Financial Statement Analysis

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

Course description
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.
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.
The course will be in the form of lectures, discussions and exercises.

Detailed programme

1. Introduction to Investing and Valuation
2. Introduction to the Financial Statements
3. How Financial Statements are used in Valuation
4. Cash Accounting, Accrual Accounting, and DCF Valuation
5. Accrual Accounting and Valuation: Pricing Book Values
6. Accrual Accounting and Valuation: Pricing Earnings
7. Valuation and Active Investing

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.