Universidade Nova de Lisboa

Universidade Nova de Lisboa

Nova School of Business and Economics

Financial Statement Analysis

Code

2222

Academic unit

null

Department

null

Credits

3,5

Teacher in charge

Francisco Martins/Xanthi Gkougkousi

Teaching language

English

Objectives

With a stock market bubble and a financial crisis in our recent history, there have been increasing calls to "return to fundamentals." This is a course on fundamental analysis. The primary emphasis is on equity valuation, with a focus on developing and applying methods for valuing firms using financial statements.

Prerequisites

N/A

Subject matter

The course has a practical focus. The methods of fundamental analysis will be examined in detail and applied in cases and projects involving listed companies. Topics include models of shareholder value, a comparison of accrual accounting and discounted cash flow approaches to valuation, the analysis of profitability, growth, and value generation in a firm, diagnosing accounting quality, forecasting earnings and cash flows, pro-forma analysis for strategy and planning, and the determination of price-to-earnings (P/E) and market-to-book (P/B) ratios.

Bibliography

The textbook used is: "Financial Statement Analysis and Security Valuation," by Penman S. H., 5th edition, 2013, McGraw-Hill.

The course requires some knowledge of financial accounting and finance. You might have to review an introductory corporate finance and/or accounting textbook during the course. The accounting clinics on the textbook´s website provide a good overview of important accounting concepts.
RESOURCES

Other textbooks on financial statement analysis and valuation are:

  • "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)

  • "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.

    • Relevant materials, such as PowerPoint slides and useful spreadsheets, will be posted on Moodle during the course.

    Teaching method

    Class attendance is optional but strongly recommended. You are expected to participate actively, both during class time and in its preparation.

    Through a teaching approach that mixes lectures, including guest lectures, class discussions, and assignments, you will be challenged to develop critical skills and build the knowledge required to conduct business valuation. Prompt arrival at class is expected.

    Evaluation method

    Final grade will comprise the following elements:

  • Final Exam: 50%

  • Individual Assignments: 20%

  • Group Assignment: 30%

    • Courses