Course Detail (Course Description By Faculty)

Hello!  I’m delighted to teach you Financial Statement Analysis & Valuation (= FSAV) via my Graduate Level Guided Learning approach 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 cases, in-class mini-lectures, and optional pre-recorded videos and relevant 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.

Case questions, lecture PDFs, Excel templates/files + always-optional supplementary + harder-core readings + video recordings will be on the MODULES sections of my Canvas 30130-01/81 sites.

There are no midterm or final exams!  Instead, your FSAV course grade will be based on:

Weekly Cases (150 points out of 200 = 75%)

• You must do all the cases solo (viz., entirely on your own) or with one partner who you choose.  I recommend working with a partner, but solo works better for some and that’s completely fine.  Your partner must be in 30130, not any other section of FSAV.
• You’ll hand in 6 case write-ups during the quarter = Cases #2, #3, #4, #6, #7, #8.  Not #1, #5.
• Each handed-in case is worth 25 points.

Class Participation (50 points out of 200 = 25%)

• Your active + high quality engagement in our case discussions is an vital part of your learning.  So please come fully prepared to engage with your answers to every part of every case!
• If you haven’t prepared the case, or you’re not open to sharing your answers or you miss a class without my permission, your class participation will be very negatively affected.