Financial Accounting
- TR 10:50 a.m.-12:20 p.m.
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Instructor:
Yao Liu
h-index: 3 Info -
Instructor:
Edward Li
Info -
Instructor:
Yao Liu
h-index: 3 Info - 3 points
Financial Planning & Analysis
This course explores the use of financial information for internal planning, analysis, and decision-making. The main objective of the course is to equip you with the knowledge to understand, evaluate, and act upon the many financial and non-financial reports used in managing modern firms.
Managing any modern firm requires information about the firm’s products, processes, assets, and customers. This information is a key input into a wide range of decisions: analyzing profitability of various products, managing product-line portfolios, setting prices, measuring and managing profitability of customers, making operational and strategic decisions, evaluating investments, guiding improvement efforts, and so on.
The focus of this course is on modern internal-reporting systems. We will discover that many firms do not provide their managers with useful information; we will see numerous examples of value destruction and bankruptcies caused by this. We will also investigate some modern ideas in how an organization’s internal information system should be designed to enhance value creation; and we will see how world-class firms take advantage of their competitors’ internal-reporting mistakes.
To attain the right level of understanding, we will briefly explore the mechanics of the many techniques used to prepare internal reports. But the emphasis in this course is very much on interpretation, evaluation, and decision-making.
We will examine the following key topics:
Designing managerial information systems to support an organization’s strategy.
Determining which financial and non-financial metrics are necessary for success in various competitive environments.
Evaluating profitability of products, services, assets, and customers.
The capabilities and the limitations of various reporting systems in guiding value-maximization, cost-control, and improvement efforts.
The limitations of traditional cost-estimation systems.
Activity-based costing and activity-based management.
Estimating and managing the costs of capacity resources.
Relevant costs and relevant revenues in business decisions.
The information necessary to evaluate long-term business decisions.
The incentives created by various performance-evaluation techniques.
- MW 9 a.m.-10:30 a.m.
- MW 10:50 a.m.-12:20 p.m.
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Instructor:
Tim Baldenius
Info - 1.5 points
Earnings Quality & Fundamental
Financial reporting provides a window into the operational and financial workings of a company. However, translating this information into actionable insights is anything but straightforward. It requires an understanding of: Generally Accepted Accounting Principles (GAAP), the quality of financial information, and the adjustments and analyses used to assess profitability, risk, growth, and value.
The course starts with a short review of financial reporting and then focuses on various modules of fundamental analysis, including earnings quality analysis, performance evaluation, risk assessment, forecasting, and valuation. The remaining class meetings (approximately 14 out of 24) are devoted to a deeper dive into the reporting and analysis of key transactions (e.g., business combinations, leasing) and financial statement line items (e.g., revenue, income taxes).
To allow for dynamic progress, the class schedule is flexible:
Topic Approximate # of class meetings
1. Review of financial reporting 2
2. Financial statement analysis 4
3. Forecasting and valuation 4
4. Revenue and related items 2
5. Operating capacity 3
6. Estimated items 3.5
7. Financial instruments 2
8. Investments in businesses 2.5
9. Equity and related items 1
Total 24
While the course covers the theoretical underpinning of the various analyses, it focuses on implementation and practical uses. We will study many actual financial disclosures and cases of accounting abuses, and we will conduct fundamental-based valuation and other financial analyses, including using Excel tools that will be provided to the students. Studying financial disclosures will help you better understand the underlying assumptions and accounting choices the firm made in arriving at its accounting numbers. This information can be used to make earnings quality adjustments to the accounting numbers to make them more consistent across time or more comparable across companies. Studying cases of accounting abuses will help you improve your ability to “read between the lines” and develop a set of red flags to look for in analyzing financial statements. The class also incorporates insights from practitioner and academic research.
The primary objective of the course is to acquire a deep understanding of accounting information and how to intelligently use it in making investment, credit, and similar resource allocation decisions. Such knowledge is required of investors, consultants, analysts, banke
- MW 2:20 p.m.-3:50 p.m.
- MW 10:50 a.m.-12:20 p.m.
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Instructor:
Jonathan Glover
h-index: 28 Info - 3 points
Financial Statement Analysis a
This course will provide students with hands-on experience analyzing financial statements. Students will learn about the general tools, theoretical concepts, and practical valuation issues of financial analysis. By the end of the course, students should be comfortable using firms' financial statements (along with other information) to assess firm performance and make reasonable valuation estimates.
