IB9R7-10 Financial Analysis
Introductory description
The module aims to provide students with the tools to analyse financial performance of publicly listed firms from an equity valuation perspective and also to carry out a business valuation building on this analysis.
Module aims
On completion of the module, students will have acquired knowledge of the main methods of financial analysis, and their application to a broad range of organisational situations both nationally and internationally. They will also be aware of the main thrusts of ongoing research in the financial analysis field and the relevance of these findings to management in practice. Students will have added to their financial skills and enhanced their effectiveness in dealing with financial data.
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.
Introduction: the main financial statements and their use in financial analysis.
Reformulation of financial statements.
Ratio analysis and forecasting financial performance.
Cash flow and accounting valuation models.
Valuation in practice: What do financial analysts do?
Financial statement analysis, valuing firms with intangibles, and earnings management.
Issues and developments in financial reporting and statement analysis: corporate governance and management communication, financial statement quality and the cost of capital.
Case study: Tesco, Face Book, Apple, Microsoft, Tesla, Dell, Coca Cola, Toshiba, Morrisons.
Learning outcomes
By the end of the module, students should be able to:
- Demonstrate a thorough knowledge of the theoretical and practical issues regarding business valuation using financial statements data.
- Demonstrate an understanding of how accounting data plays an important role in understanding performance of companies
- Demonstrate an understanding of the usefulness and limitations of accounting information in valuing different types of companies
- Demonstrate critical thinking in the area of financial analysis
Indicative reading list
Palepu, K.G.; Healy, P.M.; Bernard, V.L. and Peek, E. (2020) Business Analysis and Valuation: IFRS edition - Text and Cases, 5th edition, London: Thompson Learning
Further readings:
Cascino, S., Clatworthy, M., Osma, B., Gassen, J., Imam, S. and Jeanjean, T. (2016) 'Professional Investors and the Decision Usefulness of Financial Reporting' ICAS/EFRAG report
Cornell, B. and Landsman, W.R. 2003. 'Accounting valuation: is earnings quality an issue?', Financial Analysts Journal, 59 (6): 20-28
Dichev, I.; Graham, J.: Harvey, C. R. and Rajgopal, S. (2013), 'The Misrepresentation of Earnings', Financial Analysts Journal, 72, 1, pp. 22-35
Groysberg,B. Healy, P. and Chapman, C. 2008. Buy-Side vs. Sell-Side analysts' earnings forecasts, Financial Analysts Journal, 64 (4), 25-39
Imam, S., Barker, R, Clubb, C. 2008. 'The use of valuation models by UK investment analysts', European Accounting Review, 17 (3), 503-535.
Imam, S and Spence, C. (2016). Context, not predictions: A field study of financial analysts, Accounting, Auditing and Accountability Journal, 29 (2), p. 226-247
Penman, S. 2006. 'Handling Valuation Models', Journal of Applied Corporate Finance, 18 (2), 48-55
Penman, S. 2005. Financial ratios and equity valuation, in Blackwell Encyclopedia of Management, 2nd edition, 2005, Cary L Cooper (ed.), Accounting Volume, Colin Clubb (ed.). 188-194
Penman, S. 2003. 'The quality of financial statements: perspectives from the recent stock market bubble', Accounting Horizons, Supplement: 77-96
Penman, S. 2016, 'Valuation: The State of the Art', Schmalenbach Business Review 17, 1, pp. 3-23
Spence, C., Aleksanyan, M., Millo, Y., Imam, S., and Abhayawansa, S. (2019). Earning the ‘write to speak’: sell-side analysts and their struggle to be heard. Contemporary Accounting Research.
Subject specific skills
Analyse important accounting ratios useful for predicting future performance
Demonstrate an understanding financial data and apply that in valuation models to understand whether companies are over/under valued.
Understand forecasts based on ratio analysis for valuing the shares of a company
Transferable skills
Apply theoretical knowledge to real world applications
Written communication
Study time
| Type | Required |
|---|---|
| Lectures | 27 sessions of 1 hour (27%) |
| Private study | 29 hours (29%) |
| Assessment | 44 hours (44%) |
| Total | 100 hours |
Private study description
Private Study and preparation for lectures
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 A2
| Weighting | Study time | Eligible for self-certification | |
|---|---|---|---|
Assessment component |
|||
| Individual Assignment | 100% | 44 hours | Yes (extension) |
Reassessment component is the same |
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Feedback on assessment
Feedback via my.wbs.
Pre-requisites
To take this module, you must have passed:
Courses
This module is Optional for:
-
TIBS-N1Q1 Postgraduate Business Administration (Executive) London
- Year 1 of N1Q1 Business Administration (Executive) London
- Year 3 of N1Q1 Business Administration (Executive) London
- Year 1 of TIBS-N1Q4 Postgraduate Business Administration (Executive) London
- Year 1 of TIBS-N1PW Postgraduate Taught Business Administration (Distance Learning)
-
TIBS-N1Q2 Postgraduate Taught Business Administration (Distance Learning)
- Year 1 of N1Q2 Business Administration (Distance Learning)
- Year 2 of N1Q2 Business Administration (Distance Learning)
- Year 1 of TIBS-N1P9 Postgraduate Taught Business Administration (Executive)
- Year 1 of TIBS-N1Q3 Postgraduate Taught Business Administration (Executive)
This module is Option list B for:
- Year 1 of TIBS-N1P2 Postgraduate Taught Business Administration