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.
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:
Case studies and financial reports will be discussed during the lectures. Students will have the opportunity to work in team and actively participate in the solutions of the proposed cases/exercises.
Students will acquire an awareness of techniques to be used in an (independent) accounting and financial research department or firm. Accordingly, students will acquire confidence typical to the financial analyst.
During the lectures and discussions, the designing and management of activities will be assessed.
The course has a very practical focus. The methods of fundamental analysis will be examined in detail and applied in cases and projects involving listed companies.
See the E-learning website for the details and the articulation of the course.
Materials uploaded on the Moodle (E-learning website of the course).
Allegrini - Ferramosca, FINANCIAL REPORTING AND ANALYSIS, CREATE McGraw-Hill 2020, ISBN 9781307529432. The definitive syllabus is the following one. Part 1 – Allegrini 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) The Analysis of the Cash Flow Statement (chap. 11) Creating Accounting Value and Economic Value (chap. 17) Part 2 – Ferramosca 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) Analysis of Profitability (chap. 12) 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.
Written final exam with both open and multiple choice questions as well as exercises and case studies.
The course is of interest to those contemplating careers in banking, security analysis, consulting, public accounting, and corporate finance.
