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CM AS20 - Financial Statement Analysis* - CLOSED FOR FURTHER ENROLLMENT

Faculty
Christian V. Petersen, John Erik Stein-Peltz
Course Coordinator
Christian V. Petersen
Prerequisite/progression of the course
Bachelor-level accounting, including bookkeeping
Aim of the course
The purpose of ’Financial Statement Analysis for Decision Makers’ is to provide the students with the rigorous tools that are needed to carry out financial statement analysis from a decision oriented perspective.
Course content, structure and teaching
Accounting information is used by decision makers as input to a variety of decision models. The required accounting information depends on the specific task at hand (e.g. valuation) and the decision model applied (e.g., discounted cash flow model). For instance, analysts within corporate finance use financial statement analysis to determine the historical level of profitability in order to estimate future earnings.
The course contains the following core elements:
  • Introduction to the elements of the annual report.
  • Methods for measuring profitability (the ability to create value for shareholders), growth and operational and financial risks
  • Assessment of accounting quality (earnings quality)
  • Budgeting
  • Firm valuation
  • Accounting issues in compensation contracts and credit analysis
Learning Objectives
At the exam the students must be able to:
  • Describe how elements in the annual report are recognized, measured and classified.
  • Analyse a firm’s profitability, growth and risks based on the analytical profit and loss statement and balance sheet
  • Calculate and interpret financial ratios that describe a firm’s economic well being.
  • Assess accounting quality in a firm’s financial data.
  • Value firms based on a variety of valuation models.
  • Demonstrate the ability to assess the strengths and weaknesses of various economic decision models used for valuation, credit rating and incentive program purposes.
Type of examination, exam aids and assessment
4-hour written, open book exam.
Teaching methods
Research and theory based lectures are mixed with exercises and cases. Lectures provide the students with the necessary tools to make financial analyses. Through cases the students learn how to apply theory and use a variety of decision models in practice.
Student involvement is an integral part of the course. The course offers plenty of opportunities for students to participate actively through discussions and casework. They get plenty of opportunity to apply theory to practical issues (e.g., estimate firm value by applying different valuation models).
Course literature
  • Christian Petersen and Thomas Plenborg: “Financial Statement Analysis for decision makers” (draft).
  • Financial Reporting, Financial Statement Analysis, and Valuation. Sixth edition
  • Selected articles

Last updated by CBS International 25/06/2010