University of Alberta, Alberta School of Business Department of Accounting and OIS
Syllabus Fall, 2017
Accounting 432(§A1 and A3)/630 (§A1): Financial Statement Analysis
Professor: Jack Stecher 432/630 A1: MW 11:00–12:20
[email protected] 432 A3: MW 3:30–4:50
Office Hours: MW 9:30–10:30 3-40J Business Building
Course Objectives and General Content
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.
Course Materials
The recommended textbook for the course is
• Lundholm and Sloan, Equity Valuation and Analysis with eVal, Fourth edition.
In addition to the text, we will use financial reports from publicly traded companies. We willnot use Harvard Business School cases or anything similar. Instead, our cases will come entirely from the real world, as this 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 uLearn.
Exam and Course Project
You will take a midterm exam and will write a final course project. You may use your books, notes, and calculators during the exam, but may not use tablets, computers, phones, or any device capable of connecting to the Internet or communicating with others. Representative exams will be available on Ulearn.
The project will involve a detailed analysis of a publicly traded company. I will post on details Ulearn. Youmust receive my approval for the company you choose to analyze. The project will be due on the last day of class. In addition to the written analysis, the course project will involve a brief in-class presentation. The presentations will occur during the last four days of class.
You must take the midterm exam at the scheduled time, subject to University policies on deferred exams.
Grading
The grading breakdown is as follows:
Homeworks 20%
Midterm Exam 40%
Final Project 40%
I will base all grades in this course on the following scale:
Percentage Letter Grade Grade Point Value
≥90 A+ 4.0
[86,90) A 4.0
[82,86) A− 3.7
[78,82) B+ 3.3
[74,78) B 3.0
[70,74) B− 2.7
[66,70) C+ 2.3
[62,66) C 2.0
[58,62) C− 1.7
[54,58) D+ 1.3
[50,54) D 1.0
<50 F 0.0
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 my classes worth attending. That said, you are responsible for all the material we cover in class and for any announcements I make in class.
Homeworks and Written Work: Turn in all homework and written work electronically.
I am willing to grant extensions to homeworks (though not for the course project), provided I receive them before solutions become available on Ulearn or are covered in class.
Code of Student Behaviour: The University of Alberta is committed to the highest stan- dards 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 particularly urged to familiarize themselves with the provisions of the Code of Student Behaviour (online at www.governance.ualberta.ca) and avoid any behaviour which could potentially result in suspicions of cheating, plagiarism, misrepresen- tation of facts and/or participation in an offence. Academic dishonesty is a serious offence and can result in suspension or expulsion from the University.
Classroom Conduct: Any student who is disruptive during class will be asked to leave.
All cell phones should be silenced during the class period and students should refrain from texting or browsing the internet during class as this can be disruptive to fellow students and
the instructor.
Audio or video recording, digital or otherwise, of lectures, labs, seminars or any other teach- ing environment by students is allowed only with the prior written consent of the instructor or as a part of an approved accommodation plan. Student or instructor content, digital or otherwise, created and/or used within the context of the course is to be used solely for personal study, and is not to be used or distributed for any other purpose without prior written consent from the content author.
Tentative Course Timetable
Sep 6 Course Overview and Introduction (Ch. 1 of LS)
Sep 11/13 Basic info on the business (Ch. 2/3 of LS; uploaded statements on Ulearn) Sep 18/20 Review of main statements (Ch. 4 of LS; uploaded statements)
Sep 25/27 Class exercise on information and valuation; intro to ratios (Ch. 5 LS) Oct 2/4 Valuation models (Ch. 10 LS plus posted articles/notes)
Oct 11 Catch up. (No class Oct 9—Thanksgiving.)
Oct 16/18 Valuation ratios (Ch. 11 LS plus posted articles/notes) Oct 23 Review / catch up
Oct 25 In-class midterm exam
Oct 30/Nov 1 Free cash flows and DCF (Ch. 6 of LS and posted articles/notes) Nov 6/8 Forecasting (Ch. 7–8 of LS)
Nov 13/15 No classes—Reading Week
Nov 20/22 Estimation of cost of capital (Ch. 9 of LS plus class notes); advabced topics (time permitting)
Nov 27/29 Catch up and Presentations Dec 4/6 Presentations; Project Due Dec 6