ACC420E Strategic Financial Statement Analysis

• Topics

  Course description:

  This course provides the key competencies to understand and independently evaluate financial statement information. Are the results satisfying? Has the management performed well and deserves a bonus? Is the company financially constrained? How should an investor read corporate accounts? ACC420E will enable students to answer these questions.

  Content:

  • Introduction to financial statements, accounting information, and reporting incentives
  • IFRS standards, accounting flexibility, and necessary adjustments for an insightful analysis
  • Reformulation of financial statements for analysis purposes
  • Analysis of profitability, growth, and liquidity
  • Prospective analysis: forecasting future earnings and cash flow
  • Credit analysis and assessment of distress probability
  • Assessment of management performance and preparation of incentive schemes

• Learning outcome

  Knowledge - The student will, upon completion:

  • Acquire substantial knowledge of profitability, growth, and liquidity analyses using financial statements, accounting information, and key performance indicators
  • Be able to identify the most suitable analysis from the perspectives of external capital providers and those who internally decide and monitor investment and financing policies
  • Understand and independently evaluate managers’ accounting flexibility and financial reporting quality, including their effect on key figures and financial analysis
  • Learn how to improve the quality of accounting information for analysis purposes

  Skills - The student will, upon completion:

  • Be able to apply concepts and principles to conduct relevant analyses of profitability, growth, and liquidity using financial statements and accounting information
  • Learn how to perform these analyses from the perspectives of different users: an investor, a creditor/bank, and those who internally appraise management performance
  • Be able to identify critical areas for flexibility, assess the quality of corporate accounts, and make the necessary adjustments so that accounting information is better suited for analysis
  • Understand and independently evaluate the consequences of accounting flexibility for key performance indicators and financial statement analysis

  General competencies - The student will, upon completion:

  • Learn how to communicate key results and areas for improvement both in writing and orally
  • Understand the main academic theories and empirical findings related to financial reporting, analysts' forecasts, and distress prediction

• Teaching

  Lecture are accompanied by weekly seminars. Seminars typically take the form of a discussion of a specific problem set, business case or research article. Preparation for seminars is an essential part of the workload for this course. Students are expected to actively participate to the discussions in the classroom

• Credit reduction due to overlap

  ACC420E is a continuation of BUS424E

  ACC420E can not be combined with ACC420N, BUS424E, BUS424N, and BUS424

• Compulsory Activity

  Group presentation

  Retake: Previously valid compulsory activities (work requirements) is valid also when requirements compulsory activities (work requirements) has been changed. Compulsory activities (work requirements) is valid for all variants of BUS424, independent of suffixes (-E, -A, -N, or similar)

• Assessment

  4 hour digital individual school exam

  The exam must be answered in English

• Grading Scale

  A - F

• Literature

  Main textbook:

  • Palepu, Healy, and Peek. 2022. Business Analysis and Valuation: IFRS Edition, Cengage, Sixth Edition. [ISBN: 9781473779075]

  Supplementary reading  (eBook available via Leganto/Library):

  • Lev, and Gu. 2016. The End of Accounting and the Path Forward for Investors and Managers, Wiley Finance Series [ISBN: 9781119191087]

• Permitted Support Material

  Scientific calculator

  Digital school exam: lock-mode