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Structuring financial statement analysis projects to enhance critical thinking skills development
J. of Acc. Ed. 18 (2000) 341–353 www.elsevier.com/locate/jaccedu
Teaching and educational notes
Structuring financial statement analysis projects to enhance critical thinking skills development Beth B. Kern * School of Business and Economics, Indiana University — South Bend, PO Box 7111, South Bend, IN 46634, USA Received 1 October 1998; accepted 1 November 2000
Abstract This paper documents a method of structuring financial statement analysis projects to enhance the development of students’ critical thinking skills. The project is structured in a cooperative learning framework in which a student accesses financial statement information from the World Wide Web, performs a financial statement analysis, and then engages in an exercise with other students who have analyzed firms in the same industry. Both the individual and team phases of the project offer opportunities for students to develop several important critical thinking skills. # 2001 Published by Elsevier Science Ltd. All rights reserved. Keywords: Financial statement analysis; Critical thinking
1. Introduction The Accounting Education Change Commission (AECC) has outlined desired capabilities that accounting students should possess. For example, students’ intellectual skills should ‘‘include the ability to locate, obtain, and organize information and the ability to identify and solve unstructured problems in unfamiliar settings and to exercise judgment based on comprehension of an unfocused set of facts’’ (AECC, 1990, pp. 307–308). With regard to the knowledge base that students should attain, the AECC believes that the ‘‘focus should be on developing analytical and conceptual thinking, not on memorizing professional standards’’ (AECC, 1990, p. 308).
* Tel.: +1-219-237-4352; fax: +1-219-237-4866. E-mail address: [email protected] 0748-5751/01/$ - see front matter # 2001 Published by Elsevier Science Ltd. All rights reserved. PII: S0748-5751(01)00005-7
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The American Institute of Certified Public Accountants (AICPA)’s Core Competency Framework extends the AECC’s emphasis of a skills-based rather than content-driven curriculum (AICPA, 1999b). Strategic and critical thinking skills are one of the requisite broad business perspective competencies that the AICPA feels all students should have to succeed in a changing accounting profession (AICPA, 1999a). Consistent with the AECC’s recommendations and the AICPA’s Core Competency Framework, both Kimmel (1995) and Cunningham (1996) provide suggestions for modifying accounting courses to promote and enhance students’ critical thinking skills. The AECC (1992, p. 250) has also taken the position that the first course in accounting should facilitate future learning, regardless of a student’s potential career. Financial statement analysis is cited by the AECC as a necessary skill for lifelong learning regardless of a student’s future career choice. Financial statement analysis is a particularly rich setting for developing critical thinking skills in that students may form more than one defensible position. Both Sullivan (1996) and Basu and Cohen (1994) document using financial statement analysis projects in introductory accounting courses. Financial statement analysis projects are often assigned as group projects. Group activities foster critical thinking skills in a number of ways, including providing students with the opportunity to discuss and debate competing viewpoints. Individual students with weaker critical thinking skills can, however, opt out of participating in portions of a project that are more difficult for them. Thus, students needing the most development may forfeit the opportunity to improve their critical thinking skills. One partial remedy for this potential shortcoming of group activities is to require students to do a project on an individual basis, but this approach does not provide students an opportunity to weigh competing views and improve on team building skills. The project discussed in this paper is structured with both individual and team-oriented phases to mitigate some of the disadvantages and exploit the benefits of individual and group work. The project’s structure requires each student to complete a financial statement analysis independently followed by a cooperative learning team-oriented phase where individual students’ analyses are compared against each other. This structure has the potential for enhancing each student’s critical thinking ability based on his or her stage of critical thinking development. The individual phase serves as a gateway into the more unstructured group phase of the project. Instructor feedback is provided at the end of the individual phase. This feedback is tailored to each student noting both the strengths and weaknesses of his or her analysis. Students who have not completed a satisfactory financial statement analysis must correct their work before entering the group-oriented phase. The learning gained through the individual phase, along with the instructor feedback, allows students the opportunity to develop their critical thinking skills, and therefore, partially mitigates some of the frustration that may occur if an unstructured project is offered without prior experience. This classroom project has been used for nine semesters for a total of 17 sections of a first course in financial accounting at a medium-sized Midwestern public university.
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The student body is diverse in nature and includes both traditional and nontraditional students.1
2. Overview of the project This section provides a description of the project, an explanation of its grading and a summary of the cooperative learning framework used. The Appendix provides a sample of project materials distributed to students. 2.1. Project description Students are assigned to groups of four or five. Kagan (1989) and Johnson, Johnson, Holubec, and Roy (1984) recommend forming heterogenous groups. For this project, the instructor forms the groups after the first exam in the course. The primary criterion for group assignment is student performance on the first exam. Each group includes students representing the entire spectrum of student performance on the first exam. To the extent possible, diversity in terms of gender, race, and prior experience is maximized. Additional criteria such as major and age may also be considered. Earlier versions of the project required each group to analyze the same predetermined set of firms. Invariably, a few groups could not put aside the notion that there could be only one ‘‘correct’’ answer. Since one critical thinking characteristic is the ability to consider divergent views, it is important to create an atmosphere which fosters the possibility of multiple defensible solutions. Therefore, each group selects a set of firms within an industry to analyze.2 Each student group must select a different industry-based set of firms, with popular industry choices being beverages, sports apparel, retail, computer software, and computer hardware. Once the set of firms is selected, each student within the group selects a different firm to analyze. Thus, each student group has a unique set of firms within an industry to analyze with each student having a unique firm. Requiring different sets of firms for each group is done to give students an opportunity to examine companies for which they have an interest, ensure that each group is forming its judgments independently, and help foster the notion that there is more than one possible solution that could be formed for each project.
1
The students in the course are approximately 50% male, 50% female; 75% traditional, 25% nontraditional; 15% accounting majors, 55% business (but not accounting) majors and 30% non-business majors. 2 Students are given a handout listing example industry-based groups of firms with five to eight firms that would be included in that group. Students are told that they are welcome to develop their own group of firms, but their set of firms must be drawn from the same industry. Once a group selects an industry, the instructor also provides a list of additional firms based on SIC codes so that the students have a wider selection of firms from which to choose.
