Financial Statement Analysis

1.5 Credits · Level: Graduate

This is an introductory course in financial statement analysis. We discuss the analysis of fundamental risk in the context of credit decisions and the analysis of price risk in the context of equity investments and mergers and acquisitions. We always focus on the four integral components of financial statement analysis, namely managerial incentives and reporting objectives, business model and external environment, specific accounting policies and tools utilized, and the “price-to-value” assessment. Most of the skills to be acquired in the class will be taught through cases and hands-on analysis of company filings. After taking this course, you should be able to: - Summarize a firm’s accounting policies and identify the impact these policies have on revenues, earnings and cash flows from operations - Perform basic profitability and risk analysis in the context of decision making - Understand where the imperfections in financial statements come from and discover tools that detect the distortion in financial statements - Understand how forecasts of income statements and balance sheets relate to value and reverse engineer forecasts implicit in the market price In summary, you are able to distinguish a “good’ investment from a “good” company.