FINANCIAL STATEMENT ANALYSIS
Syllabus
EN
IT
Learning Objectives
LEARNING OUTCOMES:
Emebedded in a specialized pathway on Risk, Auditing and Control, the course aims to provide an integrated, intermediate-level framework for financial statement analysis and the valuation of complex listed companies. This overarching goal responds to the need to contribute to the training of professionals working in auditing, business valuation controller's main tasks for companies of different sizes. Last but not least, it equips those who intend to pursue a career as certified public accountant with useful tools.
KNOWLEDGE AND UNDERSTANDING:
understand the relationships between the financial statements, to be able to distinguish their main components, to grasp the main dimensions of corporate performance and to provide interpretations of moderate complexity regarding the financial dynamics of companies; to understand the differences between market values and book values
APPLYING KNOWLEDGE AND UNDERSTANDING:
to be able to carry out a financial statement analysis and understand its results from an interpretive standpoint, including for activities such as reconstructing financial policies and evaluating the financial reporting quality in its broadest sense.
MAKING JUDGEMENTS:
form well-reasoned opinions on a company's financial health, and on whether it may be overvalued or undervalued, by applying financial statement analysis techniques in contexts where some of the necessary information are limited or incomplete
COMMUNICATION SKILLS:
to be able to explain the main reasons behind the differing financial and operating performance of listed companies. This goal will be achieved alsot hrough a dedicated course project, which will guide students toward a level of technical, specialist knowledge that they should show when presenting their findings.
LEARNING SKILLS:
to be able to progressively develop a deeper understanding of the drivers behind the different levels of performance achieved by companies, also through an acquired and/or enhanced ability to interpret documents belonging to financial reporting (from financial statements to press releases, analyst reports, etc.) or related to it (newspaper articles, textbooks, etc.).
Emebedded in a specialized pathway on Risk, Auditing and Control, the course aims to provide an integrated, intermediate-level framework for financial statement analysis and the valuation of complex listed companies. This overarching goal responds to the need to contribute to the training of professionals working in auditing, business valuation controller's main tasks for companies of different sizes. Last but not least, it equips those who intend to pursue a career as certified public accountant with useful tools.
KNOWLEDGE AND UNDERSTANDING:
understand the relationships between the financial statements, to be able to distinguish their main components, to grasp the main dimensions of corporate performance and to provide interpretations of moderate complexity regarding the financial dynamics of companies; to understand the differences between market values and book values
APPLYING KNOWLEDGE AND UNDERSTANDING:
to be able to carry out a financial statement analysis and understand its results from an interpretive standpoint, including for activities such as reconstructing financial policies and evaluating the financial reporting quality in its broadest sense.
MAKING JUDGEMENTS:
form well-reasoned opinions on a company's financial health, and on whether it may be overvalued or undervalued, by applying financial statement analysis techniques in contexts where some of the necessary information are limited or incomplete
COMMUNICATION SKILLS:
to be able to explain the main reasons behind the differing financial and operating performance of listed companies. This goal will be achieved alsot hrough a dedicated course project, which will guide students toward a level of technical, specialist knowledge that they should show when presenting their findings.
LEARNING SKILLS:
to be able to progressively develop a deeper understanding of the drivers behind the different levels of performance achieved by companies, also through an acquired and/or enhanced ability to interpret documents belonging to financial reporting (from financial statements to press releases, analyst reports, etc.) or related to it (newspaper articles, textbooks, etc.).
Prerequisites
Have been succeed in a basic courses of financial accounting and related recognition and measurement of the most important items in financial statements
Program
The course is designed to provide you with a basic understanding of financial statement analysis. Specific attention will be devoted in providing students basic instruments as common size analysis, restatements, ratios. Then other intermediate instruments will be provided as the cash flow analysis, analyst reports wrap-ups, detection of the investing and financing activities rationale, earnings forecast and the overall evaluation about the quality of financial reports. Moreover, part of the course will be devoted at disentagling the relationship between book values and market values and basics of financial valuation and modelling.
