ECTS - University of Pisa
This is a course on fundamental analysis. 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? The primary emphasis is on equity (share) valuation, with a focus on developing and applying methods for valuing firms using financial statement analysis. Topics include models of shareholder value, a comparison of accrual accounting and discounted cash flow approaches to valuation, the analysis of profitability, growth and value generation in a firm, diagnosing accounting quality, and the determination of price/earnings (P/E) and market-to-book (P/B) ratios.
This is a course on fundamental analysis. 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? The primary emphasis is on equity (share) valuation, with a focus on developing and applying methods for valuing firms using financial statement analysis. Topics include models of shareholder value, a comparison of accrual accounting and discounted cash flow approaches to valuation, the analysis of profitability, growth and value generation in a firm, diagnosing accounting quality, and the determination of price/earnings (P/E) and market-to-book (P/B) ratios.
During the course, the student is engaged at understanding and developing a thorough, credible equity research report or investment analysis that meets the standards of professionalism.
During the course, the student is engaged at understanding and developing a thorough, credible equity research report or investment analysis that meets the standards of professionalism.
By the end of the course students should have answers to the following questions:
By the end of the course students should have answers to the following questions:
Case studies and financial reports will be discussed during the lectures.
Case studies and financial reports will be discussed during the lectures.
Students will acquire an awareness of techniques to be used in an accounting and financial research department or firm. Accordingly, students will acquire confidence typical to the financial analysis.
Students will acquire an awareness of techniques to be used in an accounting and financial research department or firm. Accordingly, students will acquire confidence typical to the financial analysis.
The course has a practical focus.
The methods of fundamental analysis will be examined in detail and applied in cases and projects involving listed companies.
The course has a practical focus.
The methods of fundamental analysis will be examined in detail and applied in cases and projects involving listed companies.
MODULE A (6 ECTS)
Introduction to Investing and Valuation
The Analysis of the Cash Flow Statement
How Financial Statements are Used in Valuation
Cash Accounting, Accrual Accounting and Discounted Cash Flow Valuation
Accrual Accounting and Valuation: Pricing Book Values
MODULE B (3 ECTS)
Viewing the Business through the financial Statements
Analysis of the Statement of Shareholders’ Equity
Analysis of the Balance Sheet and Income Statement
Analysis of Profitability
Analysis of the Quality of Financial Statements Analysis of Credit Risk and Return
Introduction to Investing and Valuation
Introduction to the Financial Statements
How Financial Statements are Used in Valuation
Cash Accounting, Accrual Accounting and Discounted Cash Flow Valuation
Accrual Accounting and Valuation: Pricing Book Values
Accrual Accounting and Valuation: Pricing Earnings
Valuation and Active Investing
Viewing the Business through the financial Statements
Analysis of the Statement of Shareholders’ Equity
Analysis of the Balance Sheet and Income Statement
The Analysis of the Cash Flow Statement
Analysis of Profitability
Creating Accounting Value and Economic Value
Analysis of the Quality of Financial Statements
Analysis of Credit Risk and Return
Materials uploaded on the Moodle (E-learning website of the course).
Allegrini - Ferramosca, FINANCIAL REPORTING AND ANALYSIS, CREATE McGraw-Hill 2020, ISBN 9781307529432.
Introduction to Investing and Valuation (chap. 1)
Introduction to the Financial Statements (chap. 2)
How Financial Statements are Used in Valuation (chap. 3)
Cash Accounting, Accrual Accounting and Discounted Cash Flow Valuation (chap. 4)
Accrual Accounting and Valuation: Pricing Book Values (chap. 5)
Viewing the Business through the financial Statements (chap. 8)
Analysis of the Statement of Shareholders’ Equity (chap. 9)
Analysis of the Balance Sheet and Income Statement (chap. 10)
The Analysis of the Cash Flow Statement (chap. 11)
Analysis of Profitability (chap. 12)
Analysis of the Quality of Financial Statements (chap. 18)
Analysis of Credit Risk and Return (last chap.)
Materials uploaded on the Moodle (E-learning website of the course).
Allegrini - Ferramosca, FINANCIAL REPORTING AND ANALYSIS, CREATE McGraw-Hill 2020, ISBN 9781307529432.
Introduction to Investing and Valuation (chap. 1)
Introduction to the Financial Statements (chap. 2)
How Financial Statements are Used in Valuation (chap. 3)
Cash Accounting, Accrual Accounting and Discounted Cash Flow Valuation (chap. 4)
Accrual Accounting and Valuation: Pricing Book Values (chap. 5)
Accrual Accounting and Valuation: Pricing Earnings (chap. 6)
Valuation and Active Investing (chap. 7)
Viewing the Business through the financial Statements (chap. 8)
Analysis of the Statement of Shareholders’ Equity (chap. 9)
Analysis of the Balance Sheet and Income Statement (chap. 10)
The Analysis of the Cash Flow Statement (chap. 11)
Analysis of Profitability (chap. 12)
Creating Accounting Value and Economic Value (chap. 17)
Analysis of the Quality of Financial Statements (chap. 18)
Analysis of Credit Risk and Return (last chap.)
Exams methods, materials and syllabus are the same for attending and non-attending students.
Exams methods, materials and syllabus are the same for attending and non-attending students.
Test on the web platform (test.ec.unipi.it)
Written exam with open questions as well as exercises and case studies
Test on the web platform (test.ec.unipi.it)
Written exam with open questions as well as exercises and case studies
Student may choose to carry out a "business game". Students who apply for the business game will work in a team with classmates and will develop an equity research report. Students will be expected to combine knowledge from the materials presented in this class to develop analyses and solutions to pursue opportunity in today’s fast-paced, global, and highly competitive business environment. Each team group will act as financial analyst of the company(-ies) selected. All the team groups’ analyses will be presented in the last lectures and will be assigned a Bonus to add to the final grade of the exam. The composition of the team should be communicated by the end of March via e-mail to both professors, describing also the selected target company.
