37299 - Financial Analysis

Learning outcomes

By the end of this course students are able to: -understand the structure and items of the financial statement reports; - comprehend the main financial accounting principles; - understand drivers and critical success factors of a business financial performance; - understand various techniques of ratios analysis; - relevant accounting information to make informed forecasts and valuations of businesses.

Course contents

With a stock market bubble and a financial crisis in our recent history, there have been increasing calls to “return to fundamentals.” This course aims to explore the principles of fundamental analysis. It gives the participants a framework to understand how businesses' value and risks are captured in financial statements. Most importantly, we learn how to handle accounting and financial reports in valuation. We see that valuation is really a matter of appropriate accounting for value. The course combines accounting principles and investment principles to answer the question: How do I account for value so that I can challenge stock prices with some confidence?

At the end of the course, students should be able to:

1. understand various techniques in financial statement analysis;
2. apply techniques to assess and compare firms' financial position, performance, and credit risk;
3. understand the limitations of financial statement numbers;
4. extract accounting information to make forecasts;
5. select the most appropriate valuation model depending on the company analysed.

This course is relevant for students who want to pursue careers in investment banking (particularly in equity research), consulting (private equity, corporate finance), etc.

 

Readings/Bibliography

Required Readings:

• Wahlen, J. M., Baginski, S. P., & Bradshaw, M. T. (2023). Financial reporting, financial statement analysis, and valuation: A strategic perspective. Cengage Learning, Inc..

Supplementary Readings (Optional):

• Financial Analysis, McGraw Hill CREATE, ISBN 9781307866322. You can buy the textbook here: https://www.libreriauniversitaria.it/financial-analysis-ebook-mcgraw-hill/libro/9781307866322
• Easton, McAnally, Sommers (2025) Financial Statement Analysis & Valuation (7th ed.). Cambridge Business Publishers.
• Robinson, T. R. (2020). International financial statement analysis, 4^th edition. John Wiley & Sons.

Teaching methods

This course consists of 20 sessions during the 3rd and 4th subcycle of the academic year (total of 60h).

The main instructional approaches used in the course are:

- Lectures

- Group Work

Assessment methods

To pass this course, each student has to perform a final written exam (multiple choices and exercises) and a group project. More details are available in the syllabus.

This is the assessment grid:

• (a) <18 insufficient;
• (b) 18-23 sufficient;
• (c) 24-27 average/good;
• (d) 28-30 very good;
• (e) 30 cum laude excellent/outstanding.
  
  

Course evaluation will be different depending on the non-compulsory participation in team-work assignment, as detailed in the following:

Students participating in team-work assignments:

Component Weight (%)

• Group project 40
• Final Exam 60

Students who do not participate in team-work assignments:

Component Weight (%)

• Final Exam 100

 

Partial/final exams structure:

Each mid-term exam is made of 16 multiple choices questions, only one answer right, no penalization for a wrong answer. Time: 45 Minutes. Maximum grade 32 points.

The full exam is made of 32 multiple choices questions, only one answer is right, no penalization for a wrong answer. Time: 90 Minutes. Maximum grade 32 points.

The group project aims to produce a report detailing an analysis of the strategy, financial performance, and valuation of one company selected independently by each group. In this project, you have to perform the following tasks:

1. Introduce the company and analyse the business activities and strategy (explain why you selected the company you are analysing). Perform industry analysis. Identify one direct peer and justify your choice.
2. Perform the horizontal and vertical analysis of your company's income statement and compare it with the one of direct peer over the last three years.
3. Perform the ratio analysis of your company and compare it with the one of the direct peer over the last three years. Focus on the most relevant profitability, solvency, liquidity, and efficiency ratios.
4. Perform the decomposition of ROE (select the traditional or alternative) and compare it with the one of the direct peer over the last three years.
5. Compute the intrinsic value of your company by using a proper valuation method. Challenge your result with the stock market price at the time of your valuation.

The evaluation criteria for the project work are the following:

1. Exhaustivity of the presentation;
2. Ability to address the topic correctly;
3. Presentation skills;
4. Respect of the allotted time

Office hours

See the website of Lorenzo Dal Maso

See the website of Eleonora Monaco