upon graduation.

Real Company Data Throughout

Market research and reviewer feedback tell us that one of instructors’ greatest frustrations with other MBA books is their lack of real company data. We have gone to great lengths to incorporate real company data throughout each module to reinforce important concepts and engage MBA students. We engage nonaccounting MBA students specializing in finance, taxation, marketing, management, real estate, operations, and so forth, with companies and scenarios that are relevant to them.

Footnotes and Other Management Disclosures

Analyzed on their own, financial statements reveal only part of a corporation’s economic story. Information essential for a complete analysis of a company’s performance and financial position must be gleaned from the footnotes and other disclosures provided by the company. Consequently, we incorporate footnotes and other disclosures generously throughout the text and assignments.

Dual Approach to ROE and Financial Statement Analysis

We continue to stress profitability and return analysis as a “hook” for student interest. The analysis framework includes disaggregation of ROE and application of several other key metrics.

• Module 4 opens with the traditional DuPont model as a simple, yet powerful, analysis framework.
• Later in Module 4, we disaggregate ROE into operating and nonoperating components as a natural extension of the traditional DuPont model.
• Later modules revisit the DuPont model, and text boxes throughout include deeper discussion of operating versus nonoperating activities.
• Later modules also discuss factors that affect operating performance and consider actions that managers can take to improve that performance.

Industry-Level Data

We repeatedly emphasize that financial analysis cannot be performed in a vacuum—appropriate benchmarks are critical to a complete understanding of a company’s financial performance and position. To this point, we provide graphics that capture industry‑level data including many of the ratios we discuss and compute in the modules.

Decision Making Orientation

One primary goal of an MBA financial accounting course is to teach students the skills needed to apply their accounting knowledge to solving real business problems and making informed business decisions. With that goal in mind, Managerial Decision boxes in each module encourage students to apply the material presented to solving actual business scenarios. Each module also includes Analysis Insight boxes that provide insight into data analysis techniques and models that financial analysts typically use.

Research Insights

Academic research plays an important role in the way business is conducted, accounting and analysis are performed, and students are taught. It is important for students to recognize how modern research and modern business practice interact. Therefore, we periodically incorporate relevant research to help students understand the important relation between research and modern business.

Reviews for Each Learning Objective

Financial accounting can be challenging—especially for MBA students lacking business experience or previous exposure to business courses. To reinforce concepts presented in each module and to ensure student comprehension, we include reviews that require students to recall and apply the financial accounting techniques and concepts described in each section. Review questions usually include real financial statement data from a company in the same industry as the module’s focus company. Each Review has a video, prepared by the authors, that provides a step-by-step solution to the review questions to further support students' learning.

Experiential Learning

Students retain information longer if they can apply the lessons learned from the module content. To meet this need for experiential learning, we conclude each module with a hands‑on analysis project. The Ongoing Analysis Project uses Excel and includes financial statements for two companies, Parker Hannifin (PH) and Illinois Tool Works (ITW). Quantitative and qualitative questions in each module require students to apply the lessons learned to complete a comprehensive financial statement analysis and valuation. The project helps students synthesize the material in the module and integrate material across modules.

Excellent, Class-Tested Assignment Materials

Excellent assignment material is a must‑have component of any successful book (and class). We went to great lengths to create the best assignments possible from contemporary financial statements. In keeping with the rest of the book, we used real company data extensively. We also ensured that assignments reflect our belief that MBA students should be trained in analyzing accounting information to make business decisions, as opposed to working on mechanical bookkeeping tasks. There are six categories of assignments: Multiple-Choice Questions, Questions, Mini Exercises, Exercises, Problems, and Management Applications.

Fundamentals of Financial Accounting Tutorial

This interactive tutorial is intended for use in programs that either require or would like to offer a pre-term tutorial that creates a baseline of accounting knowledge for students with little to no prior exposure to financial accounting. Initially developed as a pre-term tutorial for first-year MBA students, this product can be used as a warm-up for any introductory-level financial accounting course. It is designed as an asynchronous, interactive, self-paced experience for students

Available Learning Modules (You Select)

1.   Introducing Financial Accounting (approximate completion time 2 hours)
2.   Constructing Financial Statements (approximate completion time 4 hours)
3.   Adjusting Entries and Completing the Accounting Cycle (approximate completion time 4 hours)
4.   Reporting and Analyzing Cash Flows (approximate completion time 3.5 hours)
5.   Analyzing and Interpreting Financial Statements (approximate completion time 3.5 hours)
6.   Excel and Time-Value of Money Basics (approximate completion time 2 hours)

This is a separate, saleable item. Contact your sales representative to receive more information or email customerservice@cambridgepub.com.

