2020/2021
KAN-CCMVV1931U Financial Statement Analysis
| English Title |
| Financial Statement
Analysis |
|
|
| Language |
English |
| Course ECTS |
7.5 ECTS |
| Type |
Elective |
| Level |
Full Degree Master |
| Duration |
One Semester |
| Start time of the course |
Autumn |
| Timetable |
Course schedule will be posted at
calendar.cbs.dk |
| Max. participants |
80 |
| Study board |
Study Board for MSc in Economics and Business
Administration
|
| Course
coordinator |
- Yanlei Zhang - Department of Accounting
(AA)
|
| Main academic
disciplines |
|
|
| Teaching
methods |
|
|
|
Last updated on
10-06-2020
|
| Learning objectives |
The aim of the course is to enable the students
to analyse a firm’s profitability, growth and risks, calculate and
interpret financial ratios that describe a firm’s economic well
being and demonstrate the ability to value firms using different
valuation techniques. The students should also be able to perform a
credit analysis and assess accounting-based bonus. Finally the
student should be able to understand that it is possible that the
quality of accounting information may limit the quality of the
analyses and decision making tools. Upon completion of the course
the student should therefore be able to:
- read and understand a financial statement (annual report)
- conduct a profitability analysis using financial ratios
- conduct a growth analysis using financial ratios
- conduct a liquidity risk analysis using financial ratios
- prepare pro forma (budgetted) statements (income statement,
balance sheet and cash flow statement) which articulate
- estimate firm values
- perform a credit analysis
- assess accounting-based bonus plans
- understand the concept of accounting
quality
|
| Course prerequisites |
This elective is a part of the minor in
Accounting and Finance.
Students have to sign up for the whole minor. In order to sign up
for the minor, students must have prerequisite skills in Accounting
and Finance. A minimum of 7.5 ECTS in Accounting and a minimum of
7.5 ECTS in Corporate Finance - both at bachelor level – is
required.
The minor is closed for students studying Cand.Merc. in one of the
following concentrations: ASC, FSM, FIN, AEF, IMM and FIR.
Note that it is not possible to write a termpaper in this
elective. |
| Examination |
|
Financial
Statement Analysis:
|
| Exam
ECTS |
7,5 |
| Examination form |
Home assignment - written product |
| Individual or group exam |
Individual exam |
| Size of written product |
Please see text below |
|
No maximum number of pages, students have 4 hours
to complete the assignment. |
| Assignment type |
Written assignment |
| Duration |
Written product to be submitted on specified date
and time. |
| Grading scale |
7-point grading scale |
| Examiner(s) |
One internal examiner |
| Exam period |
Winter |
| Make-up exam/re-exam |
Same examination form as the ordinary
exam
|
|
| Course content, structure and pedagogical
approach |
|
The first part of the course focuses on refreshing the students’
knowledge of basic financial accounting and components of the
financial statements including the income statement, balance sheet,
statement of changes in owners’ equity and cash flow statement. The
first part also addresses the conceptual differences between
accrual and cash flow based accounting. After completing the first
part the student should be able to read and understand the
financial statements in the annual report of a company.
The second part of the course focuses on ways to measure
profitability. Key financial ratios like return on invested capital
(ROIC) and Economic Value Added (EVA) are defined and analysed.
After completing the second part the student should be able to
conduct a ratio analysis measuring the profitability of a firm.
Further, the student should be able to compare similar firms’
profitability.
The third part of the course focuses on different ways to measure
growth and particularly on the fact that growth in any parameter is
not necessarily beneficial. After completing the third part the
student should be able to analyse growth and understand which kind
of growth is beneficial for company value.
The fourth part of the course concerns credit analysis. Different
techniques including ratio analysis and forecasting are introduced
with the purpose of assessing a firm’s credit worthiness and the
risk of default. The advantages of each approach are highlighted.
For example, ratio analysis is simple to apply and typically less
costly than other approaches available for credit analysis. After
completing the fourth part the student should be able to conduct a
simple credit analysis using financial ratios.
The fifth part of the course focuses on forecasting. Forecasting is
essential as it serves as the foundation for many business
decisions including whether to give or extend loans to firms or
estimating the value of a corporation. Two issues are addressed.
The first issue is how to technically develop pro forma statements;
i.e. to ensure that the forecasted income statement, balance sheet
and cash flow statement articulate. The second issue concerns how
to add realism in the projected earnings and cash flow measures.
After completing the fifth part of the course the student should be
able to develop pro forma statements which articulate and are based
on achievable (realistic) assumptions.
The final part of the course focuses on firm valuation primarily
through discounting the cash flows forecasted in the fifth part.
Different valuation approaches are introduced and the strengths and
weaknesses of each approach are discussed. After completing the
fifth and final part the student should be able to estimate the
value of a firm.
|
| Description of the teaching methods |
| Lectures with exercises. |
| Feedback during the teaching period |
| Exercise classes entail feedback to students who
have prepared solutions at home. Students will see the
instructor's solution and are encouraged to speak up in case of
deviations between the instructor solutions and their own
solutions. This will form the basis of feedback to the
students |
| Student workload |
| Lectures |
33 hours |
| Preparation for lectures |
66 hours |
| Exercise classes |
14 hours |
| Preparation for exercise classes |
70 hours |
| Exam |
4 hours |
| Final preparation for exam |
19 hours |
|
| Expected literature |
|
Chapters 1-13 in Christian Petersen, Thomas Plenborg og Finn
Kinserdal
Financial Statement Analysis, Fagbokforlaget, 2017, 1. udgave,
ISBN: 9788245021028
|
Last updated on
10-06-2020
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