Course Detail (Course Description By Faculty)

Hello!  I’m delighted to teach you Financial Statement Analysis & Valuation (= FSAV) because I believe that strong FSAV skills will help you better understand firms’ financial statements, disclosures, business strategies/decisions, and equity valuations.  FSAV is especially designed for students who are seeking an internship or full-time career in finance or consulting.  But I believe it’s also very helpful and invaluable to anyone planning a career in business!

Using applied business cases, in-class mini-lectures, and optional pre-recorded videos and academic & real-world readings, my goals in FSAV are to do all I can to help you learn FSAV skills.  We will:

[1]   Motivate/Overview FSAV + Review Accrual/Deferral Accounting + Analyze Managed Financial Statements.  Review the key elements of accrual/deferral accounting that make financial statements different from and on a net basis more informative and useful than pure cash accounting.  Motivate + overview FSAV.  Appreciate why, where, and how some managers may exploit the discretion in GAAP + IFRS to ‘manage’ their firm’s financial statements, especially earnings/net income/EPS.

[2]   Analyze Firm Financial Performance.  Learn how to analyze a firm’s financial performance in a multi-dimensional way by calculating + evaluating the SPP = size(s), source(s) and persistence(s) of conventional profitability, efficiency, liquidity, and leverage (PELL) ratios.  Learn to decompose return on equity using the basic and advanced approaches and know how to measure and analyze the SSP of both normal and abnormal profitability.

[3]   Analyze Revenues, Expenses & Assets.  Discern key connections between revenues, expenses, and assets in firms’ financial statements, business decisions, and past, present & future performance.

[4]   Analyze the Economics, Accounting & Valuation of Intangibles + M&A.  Gain insights into the unusual business characteristics, risks and returns of firms’ intangible assets and M&A activities.  Appreciate when, how and why financial statements capture vs. distort these big investments.

[5]   Analyze Credit Risk & Financial Distress.  Do FSAV wearing creditor shoes.  Quantitatively & qualitatively measure and analyze a firm’s credit riskiness and proximity to financial distress.

[6]   Sensibly Forecast Full Sets of Financial Statements.  Learn how to sensibly construct full sets of forecasted financial statements in order to arrive at economically well-founded quantitative answers to financing, investing or valuation questions.  Know how to avoid the errors and dubious judgments Wall Street analysts often make when they forecast financial statements.

[7]   Sensibly Value a Firm and Its Equity.  Learn how good FSAV can help you arrive at sensible DCF + multiples measures of enterprise and equity value.  Recognize and avoid the errors and dubious economic judgments that managers & Wall Street analysts make when they do DCF valuations.

To take BUSN 30130, you must have taken BUSN 30000 (Financial Accounting) or received a waiver from me.  I strongly recommend but do not mandate that you must have taken BUSN 35200 (Corporation Finance).  Also, while you don’t need to have taken BUSN 35000 (Investments), it can be helpful in FSAV.  You may not enroll in BUSN 30130 if you have previously taken BUSN 20150.

Restrictions

There is no textbook.  Cases, case questions, lecture PDFs, Excel files and templates, and always-optional supplementary + harder-core readings will be available on my 30130-01 Canvas website.  I use the Modules structure in Canvas, so the Modules will have everything you need.

My pedagogy consists of required in-class business cases + topic-based mini-lectures, and optional topic-based out-of-class videos.  All classes except the 1^st and 6^th are structured as follows:

• During the first 2 hours, we’ll discuss in depth the case that you must have fully prepared since our last class.I may also spring on you entirely out of the blue new a question or two about the case!
• We’ll take a 5-minute break halfway thru and at the end of our case discussion.
• During the last hour of class, I’ll present a PPT-based mini-lecture on the key aspects of the next FSAV topic.After my mini-lecture, I’ll post the PDFs of my mini-lecture onto Canvas for you.
• Optional materials – For some topics there on Canvas will be optional/supplementary readings and videos available for you to read/see/use.My videos are typically two or three Zoom recordings, each lasting one hour or so, in which I walk through in more detail the FSAV topic(s) at hand.

Grades

Restrictions