New Edition Changes

Based on classroom use and reviewer feedback, a number of substantive changes have been made in the new edition to further enhance the MBA students’ experiences.

• Digital delivery enhanced:  To serve the expanding delivery modes of MBA education, we updated our in‑module Reviews and Guided Example videos for all modules (each Learning Objective has a Review/Guided Example, as well as a corresponding eLecture). In addition, all objective assignments are available in MBC.
  

• Updated and expanded data visualization and analytics: Data analytics questions have been updated and expanded in each module to show their usage in financial statement analysis. Author-prepared videos demonstrate how to complete the data visualizations and analytics assignments.

• New Data Analytics Insights: Each module includes new Data Analytics Insights that provide examples of how financial statement data can be analyzed and visualized to uncover trends and address important questions. Also, a new Appendix D entitled, "Data Analytics & Visualizations" provides an overview to create a baseline of knowledge.
  

• New analysis project: Each module concludes with a hands-on analysis project set in MBC. Students are led through an analysis of two competitors: Parker Hannifin (ticker: PH) and Illinois Tool Works (ticker: ITW). Students apply the tools they learn in each module to complete a comprehensive financial statement analysis and valuation project.

• Integration of Calcbench data: We have partnered with Calcbench, a leading provider of data extracted from SEC filings. Calcbench data underlies most of the data visualization graphics presented in each module and many of the end-of-chapter data analytics assignments. This allows readers to work with actual and interesting financial statement data.

• ESG reporting: We include relevant discussions of ESG reporting and analysis whenever appropriate.

• Enhancements to MBC: Assignments in MBC are updated to reflect new technology and reduce rounding issues. Downloadable Excel spreadsheets have been developed for many assignments. Solutions to algorithmic assignments have been added to this edition. 

• Credit analysis: There is expanded content related to credit analysis included in Module 7 where we discuss common goals of credit analysis and the critical facets of this process. We adopt the term "capital structure analysis" instead of "solvency analysis" in light of its growing popularity to emphasize the importance of looking at all facets of a company's capital structure when conducting credit analysis.
  

• EBITDA: EBITDA is a term commonly used in practice. This important measure is introduced in several places and explains how it relates to net income and other income statement measures. This includes discussion of the pros and cons of using EBITDA and its variations.

• Analyzing intangible assets: New content in Module 6 discusses a wide variety of intangible assets including goodwill. The section discusses valuation methods, capitalization, and the subsequent accounting for intangibles. This includes explanation of the impairment of intangible assets and how to forecast intangibles.

• Treasury Stock: In light of the marked increase in the frequency and size of stock repurchases and retirements, this edition includes an expanded discussion of this activity and demonstrates the financial statement impact of retiring stock and its interpretation.

• Acquired Research and Development expense: We include a discussion of the origin and interpretation of acquired R&D expenses for financial statement analysis.
  

• Earnings Quality: We expand discussion of earnings quality to include a detailed look at the relations among net income, accruals, and cash flows, along with academic research on these subjects.

• Financial Statement implications of current events: We discuss important market implications to financial statement analysis such as the collapse of Silicon Valley Bank and its connection to debt investments, the effect of unused office space in the wake of the shift to work-from-home on lease arrangements, and other current events.
  

• Multiple Choice questions: Each module contains a new set of multiple-choice questions for readers to quickly check on their understanding of key concepts and tools for each module.

• Solutions: Solutions are presented entirely in MS Excel. Spreadsheets include all data from the exercises and problems, which facilitates student work and allows instructors to easily demonstrate solutions.

SUPPLEMENT PACKAGE

For Instructors

• myBusinessCourse: A web-based learning and assessment program intended to complement your textbook and classroom instruction. This easy-to-use course management system grades homework automatically and provides students with additional help when you are not available. In addition, detailed diagnostic tools assess class and individual performance. myBusinessCourse is ideal for online courses or traditional face-to-face courses for which you want to offer students more resources to succeed. Assignments with the MBC Homework logo in the margin are available in myBusinessCourse. eLecture videos are available for the module Learning Objectives, and Guided Examples for the in-module Reviews are available for you to assign students. MBC integrates with many learning management systems, including Canvas, Blackboard, Moodle, D2L, Schoology, and Sakai. The integration process is quick and easy, so you and your students are ready to go on day one.
  
• Solutions Manual: Created by the authors, the Excel-based Solutions Manual contains complete solutions to all the assignments.
• PowerPoint: Created by the authors, the PowerPoint slides outline key elements of each module.
• Test Bank: Written by the authors, the test bank includes multiple-choice items, exercises, short essay questions, and problems.