General Information
Target Audience
Basically, all MBA students could, and should, take the course. In particular, students interested in careers in consulting, corporate finance, equity research, investment banking, and anybody who wants to run a corporation.
Format
Weekly interactive presentations, case studies, and analyses of real companies in real time.
Course Mission
The objective of this course is to develop a set of tools for in-depth financial statements analysis and valuation. This course emphasizes the theme of data analytics and the “Accounting Art of War” (paraphrasing Sun Tzu) and extends it. The class emphasizes analysis rather than mechanical work and, consequently, uses a specialized software for the mechanical part (spanning from ratio analysis to company valuation).
The course builds upon the foundation established in the first-year course in Financial Accounting, and thus assumes a basic familiarity with financial statement preparation using accrual accounting. The course emphasizes an integrative approach and, as such, has strong links with economics, marketing, finance and strategy. Consistent with this goal we use a textbook that applies a strategic framework to analyze companies.
To analyze financial statements and the reporting strategy of companies we need to understand the underlying motivation of management to shade their financial statements in the way it best serves their overall strategy. As such, we will use specialized (but user friendly) data analytics tools to analyze accounting manipulation and predict bankruptcy.
Predicting the past, as opposed to predicting the future, is not a useful goal. Consequently, instead of case analyses (predicting the past) the course requires an integrative project to analyze real companies in real time, applying all of the tools taught up to that point in the course (predicting the future). The course has in it three modules:
- Global and strategic analysis of profitability and risk (including bankruptcy prediction)
- The Accounting Art of War
- Forecasting financial statements, valuation and reverse engineering of stock prices
These modules have in them an interactive presentation part and an analysis of real companies in real time.
Evaluation and Grade Breakdown
| Component | Due Date | Weight |
|---|---|---|
| Group financial statement analysis project (in two instalments) | TBC | 40% |
| Participation | Ongoing | 10% |
| Final Exam | During the exam period | 50% |
Required Resources
JAMES M. WAHLEN; STEPHEN P. BAGINSKI; MARK BRADSHAW, “Financial Reporting, Financial Statement Analysis, and Valuation – A Strategic Perspective”, 9th edition, South-Western Publishing, 2018.