Financial Statement Analysis
Objectives
The course has the following objectives for
students:
• Getting familiar with companies’ financial
statements, including understanding the main statements, how they are connected
and the meaning of their main captions;
• Using the information on the financial
statements for decision-making, both from a managerial point of view and from
an investment point of view, with focus given to understanding value creation
based on information from the financial statements;
• Producing a valuation about the company using
the information based on the financial statements (and other relevant sources)
while applying fundamental analysis techniques.
General characterization
Code
14508
Credits
2
Responsible teacher
Francisco Martins
Hours
Weekly - Available soon
Total - Available soon
Teaching language
Portuguese | English
Prerequisites
Available soon
Bibliography
There
is no mandatory bibliography in the course. Optional bibliography includes:
•
"Valuation: Measuring and Managing the Value of Companies," Koller,
T., Goedhart, M., and Wessels, D., 5th Edition, 2010, McKinsey & Company
Inc. (good introduction to valuation)
•
“Financial Statement Analysis and Security Valuation,” by Penman S. H., 5th
edition, 2013, McGraw-Hill.
•
"Business Analysis and Valuation: IFRS Edition," by Palepu K., Healy
P., and Peek E., 3rd Edition, 2013, South-Western.
•
"Financial Reporting, Financial Statement Analysis, and Valuation: A
Strategic Perspective," by Wahlen, J., Baginski, S., and Bradshaw, M., 8th
Edition, 2014, Southwestern Publishing.
•
"The Analysis and Use of Financial Statements," by White G., Sondhi
A., and Fried D., 3rd Edition, 2004, Wiley.
Teaching method
Minimal class attendance is mandatory. Through a teaching approach that
mixes lectures, class discussions, and assignments, students are challenged to
develop critical skills and build the knowledge required to analyze a company.
Evaluation method
The assessment of this curricular unit is done together with the block
of curricular units of the same area of knowledge. This assessment has 3
moments, which together define the final grade of the curricular unit:
•
Individual exam with a weighting of 50% of the total mark
•
Group work with a weighting of 35% of the total grade value
•
Individual reflection-action exercise carried out at the end of the curricular
unit, with a weighting of 15% of the total grade value. The set of individual
action-reflection exercises is a journaling activity, which will constitute, at
the end, a learning portfolio capable of synthesising the contributions of the
Executive Master for that student.
Subject matter
The course has a
practical content and deals with a variety of topics pertaining to the analysis
of financial statements and companies as a whole. These include: an overview of
the financial statements themselves and how to read them; value creation
metrics (return on invested capital and growth) as well as impacts of
understanding value creation; discounted cash flow methodology with focus on
reformulating the financial statements to better understand the company; and
ratio analysis, both with the purpose of analyzing the current situation of the
company with regards to decision making and to produce forecasts for a
company’s valuation.