37299 - FINANCIAL ANALYSIS

Conoscenze e abilità da conseguire

The aim of this course is to provide a thorough understanding of the theory and practice of financial assets valuation and problems within different trading markets. At the end of the course the student will be able to: - analyse the financing alternatives available to companies; - understand the economic and financial problems of the contexts in which firms and investors operate; - analyse the issue procedures of financial assets (i.e., issue of bonds and stocks).

Contenuti

Detailed Outline

1. A Framework for Business Analysis and Valuation Using Financial Statements

This chapter outlines a comprehensive framework for financial statement analysis. Because financial statements provide the most widely available data on public corporations’ economic activities, investors and other stakeholders rely on financial reports to assess the plans and performance of firms and corporate managers. Then we introduce the new era of reporting (non-financial reporting).

2. Strategy Analysis

Strategy analysis is an important starting point for the analysis of financial statements. Strategy analysis allows the analyst to probe the economics of a firm at a qualitative level so that the subsequent accounting and financial analysis is grounded in business reality. Strategy analysis also allows the identification of the firm’s profit drivers and key risks. This in turn enables the analyst to assess the sustainability of the firm’s current performance and make realistic forecasts of future performance.

3. Accounting Analysis: The Basics

The purpose of accounting analysis is to evaluate the degree to which a firm’s accounting captures its underlying business reality. By identifying places where there is accounting flexibility, and by evaluating the appropriateness of the firm’s accounting policies and estimates, analysts can assess the degree of distortion in a firm’s accounting numbers.

4. Financial Analysis

The goal of financial analysis is to assess the performance of a firm in the context of its stated goals and strategy. There are two principal tools of financial analysis: ratio analysis and cash flow analysis. Ratio analysis involves assessing how various line items in a firm’s financial statements relate to one another. Cash flow analysis allows the analyst to examine the firm’s liquidity, and how the firm is managing its operating, investment, and financing cash flows

5. Prospective Analysis: Forecasting 

Most financial statement analysis tasks are undertaken with a forward-looking decision in mind – and, much of the time, it is useful to summarize the view developed in the analysis with an explicit forecast. Managers need forecasts to formulate business plans and provide performance targets; analysts need forecasts to help communicate their views of the firm’s prospects to investors; and bankers and debt market participants need forecasts to assess the likelihood of loan repayment. Moreover, there are a variety of contexts (including but not limited to security analysis) where the forecast is usefully summarized in the form of an estimate of the firm’s value. This estimate can be viewed as an attempt to best reflect in a single summary statistic the manager’s or analyst’s view of the firm’s prospects.

6. Prospective Analysis: Valuation Theory and Concepts

The previous chapter introduced forecasting, the first stage of prospective analysis. In this and the following chapter we describe valuation, the second and final stage of prospective analysis. This chapter focuses on valuation theory and concepts, and the following chapter discusses implementation issues. Valuation is the process of converting a forecast into an estimate of the value of the firm’s assets or equity. At some level, nearly every business decision involves valuation, at least implicitly. Within the firm, capital budgeting involves consideration of how a particular project will affect firm value.

7. Prospective Analysis: Valuation Implementation

To move from the valuation theory discussed in the previous chapter to the actual task of valuing a company, we have to deal with three key issues. First, we have to estimate the cost of capital to discount our forecasts. Second, we have to make forecasts of financial performance stated in terms of abnormal earnings and book values, or free cash flows, over the life of the firm. And third, we need to choose between an equity valuation or an asset valuation approach and understand the consequences of this choice.

Finally, how do we integrate sustainability performace (ESG issues) into the financial valuation framework.

Testi/Bibliografia

We will be mainly covering chapters from the following textbook:

Business Analysis and Valuation: IFRS Edition, 5th Edition (2019). Authored by Krishna G. Palepu, Paul M. Healy, Erik Peek

Other course materials and lecture notes will be handed out and uploaded on the course website.

Metodi didattici

1- Frontal lessons by the professor explaining the contents of the course.

2- Excel lab to practice financial modeling

3- A dedicated tutor

 Matteo Teruggi: matteo.teruggi2@unibo.it

Modalità di verifica e valutazione dell'apprendimento

A written exam is expected at the end of the course, composed of multiple-choice questions and exercises.

Excel homework will also be assigned and considered

You need to obtain at least 18/30 to be able to register the final score.

• <18 fail
• 18-23: fair
• 24-27: good
• 28-30: very good
• 30 e lode: excellent

Note: only 4 exams are allowed within the same academic year. overpassing the year without passing (18/30 at least) the course requires following again the course.

Orario di ricevimento

Consulta il sito web di Murad Harasheh