Here below, the tentative program that will be covered during the six weeks of the course:
First week: The relationship among Financial statements and new trajectories in the financial reporting landscape;
Second week: The basis for the analysis: decomposing and recomposing FSs and related reclassification. Vertical and horizontal common size analysis;
Third week: Ratio analysis
Fourth week: Non-recurring items, business seasonality and financing and dividends distribution policies and laboratory activity aimed at assessing infragroup relationship among companies belonging to the same group;
Fifth week: Book values vs Market values. technical analysis and reflections about stock market under and over valuations
Sesta settimana: The big picture and working groups wrapping up
Here below, the tentative program that will be covered during the six weeks of the course:
First week: The relationship among Financial statements and new trajectories in the financial reporting landscape;
Second week: The basis for the analysis: decomposing and recomposing FSs and related reclassification. Vertical and horizontal common size analysis;
Third week: Ratio analysis
Fourth week: Non-recurring items, business seasonality and financing and dividends distribution policies and laboratory activity aimed at assessing infragroup relationship among companies belonging to the same group;
Fifth week: Book values vs Market values. technical analysis and reflections about stock market under and over valuations
Sesta settimana: The big picture and working groups wrapping up
Books
Robinson et al., (2020) International Financial Statement Analysis, 4th edition, Wiley. Chapters 1, 2, 7 in full, Chapter 4: only paragraphs 6, 7 and 8 (subparagraphs included), Chapter 5: only paragraph 7 (subparagraphs included), Chapter 6: only paragraph 4 (subparagraphs included).
Papers and book chapters recommended by the instructor. All these readings are necessary for successfully completing the exam.
Papers and book chapters recommended by the instructor. All these readings are necessary for successfully completing the exam.
Bibliography
Subramanyam (2014), Financial Statement Analysis, 11th edition, McGraw-Hill. This book is recommended for students that would like to dig more into the subjects. Other readings will be recommended by the instructor during the course
Teaching methods
Teaching Hours and Teaching Methods
Teaching methods:
Lecture 60%
Exercises, Discussion and group presentation, guest lectures 40%
(Homework assignments are the basis for class discussion)
Non-attending students will find the practical cases and the presentation made by guest speaker will be make available on the course web page.
Teaching methods:
Lecture 60%
Exercises, Discussion and group presentation, guest lectures 40%
(Homework assignments are the basis for class discussion)
Non-attending students will find the practical cases and the presentation made by guest speaker will be make available on the course web page.
Exam Rules
Final exam (oral) 50%
Project Work 30%
Laboratory 20%
by the way, there will not be differences in the evaluation system and related rewards between attendants and non-attendants. The latters can perform the project and the laboratory activities even individually and wrapping up the related contents during the exam call(s). The results of written trials will be make available on the course web page as soon as will become available.
Students will succeed in the exam by getting a grade equal or higher than 18/30. Below 18 student will be rejected and invited to attempt again at a future date after having deepened the lackings reported.
Within the range of positive grades (from 18 to 30) it is possible to recognize the following sub-range and related features:
18-20. The student can succeed in the light of a very basic understanding of all topics and ability to report and discuss them with a very minor critical approach.
21-23. The student got the basics well and is able to understand and quickly well-debrief the major concepts and issues faced during the course.
24-26. The student is mature with respect to the course contents and related understand. He/she can fairly report all concepts in a correct manner by well balancing synthesis and analysis
27-29. The understanding is full and appreciable. The student not only has learned much, he/she is also able to infer his/her knowledge in connection with other subjects and discipline and he/she is also able to open up future critical issue.
30- 30 cum laude. The student's preparation and performance is outstanding. He/she is at ease in perfectly respond to whatever issue around those faced during the course. He/she is able to make connection and bridges in the vast field of business administration and this attitudes demonstrate the student's potential to succeed in the job market in the areas related with the course.
Project Work 30%
Laboratory 20%
by the way, there will not be differences in the evaluation system and related rewards between attendants and non-attendants. The latters can perform the project and the laboratory activities even individually and wrapping up the related contents during the exam call(s). The results of written trials will be make available on the course web page as soon as will become available.
Students will succeed in the exam by getting a grade equal or higher than 18/30. Below 18 student will be rejected and invited to attempt again at a future date after having deepened the lackings reported.
Within the range of positive grades (from 18 to 30) it is possible to recognize the following sub-range and related features:
18-20. The student can succeed in the light of a very basic understanding of all topics and ability to report and discuss them with a very minor critical approach.
21-23. The student got the basics well and is able to understand and quickly well-debrief the major concepts and issues faced during the course.
24-26. The student is mature with respect to the course contents and related understand. He/she can fairly report all concepts in a correct manner by well balancing synthesis and analysis
27-29. The understanding is full and appreciable. The student not only has learned much, he/she is also able to infer his/her knowledge in connection with other subjects and discipline and he/she is also able to open up future critical issue.
30- 30 cum laude. The student's preparation and performance is outstanding. He/she is at ease in perfectly respond to whatever issue around those faced during the course. He/she is able to make connection and bridges in the vast field of business administration and this attitudes demonstrate the student's potential to succeed in the job market in the areas related with the course.
Attendance Rules
2 times per week in slots 2 and 3 hours each