Course in Financial Statement Analysis and Security Valuation

Here goes the call to all the number crunchers, all those wall street wannabes. When you talk finance, to put it simply, IIM Calcutta just cannot be excelled. The different courses take you through the ins and outs of audits and accounts. We make you value your assets, help you minimize the costs and plan the fund flow. At the end of the journey a company balance sheet would be worth a thousand words. An enabled corporate citizen you shall evaluate stocks, play around with the ratios and thus select your own cocktail of equity and debt instruments. As an empowered manager you shall acquire the power to turn-around any company.

Description

This course deals with analysis of financial reports for making investment decisions. The main focus is on equity valuation, with some time being devoted to credit analysis. Fundamental analysis methods will be examined in detail and applied in cases and projects involving listed companies. Topics include model of shareholder value, a comparison of accrual accounting and discounted cash flow approaches to valuation, the analysis of profitability, growth and valuation generation in a firm, testing the quality of financial reports, forecasting earnings and cash flows, pro-forma analysis for strategy and planning, analysis of risk and the determination of price/earnings and market-to-book ratios.
The course is of interest to those contemplating careers in investment banking(particularly in equity research), security analysis, consulting, public accounting and corporate finance. It will also help with personal investing.

Objectives

The course will taught from the perspective of a security (equity) analyst although the material covered will be relevant to the corporate financial analyst for evaluating acquisitions, restructuring and other investments, and calculate the value generated by strategy scenarios. By the end of the course, the student should feel competent in writing a thorough, convincing equity research report.

By the end of the course, the students should answers to the following questions:
1. How are fundamental values) or "intrinsic values") estimated?
2. How are businesses strategies analyzed in order to understand the value they create?
3. What business activities determine value?
How is "value created by the shareholders" identified?
4. What is the role of financial statements in calculating equity values?
5. How does one pull apart the financial statements to get the relevant information for valuing equities?
6. What is the relevance of cash flows? Of Dividends? Of Earnings? Of book values?
7. How does ratio analysis help in valuation?
8. How does profitability tie into valuation?
9. What is growth? How does one analyze growth? How does one value a growth firm?
10. How does one analyze the quality of financial reports?
11. How does one deal with accounting methods used in financial statements?
12. How is financial analysis developed for strategy and planning?
13. What determines firm's P/E ratio?
14. What determines a firm's market-to-book (P/B) ratio?
15. How does one evaluate risk? For equity? For debt?
16. How does one evaluate an equity research report?
17. How does one trade on fundamental information?

Course Delivery

The course will be in the form of lectures, discussions, exercises and cases and will involve a course project.

Course Evaluation

Mid Term Exam 20%
End Term Exam 20%
Project Presentation 15%
Project Report 45%