Financial Statement Analysis

Prerequisites
Accounting or Financial Accounting (Master in Finance) or
Contabilità A & B, & Controlling (Bachelor)
Corporate Finance

Objectives
The course is of interest to those contemplating careers in investment banking (particularly in equity research), security analysis, consulting, public accounting, and corporate finance. It will also help with personal investment.

Description / Program

This course is about the analysis of financial information, particularly the financial statements of companies, for making decisions to invest in businesses. The primary focus is on equity (share) valuation. The methods of fundamental analysis will be examined in detail and applied in involving multinational listed companies.

Topics include models of shareholder value, a comparison of accrual accounting and discounted cash flow approaches to valuation, the analysis of profitability, growth and valuation generation in a firm, diagnosing accounting quality, forecasting earnings and cash flows, pro-forma analysis for strategy and planning, and the determination of price/earnings and market-to-book ratios.

Detailed programme

Introduction to Investing and Valuation

Introduction to the Financial Statements

How Financial Statements are used in Valuation

Cash Accounting, Accrual Accounting, and DCF Valuation

Accrual Accounting and Valuation: Pricing Book Values

Accrual Accounting and Valuation: Pricing Earnings

Valuation and Active Investing

Analysis of Equity Risk and Return

Learning Method / Style of Lessons
The course will be in the form of lectures, discussions and exercises.
Compliant with COVID-19 guidelines.

Exam Style
Written exam; homework assignment and class participation represents 30% of the final grade of the course.

Readings/Textbooks
S.H. Penman, Financial Statement Analysis & Security Valuation, McGraw- Hill, 2013. 5th edition.
S. Titman/ J.D. Martin, Valuation: The Art and Science of Corporate Investment Decisions, 2nd ed., 2010.