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Each student must access his or her company’s 10-K from the Securities and Exchange Commission’s EDGAR database on the World Wide Web.3 One benefit of this project is having introductory financial accounting students become acquainted with the types of information included in a Form 10-K. Stout, Mulford, Smith, Stone, and Weirich’s (1992) survey indicates that practitioners consider knowledge of Forms 10-K and 10-Q to be the most important SEC topic in the accounting curriculum. Although this project’s focus is on the financial statements included in the 10-K, students can become acquainted with the wealth of information in a 10-K through the process of finding the financial statements. One potential enhancement to this project could be having students identify 10–15 different types of information found in a 10-K. Before students begin their financial statement analyses, class time is used to explain financial statement analysis in a lecture and discussion-oriented format. An actual firm (not selected by one of the students) is used as a sample company. Each student is given a set of financial statements for the firm and a handout with the formulas needed to calculate financial ratios for assessing profitability, short-term liquidity, and long-term solvency. Other relevant data such as market price per share and dividends/share are also provided so that price earnings and dividend ratios may be computed. The lecture and discussion includes interpretation of each of the ratios as well as overall opinions that could be formed about the sample firm. There is also a discussion of what information other than that provided on the financial statements might be used if a more comprehensive analysis were to be performed. With the caveat that a limited information set is being used, each student then analyzes and evaluates his or her company’s profitability, short-term liquidity, and longterm solvency. The final phase of the project requires students to return to their groups for a more unstructured team-oriented learning exercise. The group is asked to rank firms in their industry from best to worst, from an investor’s viewpoint, based upon their analysis of profitability, short-term liquidity, and long-term solvency. There are often clear winners or losers in a given industry, but invariably there is a subset of firms for which there is more than one defensible ranking. Students must discuss the criteria (e.g. profitability, short-term liquidity, and long-term solvency), assumptions upon which they base their analysis, and their arguments supporting the ranking they provide. 2.2. Grading Cunningham (1996) indicates that fostering critical thinking requires assessment consistent with that goal. She suggests that students’ reasoning behind their conclusions 3 Other databases such as COMPUSTAT PC-Plus or databases affiliated with some textbook adoptions could easily be used. The students are given a handout which describes how to access the Web, download information and then import it into a word processing or spreadsheet package. This handout is available from the author upon request. The url’s for the web sites to access 10-Ks are subject to change. At this writing, students typically use the following two urls: http://www.sec.gov/edaux/formlynx.htm and http://bamboo.tc.pw.com/edgarscan.html
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be valued at least as much as the conclusions themselves, and that instructors should look for consistency between the reasoning and the conclusions formed. Consistent with Cunningham’s recommendation, a large portion of the project grade for both the individual and group phases is based on assessing students’ reasoning behind their concluding opinions regarding the financial performance of their firms. Students receive separate grades for the individual and group phases of the project. One-third of the grade for the individual phase of the project is allocated to financial statement retrieval, one-third to computation of the ratios, and one-third to the student’s assessment of his or her company’s performance from an investor’s point of view. The student’s assessment should be based on his or her interpretation of the financial ratio results. Grades for the assessment portion are based on how well students interpret available information, including ratios that were stressed, assumptions that were made, and the consistency of their conclusions with the facts and assumptions. Instructor feedback is given before the students begin the final phase of the project. This feedback includes an indication of incorrect ratio computations and also indications of issues overlooked or misinterpreted in interpreting the ratios. Achieving consistent grading across multiple unique projects is challenging. Consistency is facilitated by giving clear expectations to students. The students are informed of expectations via handouts and by classroom example. Instructor feedback focuses on the attributes listed on the handouts. (See the Appendix for a more detailed description of these handouts). Two passes are made through the individual portion of the projects. Projects are first graded in random order. They are then sorted by group and re-examined to facilitate greater consistency across students. The grade for the group portion is predominantly based on how well the students justify their ranking of firms. An additional requirement is that each student must perform a peer evaluation of the other group members. If there is consensus regarding an individual’s shirking responsibilities, that individual’s grade for the group phase of the project is adjusted accordingly. 2.3. Cooperative learning framework The project uses a cooperative learning framework. One of the advantages of using cooperative learning over other forms of small group learning experiences is that it can mitigate the possibility that the work is done by a few group members with others shirking. To achieve this goal, Cottell and Millis (1992) indicate that several characteristics must be present. These include: positive interdependence, individual accountability, appropriate grouping, and group processing. Table 1 provides a summary of cooperative learning characteristics and the elements in the project which support them.
3. The project’s potential for enhancing critical thinking skills Critical thinking has been defined in a variety of ways. For example, Kurfiss (1988, p. 2) defines critical thinking as ‘‘an investigation whose purpose is to explore
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a situation, phenomenon, question or problem to arrive at a hypothesis or conclusion about it that integrates all available information and that can therefore be convincingly judged.’’ Huffman, Vernoy, Williams, and Vernoy (1991) further disaggregate critical thinking into three components: affective, cognitive, and behavioral. Table 2 summarizes the critical thinking components, provides examples of these components, and identifies those elements of the project which can help
Table 1 Project elements based on cooperative learning characteristics Cooperative learning characteristicsa
Project elements based on these characteristics
Positive interdependence
Mutual goal of ultimately ranking firms Structuring the project to require that each student analyze a company Assigning roles such as chief information officer
Individual accountability
Half of grade is allocated to the individual portion of the project Peer evaluations of individuals’ efforts in the group phase
Appropriate grouping
Heterogenous groups formed, to the extent possible
Group processing
Class time periodically allocated to allow instructor and students’ monitoring of each group’s progress
a
Cooperative learning characteristics are from Cottell and Millis (1992).
Table 2 Project elements that help develop critical thinking components Critical thinking componenta
Project elements related to developing critical thinking components
Affective component: perspectives that either promote or limit critical thinking (e.g. ability to tolerate ambiguity, recognize personal biases, welcoming divergent views)
Ambiguity of conflicting information that ratios can give Ambiguity of ranking firm Willingness to explore prior opinions with an open mind when faced with new information Exploring the merit of individuals’ divergent views in the group phase of the project
Cognitive component: the thought processes involved in critical thinking (thought processes such as defining problems accurately, thinking independently and synthesizing)
Students’ developing opinions about how well their firms are doing Developing an argument to support the ranking that each group develops
Behavioral component: actions or strategies used in critical thinking (actions such as gathering data, applying knowledge to new situations and modifying judgements because of new information)
Obtaining financial statements Computing and analyzing ratios for a firm after a classroom example of a different firm Modifying judgements formed initially during the individual phase of the project when faced with group members’ views
a
Components and examples are from Huffman et al. (1991).
