Option Area(s):

Course Description :

Financial Statement Analysis is a course in how to use accounting information to make business and investment decisions. Internally, the information is used to assess performance of units, to evaluate performance of upper level management, to monitor the firm’s investment and financing decisions and for comparison purposes with the firm’s rivals. Externally, accounting information is used by financial analysts, investors and (potential) acquirers to assess the value of the firm, by creditors to assess its credit-worthiness, and by regulators. The primary objective of this class is to help you develop and sharpen your analytic abilities in financial statement analysis paying particular attention to the incentives of producers and users of this information. In addition to explaining techniques, cases will be used to help you develop the tools and skills required. In preparing cases for class, you should work in a group and focus not on number crunching but on identification of problems and potential solutions. Only once these have been identified is number crunching valuable. Let me emphasize, this is a course in using accounting information (predominantly financial statements) for decision-making. As such, we will not spend time on the details of financial statement preparation and reporting except as they are relevant to our focus on analysis and decision-making. Topics covered include: Business Strategy analysis: assessing the qualitative position of a firm’s business activities Accounting analysis: assessing the quality of a firm’s earnings Financial analysis: assessing the firm’s past performance Prospective analysis: assessing the firm’s future prospects Valuation using comparables and discounted cash flow analysis Valuation using EBO (abnormal earnings) analysis Credit analysis: assessing the firm’s ability to satisfy debt obligations