University of Alberta, Alberta School of Business Department of Accounting and Business Analytics Accounting 432 (A1): Financial Statement Analysis I
Fall 2021
Instructor: Ke Feng (pron. he/him/his) Time: M W 11:00AM to 12:20PM Email: [email protected] Place: BUS 3-06
Office Hours: By appointment
1 Course Objectives, Learning Goals, and Content
This course incorporates the Learning Goals of the BCom Program, including Critical Thinking, Quantita- tive Skills, Written Communications, and Oral Communications Skills.
This course is designed to improve your ability to analyze financial reports and understand the intrinsic value of debt and equity securities, with an emphasis on equity securities. After completing the course, you will add two valuable tools to your skill set:
• financial statement analysis
• accounting-based equity valuation
Our focus is on interpreting financial statements in order to highlight a firm’s shareholder value generation and distribution processes. Corequisites: ACCTG 415 or 412.
2 Course Materials
The recommended textbook for the course is
• Lundholm and Sloan, Equity Valuation and Analysis, Fifth edition.
In addition to the text, we will use financial reports from publicly traded companies. We will not use Harvard Business School cases or anything similar. Using real world financial reports will give you practice working with financial information as you will actually encounter it.
I will post financial statements (or links to them), problem sets, articles, lecture slides, and the like on the course website.
3 Exam and Course Project
The evaluation of this course consists of homework, a midterm exam and a two-part final course project.
The project involves a detailed analysis of publicly traded companies. You will complete the first part individually and the second part in a group of two or three. I will post requirements on the course website.
You must receive my approval for the company you choose to analyze. The first part will be written, and due by November 3rd. The second will include a written part and an in-class presentation. The second part is due on the last day of class.
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ACCTG 432: Financial Statement Analysis I August 31, 2021
4 Grading
The grading breakdown is as follows:
Homework . . . 20%
Midterm . . . 40%
Project . . . 40%
5 Course Policies
Policy about course outlines can be found in Course Requirements, Evaluation Procedures and Grading of the University Calendar(§23:4(2)).
Attendance: I do not grade on attendance or participation. We are all adults, and I will not penalize you in any way whatsoever for missing classes. Instead, I will do my best to boost attendance by making classes worth attending. That said, you are responsible for all the material we cover in class and for any announcements I make in class. Additionally, class will be a mixture of lectures, discussions, and trading experiments. These activities will be useful for building your networks and learning from each other, in ways that are difficult or impossible to replicate outside of class.
Homework and Written Work: Turn in all homework and written work electronically. I am willing to grant extensions for homework (though not for the midterm or the course project), provided I receive the homework before solutions are posted to the course website or covered in class.
Code of Student Behaviour: The University of Alberta is committed to the highest standards of academic integrity and honesty. Students are expected to be familiar with these standards regarding academic honesty and to uphold the policies of the University in this respect. Students are particu- larly urged to familiarize themselves with the provisions of the Code of Student Behaviour (online at http://www.governance.ualberta.ca) and avoid any behaviour which could potentially result in sus- picions of cheating, plagiarism, misrepresentation of facts and/or participation in an offence. Academic dishonesty is a serious offence and can result in suspension or expulsion from the University.
6 Tentative Course Timetable
Sep 1 . . . Course Overview and Introduction (§1 of LS) Sep 6 . . . .No class—Labour Day Sep 8 . . . Basic info on business (§2/3 of LS; uploaded statements) Sep 13 . . . Review of main statements (§4 of LS; uploaded statements) Sep 15/20 . . . Class exercise on information and valuation; intro to ratios (§5 LS) Sep 22/27 . . . Valuation models (§10 LS plus posted articles/notes) Sep 29/Oct 4 . . . Valuation ratios (§11 LS plus posted articles/notes) Oct 6 . . . Review / special topics Oct 11 . . . .No class—Thanksgiving Oct 13 . . . In class midterm exam Oct 18 . . . Free cash flows (§6 of LS and posted articles/notes) Oct 20 . . . Guest speaker Oct 25 . . . DCF (§6 of LS and posted articles/notes) Oct 27 . . . Guest speaker Nov 1/3 . . . Forecasting (§7-8 of LS) Project Part I Due Nov 3 Nov 8/10 . . . .No classes—Reading Week Nov 15/17 . . . Estimation of cost of capital (§9 of LS plus class notes) Nov 22/24 . . . Bankruptcy risk, real options, segment reporting Nov 29/Dec 1/6 . . . Presentations; Project Part II Due Dec 7
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ACCTG 432: Financial Statement Analysis I August 31, 2021
7 Covid Related
The University published new measures for fall return to campus athttps://www.ualberta.ca/news/2021/
08/new-measures-for-fall-return-to-campus.html. This class fully adopts the most recent measures to keep everyone safe.
Face masks: It is unlikely to maintain a minimum of 2 metres between instructor or among students in the classroom. Therefore, all participates are required to wear face masks in the classroom, unless the university lifts this requirement.
Staying home when sick: Anyone who has any of the following COVID-19 symptoms is required to isolate for 10 days from the onset of symptoms, or until they receive a negative COVID-19 test result.
• Fever
• Cough
• Shortness of breath or difficulty breathing
• Loss of sense of smell or taste
• Sore throat (adults only)
• Runny nose (adults only)
Staying home and taking care of yourself when sick is important for your health and reduces exposure to others.
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