This course is useful for students pursuing a career where one needs to analyze financial
statements. This includes those students 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 which focuses on business
analysis with tie-ins to corporate strategy.
This course will help you analyze and 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, and make
judgments about earnings quality. Finally, we will use financial statement analysis prospectively to
forecast and value firms using cash flow-based and accounting-based methods.
The course will consist of 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 in order generate forecasts for the firm. 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 analysis and
valuation techniques in a variety of settings including credit analysis and M&A.
Evaluation and Grade Distribution
|4 Case Write-Ups||11:59 pm, the night before class |
in which the case is discussed
(for all four total)
|Group Porject||Due at end of course||30%|
|Final Paper||Within one week after the end of the course |
(check course page/schedule)
Available on Quercus: Presentations for class; Excel spreadsheets; links to relevant articles from business press, and additional readings. There will be no additional course packet as all material will be made available online.
There is no required or recommended book for the course. If a student wishes, they may use any financial statement analysis and valuation textbook as a supplementary reference.