Essay About Course Objectives And Specific Types Of Information

Acy6070a – Business Valuation and Analysis
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ACY6070A Business Valuation and Analysis
Summer Term 2 2004-2005
Instructor and class information
Subject Leader: Oliver M. RUI
Office: K.K. Leung 222
Phone: 2609 7594 (office)
Fax: 2603-5114
E-mail: [email protected]
Lecture times Monday and Wednesday 6:45-9:45
Meeting places Emerald room
Office Hours: by appointment
Course Description and Scope
This course provides students with the conceptual background and analytical skills that are
necessary to identify, assess and apply information for purposes of analyzing and valuing
business activities and entities. The course allows students to appreciate critical issues of
determining the specific types of information, including accounting information, which are
significant in ex ante valuation and ex post analysis of business activities and entities. Students
are also expected to appreciate the limitations and costs of acquiring and using such
information. Emphasis is placed on integrating the use of financial and non-financial
information in business valuation and analysis with the application of the concepts of valuation,
business policy and financial analysis.
Course Objectives
* To learn a framework for making business decisions using financial statement information
* To learn how to evaluate Financial Statements using an industry and country specific
framework.
* To practice applying the framework in specific decision contexts (e.g., security valuation,
credit analysis)
* To practice written and oral communication skills
Course Structure and Teaching Methods
This course will emphasize the understanding of how accounting and financial statement
analysis is used in decision making and problem solving through the use of analytical, creative
and critical thinking. Therefore, students will be expected to demonstrate their knowledge of
accounting and financial reporting issues through written and oral analysis and presentations.
Since the course objectives are practical and technical in nature, computer assisted analysis
will also be used, therefore students will need good quantitative skills as well as strong
analytical skills for their class participation, projects and presentations.
The course will proceed in two parts. In Part 1 of the course we will develop a framework for
business analysis and valuation. The steps in the framework include: (1) business strategy
analysis (2) accounting analysis (3) financial analysis and (4) valuation, or prospective analysis.
The purpose of business strategy analys is is to assess the profit potential of the firm at a
qualitative level. This involves industry and competitive analysis. The purpose of accounting
analysis is to develop an understanding of whether a firm accounting captures its true
underlying economic condition. This involves identifying accounting flexibility and evaluating
the appropriateness of accounting policies and estimates. The purpose of financial analysis is
to form an assessment of the firm performance in the context of its stated goals and strategy.
Tools used for financial analysis include ratio analysis, cash flow analysis, and common size
financial statements. The purpose of prospective analysis is to forecast the firm future. Tools
used for prospective analysis include forecasts of financial statements and valuation models.
In Part 2 of the course we will look at specific applications of the tools developed in the course
with a focus on valuation.
The course will be taught using a combination of the lecture and case methods. The lecture
method is well suited for helping you grasp new theories and concepts while the case method
allows you to practice making decisions in less structured environments. This approach will be
very useful to you since many of the decisions you will make in your careers will be in
unstructured environments. Therefore, the case method can add greatly to your development.
But class participation is essential for this class to be successful. I believe discussion is a vital
component to any learning experience and I hope we will have lively discussions, even during
the lecture sessions.
Course Materials
Required Material: Business Analysis and Valuation: Using Financial Statements 2 nd
Edition , by Palepu, Bernard and Healy (PBH), South Western.
Regular Readings: The Wall Street Journal,
The South China Morning Post Business Section
Assigned newspaper and journal articles
Suggested Book : Valuation