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develop critical thinking ability. The project attempts to develop all three critical thinking components with both its content and structure. Kimmel (1995) provides a framework for integrating Huffman et al.’s (1991) three critical thinking components (affective, cognitive, and behavioral) into the accounting curriculum. He suggests that the first accounting course should focus on having students welcome divergent views, a characteristic of the affective component of critical thinking. It is, therefore, important to have projects that present multiple defensible solutions so that students have the opportunity to develop this key critical thinking component. Ambiguity and the possibility of multiple reasonable opinions are inherent in the content of most financial statement analysis projects. The content of both the individual and group phases of the project therefore helps develop the affective component of critical thinking. The project also helps each student develop skills that are part of the behavioral component of critical thinking. During the individual phase, each student obtains a company’s financial statements, and then computes and analyzes several financial performance ratios. The instructor gives feedback regarding any errors in the ratio calculations, and students are required to correct any errors before entering the group phase of the project. Huffman et al. (1991) indicate that tasks such as gathering data and applying knowledge to new situations relate to the behavioral component of critical thinking.4 In the individual phase, each student must form an independent opinion as to whether his or her firm would be a desirable equity investment. In the group phase of the project, teams must form a ranking of their firms and justify their ranking. Huffman et al. (1991) indicate that thought processes such as those necessary to form the required opinion in the individual phase and to rank the firms in the group phase (i.e. defining the problem accurately, thinking independently, and sythesizing) relate to the cognitive component of critical thinking. Thus, the content of the individual and group phases can help develop all three components (affective, behavioral and cognitive) of critical thinking for each student. The project’s structure of having an individual phase followed by a team-oriented phase also can help develop key critical thinking skills. When students enter the group phase of the project, they receive new information about how other firms in their industry are doing financially. They not only receive this new information, but they also learn their fellow students’ opinions about the firms they have analyzed. The project requires the group to rank firms within the group’s industry in terms of desirability as an investment. Students are therefore faced with potentially having to modify their initial opinions regarding their firms. Some students have difficulty reconsidering their own initial opinions, an attitude that can limit their ability to think critically. Structuring the project to introduce new information and having students 4 At some universities, students in the first accounting course may not need to develop this skill. Thus, this phase of the project could be replaced with using a database that provides ratios. Informal feedback from students who easily completed this phase of the project was solicited to discern if they would prefer this option. Rather than viewing this phase as needless busywork, the students indicated that the process of combing through the financial statements was in their opinion a useful learning experience. They perceived that this phase of the project helped them better understand how the financial statements interrelate.
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reconsider their opinions previously expressed in the individual phase can help cultivate an ability to reconsider initial opinions, which is part of the affective component of critical thinking. The act of actually modifying a judgment is part of the behavioral component of critical thinking. Thus, the project’s structure offers the opportunity to enhance both the affective and behavioral components of critical thinking. Reflection on one’s opinions is a key thinking skill. Ruggiero (1998) notes that evaluating one’s own ideas is unpleasant because people tend to bond to them and comments that the ‘‘willingness to re-open settled issues whenever significant contrary evidence arises . . . is a central characteristic of all good thinkers’’ (p. 117). Ruggiero (p. 119) believes that teachers can cultivate a student’s ability to question his or her own ideas by pointing out that beliefs are vulnerable to ‘‘faulty observation, erroneous report from others, insufficient data, inattention to detail, misinterpretation, wishful thinking, self-deception, confusion, forgetfulness and lapses in logic.’’ The instructor feedback at the end of the individual phase can be helpful to a student to assist with reflection about his or her opinions. A student can ignore or discount this feedback, however. Structuring a project so that a student must consider feedback from not only the teacher but also his or her peers ensures that the student must undertake reconsideration about the thought processes that led to the opinions he or she initially developed. Thus, the project’s structure assists with developing this important thinking skill.
4. Concluding remarks This paper describes a project whose unique features can be used to develop several components that are essential for thinking critically. Having an individual phase to the project provides each student with the opportunity to develop the cognitive, affective, and behavioral components of their critical thinking skills. Instructor feedback at the close of the individual phase can further develop critical thinking skills so that students are better prepared to actively participate in the group phase. In addition, the individual phase forces each student to form an initial opinion prior to entering into the group phase of the project. During the group phase of the project, the student receives additional information and opinions regarding his or her firm. This additional information can also develop critical thinking skills by giving each student an opportunity to reconsider his or her initial opinion when faced with new information presented in the group phase. During the group-oriented phase of the project students weigh competing opinions to derive a ranking of firms. Both phases of the project, in addition to the transition from the individual to group phases, have the potential for developing key critical thinking skills. Although this project uses financial statement analysis as its focus, the structure could be adapted to other topics within the accounting curriculum. Another potential application could involve students in an accounting theory class forming opinions about a specific accounting treatment for a financial reporting issue and then joining other students who have analyzed alternative treatments for the same
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reporting issue. Assessing risk in an auditing class is another possible application for the project’s structure. This project, as well as potential adaptations of it, are promising avenues for enhancing students’ critical thinking skills in accounting courses.
Appendix A. Financial Statement Analysis Project The project is worth 60 points in total. Half is allocated to the group portion; the remainder is allocated to the individual portion. You have already completed 5 of the points allocable to the group portion by choosing your industry. You also completed 10 points of the 30 points allocable to the individual portion by handing in your financial statements for review. The remainder of the project is outlined below. Individual Portion: (20 points) Each group has selected an industry to analyze. In addition, each person in a group has chosen a firm and retrieved its financial statements. Your next step is to analyze your firm from the viewpoint of a potential investor. Chapter 15 in your text may be used as guidance. Since each industry has financial profiles unique to it, the group will decide the minimum analysis it needs to form comparisons of the firms in that industry. An individual, however, can go beyond the group’s minimum requirements for the analysis for his or her firm. The individual analysis will include the following: 1)
A printout of the income statements, balance sheet(s) and statements of cash flow as well as stock price and dividend data for the applicable years analyzed for your firm. You have already handed this in for review, but will need to resubmit this so that I have a basis for determining if ratios were computed correctly.
2)
Calculation of the applicable ratio(s) and other statistics that you derived as a basis for your analysis. You may use a spreadsheet or calculate the ratios by hand. If you use a spreadsheet, please hand in your disk as well as a printout of your calculations to assist with grading. If you calculate the ratios without the use of software, please show your calculations to obtain full credit. You should have ratios to evaluate profitability, liquidity and solvency for two years.
3)
A discussion of the merits (or lack thereof) of the company as a potential investment. This analysis should evaluate profitability, liquidity, and solvency of your company based on the ratios you compute in part (2).
