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RSM2212H – Business Analysis and Valuation

General Information

Course Description

This course is targeted towards students pursuing a career where one needs to analyze financial statements “intelligently.” This obviously includes those interested in finance related professions such as Investment Banking, Research and Investment Management. Students interested in consulting and marketing also find this course useful because of its approach that focuses on business analysis with tie-ins to corporate strategy.

Course Mission

This course will help you value businesses using financial statements. We will discuss how accounting regulations and managerial discretion influence presented financial statements. You will understand how to interpret financial statements, analyze cash flows, make judgments about earnings quality and uncover hidden assets and liabilities. You will also be exposed to research from accounting and finance that focuses on how financial statement analysis can be used in devising trading rules. Finally, we will use financial statement analysis prospectively to forecast and value firms using cash flow based and accounting based methods.

Course Scope

The course will consist of the following five modules. In the first module (strategic and industry analysis) you will learn why the critical first step is to understand industry structure and a company’s strategic choices. The second module (accounting analysis) will provide you with a framework to understand and evaluate a firm’s accounting and disclosure choices and learn how to adjust financial statements to ensure better comparability. The third module (financial analysis) will present a comprehensive framework for ratio analysis where a firm’s operations are separated from its financing to better understand the true drivers of profitability and risk. The fourth module (prospective analysis) will expose you to techniques of integrated forecasting, where you will apply the insights from the earlier modules and apply them to truly understand what the future holds for the firm being analyzed. You will then use these forecasts to value firms using a variety of techniques including multiples and abnormal earnings based valuation methods. In the fifth module, you will apply the business valuation techniques in a variety of settings including credit analysis and M&A.

Evaluation and Grade Distribution

ComponentDue DateWeight
Class ParticipationOngoing10%
4 Individual HWDue in class30%
Group ProjectDue at the end of the course30%
Final ExamDuring exam period30%

Required Resources

AVAILABLE on Course Webpage: Presentations for class, Excel Spreadsheets, Links to Articles from Business Press, Additional readings. There will be no additional course packet as all material will be made available online.

REQUIRED BOOK: There is no required or recommended book for the course. If you wish, you may use any financial statement analysis and valuation textbook as a supplementary reference.

Last Updated: 2022-11-24 @ 3:12 pm