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FIN 3516 Financial Statement Analysis

FIN 3516 Financial Statement Analysis

Course code: 
FIN 3516
Department: 
Finance
Credits: 
7.5
Course coordinator: 
Geir Høidal Bjønnes
Product category: 
Bachelor
Portfolio: 
Bachelor of Finance - Programme Courses
Semester: 
2019 Spring
Active status: 
Active
Teaching language: 
English
Course type: 
One semester
Introduction

Financial analysts and consultants are employed in a wide range of different types of firms and organizations to offer advice, provide valuable information and help corporations in their investment, operational and financing decisions. In all these 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 and so on.

To this end the course examines the point of view of user of financial statements and caters to students who expect to use financial statements in their careers. The course aims at preparing the students to analyze and interpret financial statements in a financially meaningful way. For this reason the course teaches the relevant material by examining real company data. The course also gives student skills to use Bloomberg terminal to gather and analyze information.

We emphasize understanding what numbers in the various statements mean and how to think about 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 cross section and time series of financial statements, 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.

Learning outcomes - Knowledge

Upon successfully completing the course the student will

  • Understand the needs and the uses of financial statements,
  • Understand the need and the way to extract meaningful information by combining the different financial and accounting data,
  • Know the fundamental financial information that are required for the various types of decisions,
  • Know the required steps on how to perform a company valuation,
  • Know how to strategically analyze firms and interpret their financial statements.
Learning outcomes - Skills

Upon successfully completing the course the student will be able to

  • Construct financial ratios from financial statements,
  • Perform company valuation,
  • Profitability, growth, and liquidity risk analysis
  • Forecast statements.
Learning Outcome - Reflection

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.

Course content
  • Introduction to financial statements and bookkeeping
  • Accrual-based versus cash-flow-based performance measures
  • The analytical income statement and balance sheet
  • Profitability analysis
  • Growth analysis
  • Liquidity risk analysis analysis
  • Forecasting
  • Valuation
  • Cost of Capital
Learning process and requirements to students

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.

At re-sit all exam 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:

  • 20% group project on valuation. (groups projects with 4 students in each group)
  • 80% 3-hour written final exam.

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.

Software tools
No specified computer-based tools are required.
Additional information

.

Qualifications

Higher Education Entrance Qualification.

Required prerequisite knowledge

BØK 3423 Finance and FIN 3521 Finansiering av bedrifter or equivalent.

Exam categoryWeightInvigilationDurationSupport materialsGroupingComment exam
Exam category:
Submission
Form of assessment:
Written submission
Exam code:
FIN35161
Grading scale:
Point scale
Grading rules:
Internal examiner
Resit:
All components must, as a main rule, be retaken during next scheduled course
20No 2 Week(s)Group/Individual (1 - 4)Group project on valuation. (groups projects of 4 students maximum)
Exam category:
Submission
Form of assessment:
Written submission
Exam code:
FIN35161
Grading scale:
Point scale
Grading rules:
Internal and external examiner
Resit:
All components must, as a main rule, be retaken during next scheduled course
80Yes3 Hour(s)
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Individual
Exams:
Exam category:Submission
Form of assessment:Written submission
Weight:20
Invigilation:No
Grouping (size):Group/Individual (1-4)
Support materials:
Duration: 2 Week(s)
Comment:Group project on valuation. (groups projects of 4 students maximum)
Exam code:FIN35161
Grading scale:Point scale
Resit:All components must, as a main rule, be retaken during next scheduled course
Exam category:Submission
Form of assessment:Written submission
Weight:80
Invigilation:Yes
Grouping (size):Individual
Support materials:
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Duration:3 Hour(s)
Comment:
Exam code:FIN35161
Grading scale:Point scale
Resit:All components must, as a main rule, be retaken during next scheduled course
Exam organisation: 
Continuous assessment
Grading scale: 
ECTS
Total weight: 
100
Workload activityDurationType of durationComment student effort
Teaching30Hour(s)
Other in classroom12Hour(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 teaching83Hour(s)
Group work / Assignments30Hour(s)Group project and home assignments
Examination45Hour(s)Exam incl. preparations
Expected student effort:
Workload activity:Teaching
Duration:30 Hour(s)
Comment:
Workload activity:Other in classroom
Duration:12 Hour(s)
Comment:Bloomberg sessions.
Students are expected to be familiar with Bloomberg. It is highly recommended to take BMC certificate by the start of the course.
Workload activity:Prepare for teaching
Duration:83 Hour(s)
Comment:
Workload activity:Group work / Assignments
Duration:30 Hour(s)
Comment:Group project and home assignments
Workload activity:Examination
Duration:45 Hour(s)
Comment:Exam incl. preparations
Sum workload: 
200

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.

Talis literature

Obligatorisk/Compulsory

Document
Authors/Editors År Tittel Edition Publisher StudentNote
    Lecture notes, cases, additional exercises and examples will be available on the course-website on itslearning.      

Anbefalt/Recommended

Book
Authors/Editors År Tittel Edition Publisher StudentNote
Petersen, Christian V.; Plenborg, Thomas cop. 2012 Financial statement analysis: valuation, credit analysis, executive compensation   Financial Times Prentice Hall  
Easton, Peter D. 2014 Financial statement analysis and valuation 4th ed Cambrigde Business Publishers