Strategic Financial Statement Analysis

BUS424E Strategic Financial Statement Analysis

Autumn 2020

  • Topics

    This course provides the key competences to understand and independently evaluate financial statement information and accounting data. 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? BUS 424 E will enable students to answer these questions.

    Lecture plan:

    • Introduction to financial statements, accounting data and reporting incentives
    • IFRS standards, accounting choices and necessary adjustments for an insightful analysis
    • Reformulation of financial accounts for analysis purposes
    • Analysis of profitability, growth and liquidity
    • Prospective analysis: forecasting future earnings and cash flows
    • 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 in-depth knowledge of profitability, growth and liquidity analyses using financial statements, accounting data and key performance indicators
    • Learn what accounting analyses are needed to assess the performance of a company from the perspective of external capital providers and those who internally monitor and decide what financial policies the company should pursue
    • Understand and independently evaluate managers’ accounting choices and accounting quality; including their effect on key figures and financial analysis
    • Learn how to improve the quality of accounting data 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 data
    • Learn how to perform these analyses from the perspectives of different users: an investor, a creditor / bank and those who internally monitor and assess management's performance
    • Be able to identify the important areas for flexibility in the financial statements, assess the quality of the accounts and make the necessary adjustments so that accounting quality is improved and is better suited for analysis purposes
    • Understand and independently evaluate the consequences of accounting flexibility for key performance indicators and financial analysis

    General competences - The student will upon completion:

    • Learn how to communicate key subject matters such as theories, problems and solutions both in writing and orally
    • Be able to develop insightful analyses and ask critical questions about profitability, growth and liquidity when reading financial accounts from the perspectives of different users

  • Teaching

    The lecture plan is accompanied by weekly seminars. Seminars typically take the form of a discussion of a specific problem set, business case or research article. Lectures and seminars can be attended physically or virtually through live streaming. Recordings of all lectures and seminars will be made available

  • Credit reduction due to overlap

    BUS424E cannot be combined with BUS424N or the expired BUS424.

  • Requirements for course approval

    Group presentation held either physically in the classroom or virtually through live streaming

  • Assessment

    Individual digital home-exam (4 hours)

  • Grading Scale

    A-F

  • Computer tools

    Book companion site, some applications in Excel and Stata

  • Literature

    Main textbook:

    • Palepu, Healy, and Peek, 2019. Business Analysis and Valuation: IFRS Standards Edition, Cengage, Fifth edition. [ISBN: 978-1-4737-5842-1]

    Supplemental readings:

    • Business cases, research articles, news and other study material are given by the lecturer

Overview

ECTS Credits
7.5
Teaching language
 English
Semester

Autumn. Offered autumn 2020

Note: This course description was formerly published with a disclaimer regarding potential changes to teaching methods, mandatory requirements and assessment. The course description has now been updated, and this is the final version.

Course responsible

 Simone Traini, RRR