Due Date:
The individual portion of this assignment is due on Thursday, April 8 at the beginning of class. Late papers will be docked 5 points per working day.
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Under any circumstances, your assignment must be completed by Tuesday, April 13 or you will not be able to participate in the group portion of the assignment. Basis for Grading Individual Portion: Ratio Analysis (10 points) Full credit will be attained by computing all relevant ratios correctly for a two year time period. Some ratios are not relevant to some industries (i.e. inventory ratios for service industries). Therefore, some ratios may not have to be computed for some firms. To attain full credit, you must show your work. If the ratios are computed using software, hand in the disk along with the printout of the ratios so that I may assess what numbers you used for the financial statements to obtain your ratios. If you did not use computer software, show the calculations that you made to for each ratio. Failure to submit supporting calculations will result in your grade being reduced by 3 points. You must also hand in the financial statements you used to calculate the ratios. Failure to do so will result in a grade reduction of 3 points. Interpretation (10 points) After your ratios are computed, they need to be interpreted. You will need to form an assessment of how attractive your firm would be as an investment. This should be done by evaluating the profitability, liquidity and solvency of your firm. After you have evaluated these three dimensions, you should make an overall assessment of the desirability of your firm as an investment. Your grade will be based on how well you support your conclusions. I will be assessing what ratios you stressed, were the ratios appropriate given an investor’s viewpoint, what assumptions you may have made and if the conclusions naturally flow from your assumptions and analysis. Group Portion: (25 points) Once the individual phase is complete and graded, it is time to meet with your group again. You will rank companies from best to worst in terms of which firms would be most preferable for an investor. Depending on how the group decides to rank these firms, this process may require additional calculations. The group’s write-up should include a table listing the different ratios from the individual analyses conducted by each group member. Your grade will be largely based on how well you support your argument for why you ranked companies in the order you did. In addition to providing a ranking of the firms, your group should provide a discussion of why that ranking is appropriate. This should include at minimum the criteria used for ranking, the rationale for selecting these criteria, any assumptions made, and an explanation of why the firms ended up being ranked in the order that the group selected.
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The group must hand in their analysis. In addition, each member within the group must fill out a peer evaluation of the other members. (See the following page for this evaluation). Failure to hand in this evaluation results in losing 5 points from the individual’s group grade. Should there be consensus regarding an individual’s effort, the group portion of the assignment will be adjusted accordingly for that individual. For example, if the consensus from the group is that an individual did not contribute to the group project, that individual’s grade for the group phase of the project can be adjusted to zero. Due Date:
The group write-up along with the peer evaluations are due Thursday, April 22 at the beginning of class. Late papers will be docked 5 points per day.
Basis for Grading Group Portion: Summary of Financial Ratios (3 points) This is a summary of the ratios computed by each individual for the firms in your industry that your group used for its analysis plus any other data that you used for your analysis. Criteria and Assumptions Used for Ranking the Firms (5 points) It is very rare that firms will be of a uniform rank across all dimensions. While there may be a clear winner or loser, there are often firms within the group that you are analyzing that are good on some dimensions and not so good on others. Therefore, your group will have to make judgements regarding what dimensions are most important for ranking your firms from an investor’s point of view in order to break these ‘‘ties’’. I will be assessing the criteria you select. Arguments Supporting Your Ranking (5 points) Your arguments supporting your rankings should flow from the ratios computed and the criteria and assumptions selected to form your judgements. The grade for this portion will be based on how well you use the data you have to provide support for your rankings. Actual Ranking (5 points) The group needs to provide a ranking for each firm in your group. For example, if there are 5 firms in your group, they should be ranked from 1 (best) to 5 (worst). This ranking should logically flow from your assumptions, criteria and arguments.
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Format (2 points) Does the write-up use correct grammar, spelling, easy to read layout and is it well-written? Peer Evaluation (5 points) Each individual who hands in a completed peer evaluation will receive the full 5 points. To preserve confidentiality, this may be handed in an envelope. Peer Evaluation A portion of your group grade is based on a peer evaluation of individual effort. Please allocate 100 points among your fellow group member excluding yourself. The total points that you give to your fellow group members must sum to 100. Peer evaluation are due with the group portion of the project on April 22 at the beginning of class. The information from these peer evaluations will be used to adjust individuals’ grades for the group phase of the project if necessary. Please note: You will not receive credit for the peer evaluation portion of your group grade unless you hand in a peer evaluation!! Group Member name
Points
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Total Points
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Your Name ——————————————
References Accounting Education Change Commission (AECC). (1990). Objectives of education for accountants: position statement No. one. Issues in Accounting Education, 5, 307–312. Accounting Education Change Commission (AECC). (1992). The first course in accounting: position statement No. two. Issues in Accounting Education, 7, 249–251. American Institute of Certified Public Accountants (AICPA). (1999a). Broad business perspective competencies. Available at: www.aicpa.org/edu/bbfin.htm.
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American Institute of Certified Public Accountants (AICPA). (1999b). Endorsement of board of directors. Available at: www.aicpa.org/edu/boardof.htm Basu, P., & Cohen, J. (1994). Learning to learn in the accounting principles course: outcome assessment of an integrative business analysis project. Journal of Accounting Education, 12, 359–374. Cottell, P. G., & Millis, B. J. (1992). Cooperative learning structures in accounting. Journal of Accounting Education, 10, 95–111. Cunningham, B. M. (1996). How to restructure an accounting course to enhance creative and critical thinking. Accounting Education, 1(1), 49–66. Huffman, K., Vernoy, M., Williams, B., & Vernoy, J. (1991). Psychology in action. New York: Wiley. Johnson, D. W., Johnson, R. T., Holubec, E. J., & Roy, P. (1984). Circles of learning: cooperation in the classroom. Alexandria, VA: Association for Supervision and Curriculum Development. Kagan, S. (1989). Cooperative learning resources for teachers. Laguna Niguel, CA: Resources for Teachers. Kimmel, P. (1995). A framework for incorporating critical thinking into accounting education. Journal of Accounting Education, 13, 299–318. Kurfiss, J. G. (1988). Critical thinking: Theory, research, practice and possibilities. Washington, DC: Association for the Study of Higher Education. Ruggiero, V. R. (1998). Changing attitudes: A strategy for motivating students to learn. Boston: Allyn and Bacon. Stout, D. E., Mulford, C. W., Smith, D. B., Stone, M. S., & Weirich, T. R. (1992). The role of SEC materials in the course curriculum: update and extension. Journal of Accounting Education, 10, 113–132. Sullivan, E. J. (1996). Teaching financial statement analysis: a cooperative learning approach. Journal of Accounting Education, 14, 107–111.
