Financial Statement Analysis and Security Valuation

Description

The general purpose of this course for students is to learn how to analyse financial statements, more specifically to learn how to extract information about a firm's performance and creditworthiness from its annual accounts, and use this information for valuing the firm using the most prominently used valuation techniques in practice. Students should also demonstrate that they master the scientific thinking frameworks that are covered during this course via exercises and case studies, that are discussed at class meetings. The last lecture (lecture 12) is a guest lecture done by a professional analyst whose job is valuing firms in a private equity environment. This lecture is a part of the lecture materials/requirements for the final exam. After completing this course, the student should be able: * to understand the form and measurement in financial statements * to understand and being able to critically evaluate various valuation techniques * to understand how business activities (operations, investing, financing) are depicted through stocks and flows in the financial statements * to analyse financial statements, more specifically being able to reformulate the financial statements so that they offer a clear picture about the value drivers in a firm: profitability and growth. * to analyse and interpret in depth a firm's profitability position * to analyse and interpret in depth a firm's solvency and credit risk position * to analyse and interpret in depth a firm's liquidity position * to analyse and interpret footnotes on the main income statement items including revenues, cost of sales, R&D and SG&A. * to analyse and interpret footnotes on the main balance sheet items including PPE, intangibles, inventories, receivables and leasing. * to perform a detailed valuation analysis, convert forecasts into a valuation using cash flow based valuation models * to perform a detailed valuation analysis, convert forecasts into a valuation using operating income based (accounting) valuation models * to perform a detailed valuation analysis by means of multiples (relative valuation analysis).