Valuation, Financial Analysis and Accounting (expired)

BUS437 Valuation, Financial Analysis and Accounting (expired)

  • Topics

    Topics

    -BUS 437 is an applied comprehensive course that integrates accounting standard-setting with financial analysis and company valuation. In particular, students are taught how to read financial statements and form opinions on companies¿ past, present and future performances. Our main objective is to enable participants to independently analyze accounting information when determining the value of a business entity. As such, BUS 437 is right on the edge between financial accounting and corporate finance/asset pricing.

     

    BUS 437 is particularly suitable for students who desire a good understanding of how to read and perform analyses on the basis of financial statement information. Having such skills is often critical even when students do not wish to pursue a career in financial accounting and auditing.

     

    Please note that the department of Accounting, Auditing and Law offers a number of individual courses that cover the areas of accounting standards (e.g. BUS 402), financial statement analysis (e.g. BUS 424) and company valuation (e.g. BUS 425/440). Students specializing in financial accounting might benefit more from following these courses. BUS 437 can be combined with BUS 402 (a `kjernekurs'), but not with more than one of BUS 424, BUS 425 and BUS 440.

    Details

    In 2005 publicly listed firms across Europe adopted International Financial Reporting Standards (IFRS), and today companies located in more than 100 countries use IFRS. Because having a solid knowledge of IFRS is key to working in today's global business world, these accounting standards form the backbone of BUS 437. The first half of the course we spend on learning how to use accounting information produced under IFRS. The emphasis is consistently on improving students' skills in identifying troublesome areas (often those where `earnings management' is frequent), and comprehending major areas of analysis (such as the use of `unusual items' or `intangible assets'). Gradually, we introduce the second part of the course: financial statement analysis. In this section we learn how to reclassify individual accounting items and make use of larger building blocks (such as `operating assets' and `financial assets').

     

    In the end of the course we study how knowledge of past performance can be used in forecasts of the future. Modeling the future can never be an exact science, and hence our emphasis is to offer structured analytical models where the analyzed information can be entered. When doing so, we use important financial concepts (such as the `cost of capital' and `discounting techniques').

     

    Our objective when teaching BUS 437 is to be as applied as possible. During the semester students are confronted with innumerous individual case analyses based on financial statements of various European companies. In addition, we employ an integrated case analysis of the Finnish company Nokia. The aim with the lectures is to help students comprehend and apply an analytical structure when performing the practical analyses.

     

  • Learning outcome

    Learning outcome

    Students that successfully participate in BUS 437 will:

    - obtain superior knowledge of the overall process to be used when determining a business entity's market value.

    - obtain a very good understanding of how to read financial statements and identify areas where more in-depth accounting analyses are necessary.

    - be able to extract the relevant accounting information and systematically make use of it in the analysis of business entities' financial performance and position.

    - perform forecasts of a business entity's future performance in a structured valuation model.

    - have a good understanding of how capital market information is used in the process of determining a business entity's value.

    - Understand differences and similarities between various models frequently used when determining a business entity's value.

    -Improve the ability to perform independent financial analyses and present the results of such analyses to others.

     

  • Teaching

    Teaching

    BUS 437 is taught using a variety of pedagogical approaches, including lectures and case presentations/discussions. Lectures aim at introducing the course participants to new areas and guide them through the most important aspects of the literature. The lectures contribute to all learning outcomes, except for the last one. During the series of lectures, students are given several non-obligatory assignments to work with.

     

    An integral part of BUS 437 is the analysis of a real-life case company. Students will work independently in small groups and apply what they learn at the lectures. In total, two integrated analyses have to be made and presented/discussed with others at formal seminars. These seminars contribute to all learning outcomes of BUS 437. Students have to sign up for the seminars in accordance to the instructions given at the first lecture!

    The course is taught over 15 weeks, using primarily lectures by the course administrator.

     

  • Required prerequisites

    Required prerequisites

    Basic knowledge of accounting (fundamental accounting principles and the main accounting rules for key assets like machinery/equipment, inventory, leasing etc) and of and asset pricing/investment theory (discounted cash flows, CAPM etc.) is needed.

    Course Combination Limit

     

    BUS437 can be combined with BUS402, but the course can not be taken after BUS425 or BUS440

     

     

  • Requirements for course approval

    Requirements for course approval

     

  • Assessment

    Assessment

     4 hour written exam counting 100% of grade.

     

  • Grading Scale

    Grading Scale

    Grading scale A-F.

  • Computer tools

    Computer tools

     

  • Semester

    Semester

    Autumn. Currently not offered.

  • Literature

    Literature

    Koller, T., M. Goedhart, and D. Wessels. 2010. "Valuation: Measuring and Managing the Value of Companies. McKinsey & Co. Fifth edition. Selected chapters only. Please note that we do not recommend earlier editions of the book.

    A compendium is sold through `Kompendiesalg'.

     

Overview

ECTS Credits
7.5
Teaching language
English.
Semester
Autumn

Course responsible

Mattias Hamberg, Department of Accounting, Auditing and Law.