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.
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Instructor:
Igor Vaysman
Info - 1.5 points
Financial Statement Analysis a
The purpose of this course is to learn about fundamental drivers of value and risk by analyzing financial statements of businesses in different industries. Every public company provides a lot of financial and operational information in its filings. How can this information be used to evaluate its prospects and its risks?
The course is organized around two themes (1) how to identify relevant information in the financial information reported by firms, and (2) how to draw inferences using sound analytical methodology. To this end, we will review techniques for valuation and risk analysis used by banks and asset management firms. The valuation models you will study in this course are all fundamental models – models that use
financial information and review the fundamental operating characteristics of the company. We will learn to build simple financial models, perform risk analysis and fine tune value drivers. Much of the data comes from the financial statements – but it requires a careful study of arcane footnotes to unearth the information provided by the companies. This is an advanced course that goes into the details of footnote analysis, accounting rules, and financial presentations. This course builds on what you learned in Financial Accounting and Corporate Finance. These courses are pre-requisites for taking this course. It is assumed that you have already taken these courses. If you have not taken these courses you should first talk with me before you register. This course will build significantly on your knowledge from those courses. If your basics are solid and you are interested in learning to read financial statements; if you wish to learn to apply financial analysis; this course is for you. We will use excel to build some of the models – but this is not a course in excel. But, it is highly recommended that
you have a good working knowledge of how to build formulas in excel before you come to this class.
By the end of the course, you should be able to perform a thorough, credible investment or credit analysis that meets a high standard. Students should have the ability to estimate fundamental values, and pull apart the information in the financial statements to get relevant information. This course should be of interest to those contemplating careers in investment banking, security analysis, private
equity, hedge funds, and corporate finance.
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Instructor:
Radha Radhakrishna
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.
- FM 6 p.m.-9:15 p.m.
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Instructor:
Igor Vaysman
Info - 1.5 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.
- MTWRF 9 a.m.-5 p.m.
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Instructor:
Thomas E Bourveau
Info - 3 points