Teaching and educational notes
Structuring financial statement analysis projects to enhance critical thinking skills development Beth B. Kern * School of Business and Economics, Indiana University — South Bend, PO Box 7111, South Bend, IN 46634, USA Received 1 October 1998; accepted 1 November 2000
Abstract This paper documents a method of structuring financial statement analysis projects to enhance the development of students’ critical thinking skills. The project is structured in a cooperative learning framework in which a student accesses financial statement information from the World Wide Web, performs a financial statement analysis, and then engages in an exercise with other students who have analyzed firms in the same industry. Both the individual and team phases of the project offer opportunities for students to develop several important critical thinking skills. # 2001 Published by Elsevier Science Ltd. All rights reserved. Keywords: Financial statement analysis; Critical thinking
1. Introduction The Accounting Education Change Commission (AECC) has outlined desired capabilities that accounting students should possess. For example, students’ intellectual skills should ‘‘include the ability to locate, obtain, and organize information and the ability to identify and solve unstructured problems in unfamiliar settings and to exercise judgment based on comprehension of an unfocused set of facts’’ (AECC, 1990, pp. 307–308). With regard to the knowledge base that students should attain, the AECC believes that the ‘‘focus should be on developing analytical and conceptual thinking, not on memorizing professional standards’’ (AECC, 1990, p. 308).
* Tel.: +1-219-237-4352; fax: +1-219-237-4866. E-mail address: [email protected] 0748-5751/01/$ - see front matter # 2001 Published by Elsevier Science Ltd. All rights reserved. PII: S0748-5751(01)00005-7
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The American Institute of Certified Public Accountants (AICPA)’s Core Competency Framework extends the AECC’s emphasis of a skills-based rather than content-driven curriculum (AICPA, 1999b). Strategic and critical thinking skills are one of the requisite broad business perspective competencies that the AICPA feels all students should have to succeed in a changing accounting profession (AICPA, 1999a). Consistent with the AECC’s recommendations and the AICPA’s Core Competency Framework, both Kimmel (1995) and Cunningham (1996) provide suggestions for modifying accounting courses to promote and enhance students’ critical thinking skills. The AECC (1992, p. 250) has also taken the position that the first course in accounting should facilitate future learning, regardless of a student’s potential career. Financial statement analysis is cited by the AECC as a necessary skill for lifelong learning regardless of a student’s future career choice. Financial statement analysis is a particularly rich setting for developing critical thinking skills in that students may form more than one defensible position. Both Sullivan (1996) and Basu and Cohen (1994) document using financial statement analysis projects in introductory accounting courses. Financial statement analysis projects are often assigned as group projects. Group activities foster critical thinking skills in a number of ways, including providing students with the opportunity to discuss and debate competing viewpoints. Individual students with weaker critical thinking skills can, however, opt out of participating in portions of a project that are more difficult for them. Thus, students needing the most development may forfeit the opportunity to improve their critical thinking skills. One partial remedy for this potential shortcoming of group activities is to require students to do a project on an individual basis, but this approach does not provide students an opportunity to weigh competing views and improve on team building skills. The project discussed in this paper is structured with both individual and team-oriented phases to mitigate some of the disadvantages and exploit the benefits of individual and group work. The project’s structure requires each student to complete a financial statement analysis independently followed by a cooperative learning team-oriented phase where individual students’ analyses are compared against each other. This structure has the potential for enhancing each student’s critical thinking ability based on his or her stage of critical thinking development. The individual phase serves as a gateway into the more unstructured group phase of the project. Instructor feedback is provided at the end of the individual phase. This feedback is tailored to each student noting both the strengths and weaknesses of his or her analysis. Students who have not completed a satisfactory financial statement analysis must correct their work before entering the group-oriented phase. The learning gained through the individual phase, along with the instructor feedback, allows students the opportunity to develop their critical thinking skills, and therefore, partially mitigates some of the frustration that may occur if an unstructured project is offered without prior experience. This classroom project has been used for nine semesters for a total of 17 sections of a first course in financial accounting at a medium-sized Midwestern public university.
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The student body is diverse in nature and includes both traditional and nontraditional students.1
2. Overview of the project This section provides a description of the project, an explanation of its grading and a summary of the cooperative learning framework used. The Appendix provides a sample of project materials distributed to students. 2.1. Project description Students are assigned to groups of four or five. Kagan (1989) and Johnson, Johnson, Holubec, and Roy (1984) recommend forming heterogenous groups. For this project, the instructor forms the groups after the first exam in the course. The primary criterion for group assignment is student performance on the first exam. Each group includes students representing the entire spectrum of student performance on the first exam. To the extent possible, diversity in terms of gender, race, and prior experience is maximized. Additional criteria such as major and age may also be considered. Earlier versions of the project required each group to analyze the same predetermined set of firms. Invariably, a few groups could not put aside the notion that there could be only one ‘‘correct’’ answer. Since one critical thinking characteristic is the ability to consider divergent views, it is important to create an atmosphere which fosters the possibility of multiple defensible solutions. Therefore, each group selects a set of firms within an industry to analyze.2 Each student group must select a different industry-based set of firms, with popular industry choices being beverages, sports apparel, retail, computer software, and computer hardware. Once the set of firms is selected, each student within the group selects a different firm to analyze. Thus, each student group has a unique set of firms within an industry to analyze with each student having a unique firm. Requiring different sets of firms for each group is done to give students an opportunity to examine companies for which they have an interest, ensure that each group is forming its judgments independently, and help foster the notion that there is more than one possible solution that could be formed for each project.
1
The students in the course are approximately 50% male, 50% female; 75% traditional, 25% nontraditional; 15% accounting majors, 55% business (but not accounting) majors and 30% non-business majors. 2 Students are given a handout listing example industry-based groups of firms with five to eight firms that would be included in that group. Students are told that they are welcome to develop their own group of firms, but their set of firms must be drawn from the same industry. Once a group selects an industry, the instructor also provides a list of additional firms based on SIC codes so that the students have a wider selection of firms from which to choose.
