Analysis of Financial Statements

Accounting; Financial Analysis and Financial Management

The teaching of the curricular unit is based on recent research materials and on experience gained through practice. The pedagogy of the course is strongly interactive. It seeks substantial student participation and know-how-based learning. Teaching methods include group discussion of real cases and the elaboration of practical work. Emphasis is placed on helping students relate concepts, ideas, and theories to practical, corporate reality.

The fundamental objective of this unit is to provide students with a set of tools and methods that allow them to carry out diagnoses on the economic and financial situation of a company, as well as forecasts about its future performance, namely using assumptions to obtain the value of the company.

Skills to Acquire:

After successfully completing this course, the student should be able to

Identify the sources of information necessary for the preparation of a company’s financial analysis report;
Be equipped with the most important methods and techniques to draw conclusions regarding the economic and financial situation of a company and in this way know how to evaluate the company and the business.

English:

 INTRODUCTION

Financial balance analysis
Analysis of profitability, earnings per share, and firm growth.
Analysis of freed resources, economic value-added, productivity, and Cash Flow
Risk analysis: operational risk and financial and global risk
Scoring and rating
Credit scoring-insolvency risk models
II. CAPITAL STRUCTURE
CAPM and cost of capital: Levered and unlevered beta. Typology of capital costs
Choosing types of financing
Benefits and cost of debt
The notion of opportunity cost of invested capital
MM’s theorem
Agency and bankruptcy costs
III. EVALUATION OF COMPANIES AND BUSINESSES
Value Concept
Estimate of cash flows, growth rates and redidual value.
Models based on DCF
Rating based on multiples
IV. STRATEGY, CAPITAL RESTRUCTURING AND VALUE
Mechanisms for restructuring companies
Corporate governance and corporate control
V- Options in the Valuation of Companies
traditional models
Real Options – brief notes

The assessment of knowledge will take place according to the following methods:

1. Assessment through the final exam

The final exam will consist of an individual written test, and students who obtain a classification equal to or greater than ten values ​​will be approved.

2. Continuous assessment, throughout the academic quarter

The knowledge assessment distributed throughout the academic quarter will take place as follows:

• Group work with oral discussion (100%).

The work consists of an economic and financial analysis of a listed company, chosen by the student together with the teacher of the curricular unit. All items related to the preparation of accounting elements for financial analysis, financial strength and balance, efficiency and profitability, risk, growth and value creation will be evaluated. The performance of each group is observed by the teacher who checks, on dates to be defined in the first class, the original spreadsheet as well as all the accounting and extra-accounting elements obtained by the group for the elaboration of the work.

The group work will have, necessarily, an oral discussion, being the final classification of the work assigned individually. The written work will be quoted for 15 values ​​and the oral discussion for 5 values.

The written work has as a reference 40 pages, in font size 12, and type times new roman.

The student is approved for the UC if he/she obtains, in the set of evaluation elements, cumulatively, 10 values.

NAO