| Unit name | Financial Statement Analysis and Valuation |
|---|---|
| Unit code | ECONM2027 |
| Credit points | 15 |
| Level of study | M/7 |
| Teaching block(s) |
Teaching Block 2 (weeks 13 - 24) |
| Unit director | Mr. Thomas |
| Open unit status | Not open |
| Pre-requisites |
ECONM1007 Finance and Accounting ECONM0001 Financial Reporting
|
| Co-requisites |
None |
| School/department | School of Accounting and Finance - Business School |
| Faculty | Faculty of Social Sciences and Law |
This unit provides frameworks that will help students to interpret information provided in financial statements and understand how businesses and value they generate are reflected and captured in the statements. The unit will cover fundamental analysis developed as a matter of appropriate financial statement analysis. In particular, it will focus on how different accounting information can be converted into valuation, what different accounting measures tell about firm value and how a proper analysis should be developed. Theoretical concepts and principles will be applied in a number of practical exercises. The skills and tools learnt will be those that a security analyst outside the firm may use to advise clients about investing in a firm and also those that a manager within the firm may use to evaluate investments and choose the strategy.
On successful completion of the course, students should be able to:
1) Integrate current theoretical findings to develop a comprehensive overview of the framework of fundamental analysis of companies
2) Develop a working awareness of different valuation theories and critically assess their applicability, advantages and disadvantages in different contexts
3) Apply the process of fundamental analysis to value a company, identifying relevant information from a company’s financial statements to use in the process
4) Identify and select appropriate sources of financial data and manipulate the data into forms that can be used in the forecasting and valuation processes
5) Present the results of analytical techniques studied coherently and concisely in an industry accepted standard format
20 hours of lectures, 5 hours of tutorials, 5 hours of exercise classes
Assessed group coursework (25% - 4000 words) testing learning outcomes 1,2,3,4 and 5. Students will work in groups of 4-5 students, and a mark is awarded collectively as a group. However, should students indicate that the contribution was uneven then the mark can be adjusted to reflect individual efforts.
There are six questions in this paper:
Answer ONE question from Section A and TWO questions from Section B.
Three questions in all.
The questions in Section A carry 50 marks each and the questions in Section B carry 25 marks each.
Required Reading
Thomas (2014) Financial Statement Analysis, University of Bristol, Cengage
This contains extracts of chapters from two of the textbooks below.
Recommend Reading
Wahlen, Baginski, Bradshaw (2011) Financial Reporting, Financial Statement Analysis & Valuation 7th ed
Palepu, K., P. Healy, V. Bernard and E. Peek (2013) Business Analysis and Valuation: IFRS Edition, Thomson Learning, 3rd Edition
Penman, S. (2013) Financial Statement Analysis and Security Valuation, McGraw-Hill/Irwin, 5th Edition
