Financial Statement Analysis Fall 2007 Syllabus

Financial Statement - Cornell University The Johnson School Fall 2007 Financial Statement Analysis NBA 506 Course Syllabus Instructor Nir Yehuda

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Unformatted text preview: Cornell University The Johnson School Fall 2007 Financial Statement Analysis NBA 506 Course Syllabus Instructor: Nir Yehuda e-mail: [email protected] Office: 355 Sage Hall Phone: 255-9177 Web: httpzl/blackboard.cornelLedu Office Hrs: Monday 1-2:30 pm or by appt. Course Objectives The focus of this course is on using corporate financial statements to make business decisions. We use accounting information in a variety of decision contexts, including strategic ratio analysis, cash flow evaluations. preparation of pro—forma financial statements. security valuation, credit analysis, bankruptcy predictions, and debt ratings. Our primary goal is to develop the ability to take a set of financial statements and use the data to systematically analyze the company. The emphasis in NBA506 is on equity valuation. while the continuation - NBA509 - explores several other uses of accounting information: e.g. trading strategies. valuation using multiples with a strong concentration on reporting and valuation aspects of M&A deals. This course is intended primarily for students with little or no experience in securig valuation (for example, students who have worked in mergers and acquisitions may find material redundant). The course does presume an understanding of basic corporate finance theory and basic financial accounting. I expect this course to be useful for students planning for careers in investment banking, corporate management, venture capital. security analysis. credit analysis. consulting, or public accounting. Because this is only a 1.5 credit course. coverage is limited in depth and scope. Course Material 1. NBA 506 Course Packet, Fall 2007. 2. Palepu. Healy, and Bernard, 2003, “Business Analysis and Valuation”. Third Eda Thomson South-western — Customized version. All required material will be covered in class through the lecture notes. but the textbook. provides another description of the same material. The book and course packet will be on reserve in the library and all relevant readings will be listed in the course outline. Course Design The course format is a combination of examples and lectures. The examples involve applied analysis of specific situations, while the lectures locate these examples in a broader context by summarizing research findings or going over more technical aspects of the material. This course design is intended to provide you with opportunities for both hands-on learning, and an exposure to the broader spectrum of research results. The following grading scheme will be used to determine the final course grade: Class participation 16% Assignments (4*6%) 24% Comprehensive Project 20% Final Exam 40% Class Participation (16%): Class participation includes anything that helps make this class more effective for everyone involved. In case discussions. our collective goal will be to unravel the facts and explore a variety of reasonable approaches and solutions. Emphasis is not on the duration of your air-time. or on getting the right solution (typically, there is no "right" solution). Rather. I will be looking for summaries of facts. well—reasoned viewpoints, constructive questions,~ or other relevant insights that enrich the discussion, and other evidence that you are generally prepared for class. Class participation also includes items such as regular attendance, showing up on time. etc. See final page for list of items that will negatively affect class participation. Assignments (24% total): There are 5 assignments in bold italics in the class schedule. You have to submit 4 out of the 5. Assignments submitted by each student must be his or her own individual work. Another student's memo must not be copied (by hand or by computer) and submitted. Each assignment will be due before noon on the due date in room 304. It is not permissible to hand in assignments late. Comprehensive Project (20%): The objective of this assignment is to bring together the topics we cover in the seven weeks of this course. Guidelines for the project will be distributed in class. The project is due on October 21“. Exam (40%): The exam is intended to test your comprehension of basic concepts and tools of financial statement analysis. The exam will be open book, open notes. The best way to prepare for this exam is by attending class, doing weekly assignments, and keeping up with the assigned readings. The sample exam is almost entirely applied FSA. with some qualitative questions to test your understanding of the more subtle aspects of the material. Remember to bring a handheld calculator! Ix) Regrade Procedure As always. there is the possibility that you will believe a assignment/exam is graded incorrectly. The procedure for regrading assignments is as follows: Within one week of the assignment/exam being returned to your mailbox. you must submit a written request for a regrade along with the original assignment/exam. The written request should clearly indicate why you believe