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Module Catalogue

IB396-12 Financial Statement Analysis and Security Valuation

Department
Warwick Business School
Level
Undergraduate Level 3
Module leader
Shahed Imam
Credit value
12
Module duration
8 weeks
Assessment
20% coursework, 80% exam
Study location
University of Warwick main campus, Coventry

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Introductory description

N/A.

Module web page

Module aims

The main objective of the module is to provide students with the tools to analyse firm financial performance from an equity valuation perspective and to carry out a business valuation building on this analysis. A further objective is to encourage students to use the valuation-based framework to analyse the ‘quality’ of accounting information and to explore empirical studies concerned with testing the value-relevance of financial statement information.

Outline syllabus

This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.

  1. Accounting and cash flow valuation model.
  2. Financial analysts’ use of financial statements: practice and evidence.
  3. Reformulation of financial statements and value-based ratio analysis.
  4. Implementation of accounting valuation models.
  5. Accounting quality and the value relevance of accounting information.

Learning outcomes

By the end of the module, students should be able to:

  • Understand and apply business valuation models that use accounting numbers.
  • Gain an understanding of the importance of ratio analysis to investors and analysts and learn how to apply a value based approach to ratio analysis.
  • Develop the ability to prepare a thorough valuation analysis including sensitivity analysis on the key assumptions.
  • Understand the factors determining quality of accounting information from an investor perspective and gain a basic understanding of empirical research on value relevance.
  • Develop ability to apply and integrate concepts from accounting and finance to the analysis of business plans and company valuation.

Indicative reading list

Penman, S, Financial Statement Analysis and Security Valuation, McGraw Hill, 3rd edition, 2007.
Selected articles from Blackwell Encyclopedia of Management, 2nd edition, 2005, Cary L Cooper and Chris Argyris (eds.), Accounting Volume, Colin Clubb (ed.).
Selected journal articles from Accounting Horizons, Review of Accounting Studies, Journal of Accounting Research.

Subject specific skills

Develop an understanding of how financial statements analysis can be linked to fundamental analysis.

Transferable skills

Demonstrate oral and written communication skills in relation to the analysis of company financial statement information from a valuation perspective.
Develop and apply modelling and spreadsheet skills to the solution of performance analysis and valuation problems.

Study time

Type Required
Lectures 8 sessions of 2 hours (13%)
Seminars 8 sessions of 1 hour (7%)
Private study 38 hours (32%)
Assessment 58 hours (48%)
Total 120 hours

Private study description

Private Study.

Costs

No further costs have been identified for this module.

You do not need to pass all assessment components to pass the module.

Assessment group D2
Weighting Study time Eligible for self-certification
Assessment component
Individual Assignment (12 CATS) 20% 12 hours Yes (extension)
Reassessment component is the same
Assessment component
Online Examination 80% 46 hours No

Exam

~Platforms - AEP
Reassessment component is the same
Feedback on assessment

Feedback via my.wbs.

Past exam papers for IB396

Pre-requisites

To take this module, you must have passed:

  • All of
    • IB124-12 Introduction to Financial Accounting
    • IB114-12 Financial Management

    • Courses

    This module is Core optional for:

    • Year 3 of UESA-HN12 BEng Engineering Business Management
    • Year 3 of UESA-HN11 BSc Engineering and Business Studies
    • UIBA-N201 BSc in Management
      • Year 3 of N201 Management
      • Year 3 of N20B Management
      • Year 3 of N230 Management with Finance
      • Year 3 of N232 Management with Finance
      • Year 3 of N250 Management with Marketing
      • Year 4 of N201 Management
      • Year 4 of N20B Management
      • Year 4 of N230 Management with Finance
      • Year 4 of N232 Management with Finance
      • Year 4 of N250 Management with Marketing
    • UIBA-NN35 Undergraduate Accounting and Finance
      • Year 3 of NN35 Accounting and Finance
      • Year 4 of NN35 Accounting and Finance
    • UIBA-NN36 Undergraduate Accounting and Finance (with Intercalated Year/Undergraduate Partnership Programme)
      • Year 3 of NN36 Accounting and Finance (Intercalated)
      • Year 3 of NN37 Accounting and Finance (Undergraduate Partnership Programme)
      • Year 4 of NN36 Accounting and Finance (Intercalated)
      • Year 4 of NN37 Accounting and Finance (Undergraduate Partnership Programme)
    • UCHA-F1N1 Undergraduate Chemistry with Management
      • Year 3 of F1N1 Chemistry with Management
      • Year 3 of F1N1 Chemistry with Management
    • UCSA-GN51 Undergraduate Computer and Business Studies
      • Year 3 of GN51 Computer and Business Studies
      • Year 3 of GN51 Computer and Business Studies
    • Year 3 of UCSA-G5N1 Undergraduate Computer and Management Sciences
    • Year 4 of UIBA-N140 Undergraduate International Business
    • UIBA-MN31 Undergraduate Law and Business Studies
      • Year 3 of MN31 Law and Business Studies (Three-Year)
      • Year 4 of MN31 Law and Business Studies (Three-Year)
    • UIBA-MN32 Undergraduate Law and Business Studies
      • Year 3 of MN32 Law and Business Studies (Four-Year)
      • Year 4 of MN32 Law and Business Studies (Four-Year)
    • Year 3 of USTA-Y604 Undergraduate Master of Mathematics,Operational Research,Statistics and Economics
    • Year 3 of USTA-Y605 Undergraduate Master of Mathematics,Operational Research,Statistics and Economics (with Intercalated
    • UMAA-G100 Undergraduate Mathematics (BSc)
      • Year 3 of G100 Mathematics
      • Year 3 of G100 Mathematics
      • Year 3 of G100 Mathematics
    • Year 3 of UMAA-G1NC Undergraduate Mathematics and Business Studies
    • Year 3 of UMAA-G1N2 Undergraduate Mathematics and Business Studies (with Intercalated Year)
    • USTA-Y602 Undergraduate Mathematics,Operational Research,Statistics and Economics
      • Year 3 of Y602 Mathematics,Operational Research,Stats,Economics
      • Year 3 of Y602 Mathematics,Operational Research,Stats,Economics
    • Year 3 of USTA-Y603 Undergraduate Mathematics,Operational Research,Statistics,Economics (with Intercalated Year)
    • Year 3 of UPXA-F3N1 Undergraduate Physics and Business Studies
    • Year 3 of UPXA-F3ND Undergraduate Physics and Business Studies (with Intercalated Year)

    This module is Optional for:

    • Year 1 of UIOA-VEU Undergraduate EU Visiting
    • UIOA-VOS Undergraduate Overseas Visiting
      • Year 1 of UVOS Undergraduate Overseas Visiting
      • Year 1 of UVOS Undergraduate Overseas Visiting