General Information
Target Audience
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.
Course Mission
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.
Course Scope
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 Breakdown
| Component | Due Date | Weight |
|---|---|---|
| Class Participation | Ongoing | 10% |
| 4 Case Write-Ups | 11:59pm (EST), the night before the class in which the case is discussed | 25% (for all four total) |
| Group Project | End of Course | 30% |
| Final Exam | During Exam Period | 35% |
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.