Financial Statement Analysis
Code
2222
Academic unit
null
Department
null
Credits
3,5
Teacher in charge
Maria Leonor Romão Carreiro Fernandes Ferreira da Silva
Teaching language
English
Objectives
This course introduces Masters students to the financial statement analysis and aims at providing them with an understanding of possible uses of financial reporting by companies.The focus in on the ability to analyse financing and investing decisions of companies based on fundamentals, and use ratio analysis in decision making and valuation of a company.
The course emphasizes ethical issues, flexibility in financial reporting regarding accounting regulation and managers´ accounting choice, and their impact in the value of a company. The following topics are addressed throughout the term:
- Overview of financial statements analysis;
- Users and purpose of financial reporting and analysis;
- Ratio analysis: advantages, limitations, and data issues in analysing financial statements;
- Databases of financial information;
- Credit analysis: liquidity, capital structure and solvency;
- Risk analysis: operations versus financial risk;
- Profitability analysis: return on investment and return on equity;
- Prospective analysis: pro forma financial statements and cash budget.
Prerequisites
Subject matter
Bibliography
Teaching method
The course will be delivered through twelve lectures, following a theoretic‐practical approach. Students should discuss actual reporting practices based on several examples of financial reporting by companies, and focusing on abilities to read and use financial statements information in making economic decisions.
Financial statements of actual companies are used as illustration during the classes and in the assignments. It is essential that students prepare for the classes by doing the recommended exercises every week.
Evaluation method
Final grade in the course will be based on both individual and group work. The evaluation is based on the following:
-A. Final individual exam (40%)
The final exam is mandatory. When taking the individual exam, students must obtain a minimum grade of 9.5/20 to succeed. Students are not allowed to consult reading materials.
-B. Two Individual assignments (40%)These assignments consist of two sets of short exercises, problems, and responses to questions related to topics discussed during the classes.
-C. One Group assignment (20%)Students should form groups of up five people to prepare their group assignment, which is based on a case study. Students should present an executive summary in the form of a slide PowerPoint presentation along with their write‐ups.