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Each student must access his or her company’s 10-K from the Securities and Exchange Commission’s EDGAR database on the World Wide Web.3 One benefit of this project is having introductory financial accounting students become acquainted with the types of information included in a Form 10-K. Stout, Mulford, Smith, Stone, and Weirich’s (1992) survey indicates that practitioners consider knowledge of Forms 10-K and 10-Q to be the most important SEC topic in the accounting curriculum. Although this project’s focus is on the financial statements included in the 10-K, students can become acquainted with the wealth of information in a 10-K through the process of finding the financial statements. One potential enhancement to this project could be having students identify 10–15 different types of information found in a 10-K. Before students begin their financial statement analyses, class time is used to explain financial statement analysis in a lecture and discussion-oriented format. An actual firm (not selected by one of the students) is used as a sample company. Each student is given a set of financial statements for the firm and a handout with the formulas needed to calculate financial ratios for assessing profitability, short-term liquidity, and long-term solvency. Other relevant data such as market price per share and dividends/share are also provided so that price earnings and dividend ratios may be computed. The lecture and discussion includes interpretation of each of the ratios as well as overall opinions that could be formed about the sample firm. There is also a discussion of what information other than that provided on the financial statements might be used if a more comprehensive analysis were to be performed. With the caveat that a limited information set is being used, each student then analyzes and evaluates his or her company’s profitability, short-term liquidity, and longterm solvency. The final phase of the project requires students to return to their groups for a more unstructured team-oriented learning exercise. The group is asked to rank firms in their industry from best to worst, from an investor’s viewpoint, based upon their analysis of profitability, short-term liquidity, and long-term solvency. There are often clear winners or losers in a given industry, but invariably there is a subset of firms for which there is more than one defensible ranking. Students must discuss the criteria (e.g. profitability, short-term liquidity, and long-term solvency), assumptions upon which they base their analysis, and their arguments supporting the ranking they provide. 2.2. Grading Cunningham (1996) indicates that fostering critical thinking requires assessment consistent with that goal. She suggests that students’ reasoning behind their conclusions 3 Other databases such as COMPUSTAT PC-Plus or databases affiliated with some textbook adoptions could easily be used. The students are given a handout which describes how to access the Web, download information and then import it into a word processing or spreadsheet package. This handout is available from the author upon request. The url’s for the web sites to access 10-Ks are subject to change. At this writing, students typically use the following two urls: http://www.sec.gov/edaux/formlynx.htm and http://bamboo.tc.pw.com/edgarscan.html
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be valued at least as much as the conclusions themselves, and that instructors should look for consistency between the reasoning and the conclusions formed. Consistent with Cunningham’s recommendation, a large portion of the project grade for both the individual and group phases is based on assessing students’ reasoning behind their concluding opinions regarding the financial performance of their firms. Students receive separate grades for the individual and group phases of the project. One-third of the grade for the individual phase of the project is allocated to financial statement retrieval, one-third to computation of the ratios, and one-third to the student’s assessment of his or her company’s performance from an investor’s point of view. The student’s assessment should be based on his or her interpretation of the financial ratio results. Grades for the assessment portion are based on how well students interpret available information, including ratios that were stressed, assumptions that were made, and the consistency of their conclusions with the facts and assumptions. Instructor feedback is given before the students begin the final phase of the project. This feedback includes an indication of incorrect ratio computations and also indications of issues overlooked or misinterpreted in interpreting the ratios. Achieving consistent grading across multiple unique projects is challenging. Consistency is facilitated by giving clear expectations to students. The students are informed of expectations via handouts and by classroom example. Instructor feedback focuses on the attributes listed on the handouts. (See the Appendix for a more detailed description of these handouts). Two passes are made through the individual portion of the projects. Projects are first graded in random order. They are then sorted by group and re-examined to facilitate greater consistency across students. The grade for the group portion is predominantly based on how well the students justify their ranking of firms. An additional requirement is that each student must perform a peer evaluation of the other group members. If there is consensus regarding an individual’s shirking responsibilities, that individual’s grade for the group phase of the project is adjusted accordingly. 2.3. Cooperative learning framework The project uses a cooperative learning framework. One of the advantages of using cooperative learning over other forms of small group learning experiences is that it can mitigate the possibility that the work is done by a few group members with others shirking. To achieve this goal, Cottell and Millis (1992) indicate that several characteristics must be present. These include: positive interdependence, individual accountability, appropriate grouping, and group processing. Table 1 provides a summary of cooperative learning characteristics and the elements in the project which support them.
3. The project’s potential for enhancing critical thinking skills Critical thinking has been defined in a variety of ways. For example, Kurfiss (1988, p. 2) defines critical thinking as ‘‘an investigation whose purpose is to explore
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a situation, phenomenon, question or problem to arrive at a hypothesis or conclusion about it that integrates all available information and that can therefore be convincingly judged.’’ Huffman, Vernoy, Williams, and Vernoy (1991) further disaggregate critical thinking into three components: affective, cognitive, and behavioral. Table 2 summarizes the critical thinking components, provides examples of these components, and identifies those elements of the project which can help
Table 1 Project elements based on cooperative learning characteristics Cooperative learning characteristicsa
Project elements based on these characteristics
Positive interdependence
Mutual goal of ultimately ranking firms Structuring the project to require that each student analyze a company Assigning roles such as chief information officer
Individual accountability
Half of grade is allocated to the individual portion of the project Peer evaluations of individuals’ efforts in the group phase
Appropriate grouping
Heterogenous groups formed, to the extent possible
Group processing
Class time periodically allocated to allow instructor and students’ monitoring of each group’s progress
a
Cooperative learning characteristics are from Cottell and Millis (1992).
Table 2 Project elements that help develop critical thinking components Critical thinking componenta
Project elements related to developing critical thinking components
Affective component: perspectives that either promote or limit critical thinking (e.g. ability to tolerate ambiguity, recognize personal biases, welcoming divergent views)
Ambiguity of conflicting information that ratios can give Ambiguity of ranking firm Willingness to explore prior opinions with an open mind when faced with new information Exploring the merit of individuals’ divergent views in the group phase of the project
Cognitive component: the thought processes involved in critical thinking (thought processes such as defining problems accurately, thinking independently and synthesizing)
Students’ developing opinions about how well their firms are doing Developing an argument to support the ranking that each group develops
Behavioral component: actions or strategies used in critical thinking (actions such as gathering data, applying knowledge to new situations and modifying judgements because of new information)
Obtaining financial statements Computing and analyzing ratios for a firm after a classroom example of a different firm Modifying judgements formed initially during the individual phase of the project when faced with group members’ views
a
Components and examples are from Huffman et al. (1991).
