Content, progress and pedagogy of the module

The module provides the students with the knowledge to read, interpret and analyse financial statements in order to make informed business decisions regarding investment, credit, or resource allocation. Such skills are required for equity and credit analysts, executives, bankers, auditors, consultants and other users of financial information.

Financial statement analysis represents a crucial part of fundamental analysis (FA), which aims at defining the intrinsic value of a company. The company´s value is the basis for determining the target price of a company’s stock, i.e. an estimate of a stock's future price based upon earnings forecast and assumed valuation multiples. Financial statements translate economic factors like assets, sales, margins, cash flows, and earnings into accounting numbers. This module focuses on how cash flows are generated, by considering management and strategic aspects of the business, and the risk related to the business from a financial and operational perspectives. The first half of the course develops an accounting-based valuation framework that integrates a firm's strategy, business model and intellectual capital, with its overall performance. The second part specifically concentrates on the analysis of economic and financial performance, with a focus on profitability, liquidity and solvency.

Learning objectives

Knowledge

The objective is that the student after the module possesses the necessary knowledge on:

• the comprehensive evaluation of a company, by integrating firm's strategy, business model and intellectual capital, with its overall performance.
• how to interpret and use accounting information (both financial and non-financial information) in order to define the bases for forecasts.
• how to develop evaluations according to different stakeholders’ perspectives (e.g. investors, banks, employees, shareholders and consultants).

Skills

The objective is that the student after the module possesses the necessary skills in:

• evaluating and critically interpreting non-financial disclosures of published financial statements.
• calculating and commenting economic and financial margins and ratios deriving from data contained in financial statements.
• conducting comprehensive analysis and reaching data-driven conclusions with respect to a firm's financial health and market position.

Competences

The objective is that the student after the module possesses the necessary competences in:

• using financial statements to develop an understanding of company’s performance and to establish the basis for making reasonable valuation estimates.
• helping users of financial statements broadly understand a business and provide a context to financial numbers.
• improving critical thinking and problem-based approach within accounting and auditing fields.

Type of instruction

For information see § 17.

Exam

Exams