Applied Financial Analysis and Valuation

Learning Outcomes

In terms of specific learning objectives, students, by the end of the course, will be able to:

1. Recast company financial reports (income statement, balance sheet etc.)  in a standard form so that the reports of different companies can be directly compared with each other or the reports of one company can be compared over time.
2. Reconstitute the financial reports of companies to reverse the effects of (perhaps misleading) company accounting policy decisions.
3. Forecast company funding needs from pro-forma balance sheets and income statements via the Additional Funds Needed model.
4. Value the equity of a company using a present value method that takes information directly from the company’s financial reports.
5. Employ the Black-Scholes option pricing model to value a range of investment projects of various types (projects where the choices to delay, extend or, even in the future, abandon all have a calculable value).
6. Perform a diagnosis as to whether a company is entering (or is in) a state of financial distress, employing several different techniques (Altman’s Z-score, Argenti’s balanced scorecard, the Black-Scholes option pricing model applied to real options).
7. Undertake a critical evaluation of recent developments in the research record concerning financial distress (this is a postgraduate undertaking only)
8. Perform an analysis of a firm’s equity employing the Bloomberg database and its related tools.

Prerequisites

Restrictions

Equivalent Courses

For further information see Department of Economics and Finance .