ACC30060 Financial Statement Analysis

Learning Outcomes:

Part 1 Introduction to Financial Statement Analysis

After completing this part of the module a student should be able to:
- understand the role of financial statements analysis within business analysis.
- navigate the income statement, balance sheet and cash flow statement.
- explain how the financial statements are connected by the accounting equation.
- describe the impact of accrual accounting on the financial statements.
- identify and source information about business organisations using Bloomberg and other sources.

Part 2 Accounting analysis

After completing this part of the module a student should be able to:

- identify the critical accounting policies and assumptions that are applied in preparing a business organisation’s financial statements.
- understand the implications of different accounting policies for the organisation’s financial statements.
- describe earnings management and identify when and how it occurs in practice.
- review a set of financial statements and identify issues that may impact on the analysis of the information in those statements.

Part 3 Financial analysis and modelling

After completing this part of the module, a student should be able to:

- evaluate economic relationships in the financial statements to better understand the performance and prospects of the firm.
- analyse the operational and Environmental, Social, and Corporate Governance (ESG) information provided by the firm
- decompose financial performance and identify performance issues and possible improvements.
- forecast firm performance and resource needs using Excel.
- evaluate the research findings on analysts’ forecasts.

Part 4 Valuation

After completing this part of the module, a student should be able to:

- value a business using the method of multiples.
- explain how investor expectations about future returns can be derived from the Capital Asset Pricing Model (CAPM).
- calculate an appropriate discount rate for a firm.
- value a business using the dividend valuation model and the discounted cash flow (DCF) model.
- value a business using the residual income valuation model.
- explain how the valuation models differ from each other in terms of their theoretical grounding, the assumptions they require and their effectiveness in valuing different types of firms.
- access the strengths and limitations of various valuation models in the context of the valuation of a particular firm.

Student Effort Type	Hours
Lectures	24
Specified Learning Activities	40
Autonomous Student Learning	44
Total	108

Learning Recommendations:

ACC 10040 Financial Accounting 1
ACC 20010 Financial Accounting 2
FIN20010 Principles of Finance
(or equivalent at another university)

This module is taught at intermediate financial analysis level. Students should have a strong background in accounting having taken at least 2 financial accounting modules. Students should also have taken an introductory finance module.

Not applicable to this module.
 

Assessment Strategy  

Description	Timing		Component Scale		% of Final Grade
Group Project: Prepare an equity valuation for an assigned company	Throughout the Trimester	n/a	Graded	No	40
Examination: End of semester examination	1 hour End of Trimester Exam	No	Standard conversion grade scale 40%	No	30
Class Test: Class Test on Accounting Analysis	Unspecified	n/a	Standard conversion grade scale 40%	No	30

 

Resit In	Terminal Exam
Autumn	Yes - 2 Hour

• Group/class feedback, post-assessment
• Online automated feedback

Not yet recorded.

The following textbooks will be useful for parts of the module.

Investment Valuation ISBN: 9781280590467 Author: Damodaran, Aswat
Available as a free e-book at UCD Library http://lib.myilibrary.com/Open.aspx?id=362029

Valuation: Measuring and Managing the Value of Companies, University Edition, 6th Edition
ISBN-13: 9781118873731
Author(s): McKinsey & Company Inc.; Tim Koller; Marc Goedhart; David Wessels
Available as a free e-book at UCD Library https://library.ucd.ie/iii/encore/record/C__Rb2096533?lang=eng

Financial Statement Analysis and Security Valuation, 5th Edition ISBN-13: 9780071326407
Author(s): Penman, Stephen
https://library.ucd.ie/iii/encore/record/C__Rb2096534?lang=eng

Best Practices for Equity Research Analysts: Essentials for Buy-Side and Sell-Side Analysts by Valentine (Author) ISBN-13: 978-0071736381
https://library.ucd.ie/iii/encore/record/C__Rb2096536?lang=eng

International Financial Statement Analysis, 3rd Ed., Tobinson, Henry, Pirie and Broihahn, CFA Institute and Wiley
http://ucd.summon.serialssolutions.com/#!/search?bookMark=ePnHCXMw42LgTQStzc4rAe_hSmGGHKsEOkcMWPeAr-yzNADWwcbAqoGTQQtl3EshDXbKhAJ4Ow1ofEwhEXo4Bw8DaxowRlJ5oTQ3g4yba4izh25pcko8dKwjPsnI0NjCxMgQdPkNXmkApyQwmQ

Equity Asset Valuation, 3rd Ed., Pinto, henry, Robinson and Stowe, CFA Institute and Wiley
http://ucd.summon.serialssolutions.com/#!/search?bookMark=ePnHCXMw42LgTQStzc4rAe_hSmGGHKsEOkcM3FwH3VQMuhgFWC4accAHQ0yB7XYLA04GMdfCUmDrUwHYcEwtUYCfd83DwJoGjI1UXijNzSDj5hri7KFbmpwSDx3niE8yMjS2MAHWSEYEpAGBZCv-

Spring
Lecture	Offering 1	Week(s) - 20, 21, 22, 23, 24, 25, 26, 29, 30, 31, 32, 33	Thurs 09:00 - 10:50