Summary of Financial Statements Analysis Course
Warren Buffet is the richest investor on the planet, and according to many accounts, the bedrock of his success is the ability to understand financial statements. This is the best evidence that, despite tremendous development of sophisticated financial technologies over the last two decades, an old-school financial statements analysis still yields the best results.
The purpose of this course is to provide a student with a set of concepts and tools to analyze and evaluate companies using their financial statements. While the emphasis is on valuation, we will also pay close attention to measuring performance and estimating the quality of earnings. This course is essential for students interested in investment banking and investment research. In many business schools, it is dubbed “Investment Banking 101″, and that’s for a reason.
Recommended Textbook for Financial Statements Analysis Course
The recommended textbooks for this course are: “Analysis for Financial Management” by R. Higgins and “Principles of Corporate Finance” by Brealey, Myers, Allen. They complement each other and are best when used together.
Duration of the course can vary, depending primarily on the amount of time a student is able to commit and previous experience with accounting and finance. In most cases, the course can be completed within 5 weeks, given 2 sessions per week.
Success during the course is impossible without working knowledge of basic financial and accounting concepts; therefore Introduction to Finance and Introduction to Financial Accounting are pre-requisites to this course. In addition, almost all the case studies and exercises in this course require some degree of financial modeling, and because of this, fluency in Excel is critical as well.
Recommended Follow-up Courses for Financial Statements Analysis Course
Recommended follow-up courses for students who would like to get a deeper knowledge of specific areas:
- Introduction to Corporate Finance – focuses on how companies manage cashflow, how they find money to keep running/expand and how they decide which projects to pursue. An essential course for those who are interested in corporate finance and investment banking. Provides additional valuation techniques and insights, on top of those discussed in Financial Statements Analysis course.
- Entrepreneurial Finance – focuses on valuing early-stage companies and structuring venture capital investments. This course will be useful to students who are interested in start-ups and venture capital. Provides additional valuation techniques and insights.
Financial Statements Analysis Course Outline
1. Valuation Introduction and Measuring Firm Performance
2. The Basics of Equity Valuation
3. Cash Flow and Earnings Projections
4. Comparative Analysis for Valuation
5. Using Accounting Earnings for Valuation (Residual Income)
6. Economics of the Firm, Pro Forma Projections
7. Valuation and Risk: Cost of Capital
8. Fundamental Trading Strategies
9. International Financial Analysis
10. IFRS and International Valuation
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