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develop critical thinking ability. The project attempts to develop all three critical thinking components with both its content and structure. Kimmel (1995) provides a framework for integrating Huffman et al.’s (1991) three critical thinking components (affective, cognitive, and behavioral) into the accounting curriculum. He suggests that the first accounting course should focus on having students welcome divergent views, a characteristic of the affective component of critical thinking. It is, therefore, important to have projects that present multiple defensible solutions so that students have the opportunity to develop this key critical thinking component. Ambiguity and the possibility of multiple reasonable opinions are inherent in the content of most financial statement analysis projects. The content of both the individual and group phases of the project therefore helps develop the affective component of critical thinking. The project also helps each student develop skills that are part of the behavioral component of critical thinking. During the individual phase, each student obtains a company’s financial statements, and then computes and analyzes several financial performance ratios. The instructor gives feedback regarding any errors in the ratio calculations, and students are required to correct any errors before entering the group phase of the project. Huffman et al. (1991) indicate that tasks such as gathering data and applying knowledge to new situations relate to the behavioral component of critical thinking.4 In the individual phase, each student must form an independent opinion as to whether his or her firm would be a desirable equity investment. In the group phase of the project, teams must form a ranking of their firms and justify their ranking. Huffman et al. (1991) indicate that thought processes such as those necessary to form the required opinion in the individual phase and to rank the firms in the group phase (i.e. defining the problem accurately, thinking independently, and sythesizing) relate to the cognitive component of critical thinking. Thus, the content of the individual and group phases can help develop all three components (affective, behavioral and cognitive) of critical thinking for each student. The project’s structure of having an individual phase followed by a team-oriented phase also can help develop key critical thinking skills. When students enter the group phase of the project, they receive new information about how other firms in their industry are doing financially. They not only receive this new information, but they also learn their fellow students’ opinions about the firms they have analyzed. The project requires the group to rank firms within the group’s industry in terms of desirability as an investment. Students are therefore faced with potentially having to modify their initial opinions regarding their firms. Some students have difficulty reconsidering their own initial opinions, an attitude that can limit their ability to think critically. Structuring the project to introduce new information and having students 4 At some universities, students in the first accounting course may not need to develop this skill. Thus, this phase of the project could be replaced with using a database that provides ratios. Informal feedback from students who easily completed this phase of the project was solicited to discern if they would prefer this option. Rather than viewing this phase as needless busywork, the students indicated that the process of combing through the financial statements was in their opinion a useful learning experience. They perceived that this phase of the project helped them better understand how the financial statements interrelate.
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reconsider their opinions previously expressed in the individual phase can help cultivate an ability to reconsider initial opinions, which is part of the affective component of critical thinking. The act of actually modifying a judgment is part of the behavioral component of critical thinking. Thus, the project’s structure offers the opportunity to enhance both the affective and behavioral components of critical thinking. Reflection on one’s opinions is a key thinking skill. Ruggiero (1998) notes that evaluating one’s own ideas is unpleasant because people tend to bond to them and comments that the ‘‘willingness to re-open settled issues whenever significant contrary evidence arises . . . is a central characteristic of all good thinkers’’ (p. 117). Ruggiero (p. 119) believes that teachers can cultivate a student’s ability to question his or her own ideas by pointing out that beliefs are vulnerable to ‘‘faulty observation, erroneous report from others, insufficient data, inattention to detail, misinterpretation, wishful thinking, self-deception, confusion, forgetfulness and lapses in logic.’’ The instructor feedback at the end of the individual phase can be helpful to a student to assist with reflection about his or her opinions. A student can ignore or discount this feedback, however. Structuring a project so that a student must consider feedback from not only the teacher but also his or her peers ensures that the student must undertake reconsideration about the thought processes that led to the opinions he or she initially developed. Thus, the project’s structure assists with developing this important thinking skill.
4. Concluding remarks This paper describes a project whose unique features can be used to develop several components that are essential for thinking critically. Having an individual phase to the project provides each student with the opportunity to develop the cognitive, affective, and behavioral components of their critical thinking skills. Instructor feedback at the close of the individual phase can further develop critical thinking skills so that students are better prepared to actively participate in the group phase. In addition, the individual phase forces each student to form an initial opinion prior to entering into the group phase of the project. During the group phase of the project, the student receives additional information and opinions regarding his or her firm. This additional information can also develop critical thinking skills by giving each student an opportunity to reconsider his or her initial opinion when faced with new information presented in the group phase. During the group-oriented phase of the project students weigh competing opinions to derive a ranking of firms. Both phases of the project, in addition to the transition from the individual to group phases, have the potential for developing key critical thinking skills. Although this project uses financial statement analysis as its focus, the structure could be adapted to other topics within the accounting curriculum. Another potential application could involve students in an accounting theory class forming opinions about a specific accounting treatment for a financial reporting issue and then joining other students who have analyzed alternative treatments for the same
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reporting issue. Assessing risk in an auditing class is another possible application for the project’s structure. This project, as well as potential adaptations of it, are promising avenues for enhancing students’ critical thinking skills in accounting courses.
Appendix A. Financial Statement Analysis Project The project is worth 60 points in total. Half is allocated to the group portion; the remainder is allocated to the individual portion. You have already completed 5 of the points allocable to the group portion by choosing your industry. You also completed 10 points of the 30 points allocable to the individual portion by handing in your financial statements for review. The remainder of the project is outlined below. Individual Portion: (20 points) Each group has selected an industry to analyze. In addition, each person in a group has chosen a firm and retrieved its financial statements. Your next step is to analyze your firm from the viewpoint of a potential investor. Chapter 15 in your text may be used as guidance. Since each industry has financial profiles unique to it, the group will decide the minimum analysis it needs to form comparisons of the firms in that industry. An individual, however, can go beyond the group’s minimum requirements for the analysis for his or her firm. The individual analysis will include the following: 1)
A printout of the income statements, balance sheet(s) and statements of cash flow as well as stock price and dividend data for the applicable years analyzed for your firm. You have already handed this in for review, but will need to resubmit this so that I have a basis for determining if ratios were computed correctly.
2)
Calculation of the applicable ratio(s) and other statistics that you derived as a basis for your analysis. You may use a spreadsheet or calculate the ratios by hand. If you use a spreadsheet, please hand in your disk as well as a printout of your calculations to assist with grading. If you calculate the ratios without the use of software, please show your calculations to obtain full credit. You should have ratios to evaluate profitability, liquidity and solvency for two years.
3)
A discussion of the merits (or lack thereof) of the company as a potential investment. This analysis should evaluate profitability, liquidity, and solvency of your company based on the ratios you compute in part (2).
Due Date:
The individual portion of this assignment is due on Thursday, April 8 at the beginning of class. Late papers will be docked 5 points per working day.
