Strategic Financial Statement Analysis

BUS424E Strategic Financial Statement Analysis

Autumn 2020

  • Topics

    This course provides the key competences to understand and independently evaluate accounting numbers. Are the results good? Has the management done a good job and deserves a bonus? Is the company financially constrained? How should you as an investor read an account? You will be able to answer these questions by taking this course.

    Course outline:

    • Introduction to financial statements, accounting data and reporting incentives
    • IFRS standards, accounting choices and necessary adjustments for an insightful analysis
    • Re-grouping of financial accounts for analysis purposes
    • Analysis of profitability, growth and liquidity
    • Prospective analysis: forecasting and valuation
    • 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

    Lectures, group project, presentations and discussions of business cases and research articles

  • Credit reduction due to overlap

    BUS424E cannot be combined with BUS424N or the expired BUS424.

  • Requirements for course approval

    Group presentation

  • Assessment

    Individual written school 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.

Please note: Due to the present corona situation, please expect parts of this course description to be changed before the autumn semester starts. Particularly, but not exclusively, this relates to teaching methods, mandatory requirements and assessment.

Course responsible

 Simone Traini, RRR