the assignment was graded incorrectly. However. all questions on the assignment are subject to regrading and. consequently. your grade might go up. go down. or remain unchanged (essentially it is an independent grading of the assignment. done by me). Regrade requests will not be returned until after the end of the course. so if you do submit an assignment for regrading. be sure to make a copy of the assignment for yourself. For simple math errors, you do not need to follow this procedure. just report the error to me and show me the assignment. Relation to Other Courses This course builds on issues covered in introductory accounting and interacts extensively with the material covered in intermediate financial accounting. Although intermediate accounting is not a prerequisite or co—requisite for this class. it is recommended that you take intermediate accounting. as it covers the extensive accounting adjustments to reported numbers in much greater depth. I also assume a basic understanding of corporate finance theory. This course overlaps with some finance offerings. particularly in its coverage of valuation and discounted cash flow analysis. However, even in the treatment of this common topic, less emphasis is placed in this course on cost of capital, and more attention is given to accounting—based valuation techniques. Academic Integrity Students are expected to follow the honor policy of the school. For this course. it means that di5cussions of cases are encouraged among you and any of your colleagues. but the write-up of the case should be solely the product of your group. In addition, it is in the nature of case» based courses to have some recycling of course material from year—to-year. Students should not in anv way rely on solutions to cases distributed in prior semesters or on the work of prior students. This prohibition extends to prior homework, cases or projects that are directly relevant to the assignment being completed. In addition, students should appropriately reference any materials they use in completing their assignments. If you have questions concerning this policy. please see me for a clarification before you use any questionable material. NBA506 - Fall 2007 Approximate Course Outline (subject to change) Part 1. Financial Statements # Analysis and Valuation m Strategy & profitability i PHB readings: Chap. 1&2, pg. 5-1 to 5-15 anal sis Sep 4 Profitability analysis (c0111.) wt Assignment #1 - Timberland C0. - Pro Itabili Analysis Sep 6 Cash flow analysis '4; PHB readings: pp. 5-15 to 5-29. 4:. Read “Preparing the Statement of Cash Sep 11 Cash flow analysis (cont.) Pro-forma financial statements & Forecasting models in courseaek . 4. Assignment #2 - Timberland C 0. - Cash Flow Analysis Sep 13 Proforma financial is Read "Pro F onna Financial Statements" (in statements & Forecasting coursepack). models cont. ‘4» PHB readins: Cha. 6 income valuation is Read “Measurin Wealth" in courseack) Sensitivity Analysis and $ Assignment #3 - Timberland C0. - checks Valuation Part II. Qualitv of Earnings and Earnings Management Sep 27 Quality of earnings and 4» PHB readings: Chap. 3&4. eamins manaement Oct 2 Quality of earnings and i Assignment #4 - Harnischfeger eamins mana ement Final exam review Accounting for Employee Stock Options and Valuation Consequences. No Class — Exam in the evenin Final Exam Thursday October ll'h, 6:00 pm - 8:00pm rooms to be announced Oct 4 i Assignment #5 (Optional you handed in assignments #1 -#4) - Previous Exam wk Prepare for exam. ~$ Read Soffer and Soffer, Chap 14 (in coursepack) Appendix: Classroom Code of Conduct (adopted from Core Course Classroom rules): 1. Ex) Class attendance: Regular late attendance will affect class participation. which counts for your grade. Cell phones must be tumed off. Regular interruptions will affect class participation grade. Laptops may not be open during class. It is in your best interest to use your name card every day. Sign up for a name card if you do not already have one. No food of any kind in class. All regrade requests will be submitted in writing before they can be discussed with the faculty (see syllabus for specific instructions). The honor code will be mentioned in materials and enforced. Financial Statement AnaLysis — NBA 506 Name E-mail/Net ID ‘— School Cl Johnson C] First Year E] Second Year D AMBA Cl Non-Johnson D Eng El Hotel El Arts El ALS Cl ILR D HumEc CI Other What other accounting/finance courses have you taken? When and where did you take them? H m R How did you hear about the course? m H E a a What area are you interested in working in? (investment banking, corporate managemenL venture capital. security analysis, credit analysis. consulting, public accounting etc.) a H— a ...
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This note was uploaded on 04/07/2008 for the course NBA 5060 taught by Professor Yehuda,nir during the Spring '08 term at Cornell University (Engineering School).

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Financial Statement - Cornell University The Johnson School Fall 2007 Financial Statement Analysis NBA 506 Course Syllabus Instructor Nir Yehuda

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