Advanced Financial Statement Analysis for Undergraduates

The module provides a basic introduction to financial statement analysis techniques and the valuation of firms using financial statement data. An introduction to various valuation models is followed by an introduction to fundamental analysis techniques.

The module takes the view that investors may profit from the adoption of an active investment strategy based on fundamental analysis. The module will cover the following specific topics: the divident valuation model, cash flow valuation models, earnings valuations models; horizontal and vertical financial statement analysis of time series data; financial ratio calculation and interpretation including capital market data; cash flow statement analysis; forecasting methods; determinants of accounting information quality; equity risk and the cost of capital for financial statement analysis.

Learning Outcomes

By the end of the module the student should be able to:

  • Understand and apply basic equity valuation techniques
  • Understand and apply various financial statement analysis techniques
  • Understand and critically assess the relationships between forecasting, accounting quality and the valuation of the firm
  • Understand and critically assess the relationship between equity risk and the cost of capital in a financial statement analysis context.

Assessment

One 2hr unseen examination (75%); one 1,500 word equity research report (25%)