The course introduces students to financial statement analysis with the objective of valuing equity securities. Equity value is determined by the amount and timing of the firm's future cash flows to equityholders. In the course, financial statements will be used to understand the firm's past performance and to forecast the firm's future cash flows in a structured way. The course involves students actively engaging in the analysis and valuation of real firms in order to prepare an investment decision. It adopts a user perspective to the financial statements: Using financial accounting information as a basis for understanding a firm's past business activities and forecasting its future business activities. The course will be covering traditional financial ratio analysis as well as basic forecasting and equity valuation techniques, including discounted cash flow and residual income analysis.
Lectures, in-class group activities, group project and final exam.
Accounting theory, capital markets theory, investment theory, valuation
Lundholm/Sloan, Equity Valuation and Analysis (with eVal), 3rd edition, Boston et al.: McGraw-Hill/Irwin 2010.