FIN 3516 Valuation
FIN 3516 Valuation
Financial professionals offer advice, provide valuable information and help corporations in their investment, operational and financing decisions. A common component and requirement is the ability to analyze the financial statements in order to determine a company's value, project future earnings and cash-flows, identify risks, spot opportunities for cost reduction and/or efficiency increase, understand the effects of tax, regulatory or policy changes, appraise the sustainability of the firm’s activities, and so on.
Students will acquire skills to analyze and interpret financial statements in a meaningful way. For this reason the course teaches the relevant material by examining real company data. The course also gives student Excel modeling skills and hands-on experience using Bloomberg terminal to gather and analyze financial data.
The course is essential to anyone who will work in the field of applied finance as understanding of financial statements is the basis of financial analysis. Financial analysis is a daily consideration for a corporate finance professional working within a firm or working as a consultant to a firm, working within investment banking, asset management, or in many other positions.
We emphasize the link between various financial statements, understanding what the numbers in the various statements mean and how to compute performance, cost of capital, and the various types of risks. The course covers the key topics of who demands financial statements, who supplies, where to find the critical information financial analyst would need in decision-making. We examine how to analyze financial statements across firms or across time, how to construct various ratios, and how to develop statement-based performance measures. We focus on the fundamental issue of valuation and we study selected applications of the topic to the cost of capital estimation and risk management.
Upon successfully completing the course the student will
- Understand the needs and the uses of financial statements, both use of historical financial statements and how to forecast financial statements
- Understand the need and the way to extract meaningful information by combining the different financial and accounting data
- Knowing which financial information that are required for the various types of decisions, and how to strategically analyze firms and interpret their financial statements
- Understand the different factors that affect the generation of future cash-flows of the firm
- Understand how the focus on sustainability can impact the market’s appraisal of the firm, and thus, its market value
Upon successfully completing the course the student will be able to
- Extract meaningful information by combining the different financial and accounting data, e.g. financial ratios and profitability measures
- Develop digital skills using Excel and Bloomberg
- Perform valuation of companies and projects
The acquired theoretical and practical knowledge provided in this course will enable the student to understand the need to generate financial statements, the relation between the suppliers and the users of this information and reflect on the ways that this information channel could be improved or compromised.
- Introduction to financial statements and bookkeeping. Understand the relation between statements.
- Accrual-based versus cash-flow-based performance measures
- The analytical income statement and balance sheet. Relate metrics, e.g. sales and working capital (WC)
- Profitability measures, analysis and forecasts
- Capital structure and Cost of Capital
- Pulling it all together: Valuation
The course will include a combination of lectures and Bloomberg laboratory sessions where the students will obtain hands-on experience on the use of the Bloomberg terminal.
Class participation is strongly encouraged and rewarded. Each class will have problems and assigned readings. You should come to class prepared. You can work in groups to solve homework assignments. The lectures will be plenary sessions whereas for the Bloomberg sessions will be done in different sections of maximum 40 students each.
A student will integrate the key concepts by developing a group project focusing on company valuation.
Use of the Bloomberg terminal will be an integral part of the course. Students will learn how to use Bloomberg terminal to find data in financial statements and prepare basic analysis. Students will learn how to use Spreadsheets (Excel) to analyze, manipulate, calculate, and present data.
This is a course with continuous assessment (several exam components) and one final exam code. Each exam component is graded by using points on a scale from 0-100. The components will be weighted together according to the information in the course description in order to calculate the final letter grade for the examination code (course). Students who fail to participate in one/some/all exam elements will get a lower grade or may fail the course.
Course responsible decide on allocation of students in case of components solved in groups. At re-sit all components must, as a main rule, be retaken during next scheduled course.
The final grade in this course will be based on the following activities and weightings:
- Group project on valuation. (4 students in each group) (20% weight)
- Three-hour written final exam (80% weight).
Specific information regarding student evaluation will be provided in class. This information may be relevant to requirements for term papers or other hand-ins, and/or where class participation can be one of several elements of the overall evaluation.
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Higher Education Entrance Qualification
Disclaimer
Deviations in teaching and exams may occur if external conditions or unforeseen events call for this.
BØK 3423 Finance and FIN 3521 Corporate Finance or equivalent.
| Assessments |
|---|
Exam category: Submission Form of assessment: Written submission Weight: 20 Grouping: Group (2 - 4) Duration: 2 Week(s) Comment: Group project on valuation. (groups projects of 4 students maximum) Exam code: FIN35161 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
Exam category: Submission Form of assessment: Written submission Invigilation Weight: 80 Grouping: Individual Support materials:
Duration: 3 Hour(s) Exam code: FIN35161 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
| Activity | Duration | Comment |
|---|---|---|
Teaching | 30 Hour(s) | |
Seminar groups | 12 Hour(s) | Bloomberg sessions. Students are expected to be familiar with Bloomberg. It is highly recommended to take BMC certificate by the start of the course. |
Prepare for teaching | 83 Hour(s) | |
Group work / Assignments | 30 Hour(s) | Group project and home assignments |
Examination | 45 Hour(s) | Exam incl. preparations |
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 7,5 ECTS credit corresponds to a workload of at least 200 hours.