Introductory description

N/A.

Module web page

Module aims

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.