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Under any circumstances, your assignment must be completed by Tuesday, April 13 or you will not be able to participate in the group portion of the assignment. Basis for Grading Individual Portion: Ratio Analysis (10 points) Full credit will be attained by computing all relevant ratios correctly for a two year time period. Some ratios are not relevant to some industries (i.e. inventory ratios for service industries). Therefore, some ratios may not have to be computed for some firms. To attain full credit, you must show your work. If the ratios are computed using software, hand in the disk along with the printout of the ratios so that I may assess what numbers you used for the financial statements to obtain your ratios. If you did not use computer software, show the calculations that you made to for each ratio. Failure to submit supporting calculations will result in your grade being reduced by 3 points. You must also hand in the financial statements you used to calculate the ratios. Failure to do so will result in a grade reduction of 3 points. Interpretation (10 points) After your ratios are computed, they need to be interpreted. You will need to form an assessment of how attractive your firm would be as an investment. This should be done by evaluating the profitability, liquidity and solvency of your firm. After you have evaluated these three dimensions, you should make an overall assessment of the desirability of your firm as an investment. Your grade will be based on how well you support your conclusions. I will be assessing what ratios you stressed, were the ratios appropriate given an investor’s viewpoint, what assumptions you may have made and if the conclusions naturally flow from your assumptions and analysis. Group Portion: (25 points) Once the individual phase is complete and graded, it is time to meet with your group again. You will rank companies from best to worst in terms of which firms would be most preferable for an investor. Depending on how the group decides to rank these firms, this process may require additional calculations. The group’s write-up should include a table listing the different ratios from the individual analyses conducted by each group member. Your grade will be largely based on how well you support your argument for why you ranked companies in the order you did. In addition to providing a ranking of the firms, your group should provide a discussion of why that ranking is appropriate. This should include at minimum the criteria used for ranking, the rationale for selecting these criteria, any assumptions made, and an explanation of why the firms ended up being ranked in the order that the group selected.
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The group must hand in their analysis. In addition, each member within the group must fill out a peer evaluation of the other members. (See the following page for this evaluation). Failure to hand in this evaluation results in losing 5 points from the individual’s group grade. Should there be consensus regarding an individual’s effort, the group portion of the assignment will be adjusted accordingly for that individual. For example, if the consensus from the group is that an individual did not contribute to the group project, that individual’s grade for the group phase of the project can be adjusted to zero. Due Date:
The group write-up along with the peer evaluations are due Thursday, April 22 at the beginning of class. Late papers will be docked 5 points per day.
Basis for Grading Group Portion: Summary of Financial Ratios (3 points) This is a summary of the ratios computed by each individual for the firms in your industry that your group used for its analysis plus any other data that you used for your analysis. Criteria and Assumptions Used for Ranking the Firms (5 points) It is very rare that firms will be of a uniform rank across all dimensions. While there may be a clear winner or loser, there are often firms within the group that you are analyzing that are good on some dimensions and not so good on others. Therefore, your group will have to make judgements regarding what dimensions are most important for ranking your firms from an investor’s point of view in order to break these ‘‘ties’’. I will be assessing the criteria you select. Arguments Supporting Your Ranking (5 points) Your arguments supporting your rankings should flow from the ratios computed and the criteria and assumptions selected to form your judgements. The grade for this portion will be based on how well you use the data you have to provide support for your rankings. Actual Ranking (5 points) The group needs to provide a ranking for each firm in your group. For example, if there are 5 firms in your group, they should be ranked from 1 (best) to 5 (worst). This ranking should logically flow from your assumptions, criteria and arguments.
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Format (2 points) Does the write-up use correct grammar, spelling, easy to read layout and is it well-written? Peer Evaluation (5 points) Each individual who hands in a completed peer evaluation will receive the full 5 points. To preserve confidentiality, this may be handed in an envelope. Peer Evaluation A portion of your group grade is based on a peer evaluation of individual effort. Please allocate 100 points among your fellow group member excluding yourself. The total points that you give to your fellow group members must sum to 100. Peer evaluation are due with the group portion of the project on April 22 at the beginning of class. The information from these peer evaluations will be used to adjust individuals’ grades for the group phase of the project if necessary. Please note: You will not receive credit for the peer evaluation portion of your group grade unless you hand in a peer evaluation!! Group Member name
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References Accounting Education Change Commission (AECC). (1990). Objectives of education for accountants: position statement No. one. Issues in Accounting Education, 5, 307–312. Accounting Education Change Commission (AECC). (1992). The first course in accounting: position statement No. two. Issues in Accounting Education, 7, 249–251. American Institute of Certified Public Accountants (AICPA). (1999a). Broad business perspective competencies. Available at: www.aicpa.org/edu/bbfin.htm.
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American Institute of Certified Public Accountants (AICPA). (1999b). Endorsement of board of directors. Available at: www.aicpa.org/edu/boardof.htm Basu, P., & Cohen, J. (1994). Learning to learn in the accounting principles course: outcome assessment of an integrative business analysis project. Journal of Accounting Education, 12, 359–374. Cottell, P. G., & Millis, B. J. (1992). Cooperative learning structures in accounting. Journal of Accounting Education, 10, 95–111. Cunningham, B. M. (1996). How to restructure an accounting course to enhance creative and critical thinking. Accounting Education, 1(1), 49–66. Huffman, K., Vernoy, M., Williams, B., & Vernoy, J. (1991). Psychology in action. New York: Wiley. Johnson, D. W., Johnson, R. T., Holubec, E. J., & Roy, P. (1984). Circles of learning: cooperation in the classroom. Alexandria, VA: Association for Supervision and Curriculum Development. Kagan, S. (1989). Cooperative learning resources for teachers. Laguna Niguel, CA: Resources for Teachers. Kimmel, P. (1995). A framework for incorporating critical thinking into accounting education. Journal of Accounting Education, 13, 299–318. Kurfiss, J. G. (1988). Critical thinking: Theory, research, practice and possibilities. Washington, DC: Association for the Study of Higher Education. Ruggiero, V. R. (1998). Changing attitudes: A strategy for motivating students to learn. Boston: Allyn and Bacon. Stout, D. E., Mulford, C. W., Smith, D. B., Stone, M. S., & Weirich, T. R. (1992). The role of SEC materials in the course curriculum: update and extension. Journal of Accounting Education, 10, 113–132. Sullivan, E. J. (1996). Teaching financial statement analysis: a cooperative learning approach. Journal of Accounting Education, 14, 107–111.