BUS424E Strategic Financial Statement Analysis
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.
- 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
Knowledge - The student will upon completion:
- Acquire substantial knowledge of profitability, growth and liquidity analyses using financial statements, accounting data 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 choices and accounting quality; including their effect on key figures and financial statement 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 appraise management performance
- Be able to identify important areas for flexibility, assess the quality of corporate accounts and make the necessary adjustments so that accounting data is better suited for analysis
- Understand and independently evaluate the consequences of accounting flexibility for key performance indicators and financial statement analysis
General competences - 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 forecast and distress prediction
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 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
Retake: Previously awarded course approval is valid also when requirements for course approval has been changed. Course approval is valid for all variants of BUS424, independent of suffixes (-E, -A, -N, or similar).
Individual digital home-exam (4 hours)
Book companion site, some applications in Excel and Stata
- Palepu, Healy, and Peek, 2019. Business Analysis and Valuation: IFRS Standards Edition, Cengage, Fifth edition. [ISBN: 978-1-4737-5842-1]
- Business cases, research articles, news and other study material are given by the lecturer
- ECTS Credits
- Teaching language
Autumn. Offered Autumn 2021.
Simone Traini, RRR