Course content and organization In the first half of the course, we will develop a valuation framework that integrates a firm’s strategy, its financial performance, and the credibility of its accounting. The framework consists of the following steps:
1. Understand the firm’s strategy. We will assess the firm’s value proposition and identify its key value drivers and risks.
2. Accounting Analysis. We will assess earnings quality and evaluate whether the firm's accounting policies capture the underlying business reality. If not, we will adjust the accounting to eliminate GAAP issues and management biases.
3. Financial Analysis. We will evaluate current performance with accounting data and financial ratios.
4. Prospective Analysis: Forecasting. We will assess whether current firm performance is sustainable, and we will forecast future performance. In our forecasts, we will consider growth, profitability, and future competitive advantage.
5. Prospective Analysis: Valuation. We will convert our forecasts of future earnings and book values into an estimate of the firm’s current value.
In the second half of the course, we will apply the above framework to a variety of business valuation contexts, including IPOs, mergers, and equity-investment analyses.
- T 9 a.m.-12:15 p.m.
- T 2:20 p.m.-5:35 p.m.
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Instructor:
Kalash Jain
Info - 3 points
LBO & Bankruptcy Transactions
The purpose of this course is to provide you with an overview of LBO strategies and to introduce you to restructuring and the bankruptcy process. During the course, you will learn how to build a basic financial model and adapt it for LBO transactions. This is an advanced and technical course. If reviewing arcane accounting and legal rules does not bring you joy, you are forewarned! You will see plenty of both in the course. During the course, we will learn to:
1. Build a basic integrated financial models (IS, BS and CFS)
2. Adapt the financial model to study the effect of LBO transactions
3. Study the impact of different deal structures, accounting choices, operating assumptions and financing decisions on firm value, liquidity, profitability, returns and other financial metrics.
4. Learn about alternative exit and restructuring strategies.
5. Understand the bankruptcy process – debt restructuring and fresh start models.
- T 6 p.m.-9:15 p.m.
- W 2:20 p.m.-5:35 p.m.
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Instructor:
Radha Radhakrishna
Info - 1.5 points
Accounting for Consultants
This elective course covers accounting tools useful to consultants, as well as for students with an interest in a firm’s finance function, general management, or private equity.
There will be a particular focus on performance measurement and management.
Performance measurement is a key determinant of success for today’s companies that sell a wide range of products and services to a wide range of customers differentiated in their needs. While financial accounting (GAAP) information is a useful shortcut toward gaining some understanding of a firm’s financial health, consultants and managers need a more solid understanding of the firm’s strategy and mission, as well as disaggregated information that helps assess how the firm is performing along its strategic objectives.
There is overlap between this course and the half-semester course “Financial Planning & Analysis (FP&A)” course. This course expands on many of the concepts taught in FP&A and supplements them with industry insights and guest speakers. For this reason, this course is mutually exclusive with the elective course “B8007 – Financial Planning & Analysis”. If you have taken FP&A, you will not be able to enroll in this course for credit. Please contact me immediately in case of such a conflict.
The following specific topics will be addressed:
• Profitability analysis to assess individual products
• Customer relationship management using customer lifetime value (CLV)
• Budgeting and variances
• Performance evaluation for profit centers and investment centers
• Performance-based pay: team incentives, relative performance evaluation, etc.
• Corporate governance: the C-suite and the role of compensation consultants
• The “War of Metrics”: Cash Flow, EVA, Balanced Scorecards, etc.
• Innovative ways to deviate from GAAP rules to better measure value creation
• Issues specific to multinational enterprises (MNEs), e.g., taxation
• Industry-specific insights: performance measurement in key industries
- MW 9 a.m.-12:15 p.m.
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Instructor:
Tim Baldenius
Info - 3 points
(PhD) Accounting & Information Economics
(PhD) Acctg & Inform Econ
- R 2:20 p.m.-5:35 p.m.
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Instructor:
Jonathan Glover
h-index: 28 Info - 3 points
Research on Investing with Fun
- M 2:20 p.m.-5:35 p.m.
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Instructor:
Shivaram Rajgopal
Wikipedia h-index: 50 Info - 3 points