Financial Statements Analysis

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

NAO

1-Principal

 Neves, J. C., (2012) Análise e Relato Financeiro – Uma Visão Integrada de Gestão, Texto Editores.

Robinson, T. (2020). International Financial Statement Analysis, John Wiley & Sons INC International Concepts.

 2-Complementar

Brealey, R.; Mayers, S., and Allen, F. (2017). ISE Principles of Corporate Finance, McGraw-Hill.

Copeland, T. E., Weston, J. F., and Shastri, K. (2004). Financial Theory and Corporate Policy. 4th edition, Addison-Wesley.

Damodaran, A. (2006), Damodaran on Valuation: Security Analysis for Investment and Corporate Finance, 2nd Edition, John Wiley & Sons.

Damodaran, A. (2012), Investment Valuation: Tools and Techniques for Determining the Value of Any Asset, Wiley Finance.

Fernandes, Carla, Cristina Peguinho, Elisabete Vieira, Joaquim Neiva, (2016) Análise Financeira – Teoria e Prática – Aplicação no âmbito do SNC, Edições Silabo (4ed)

Ferreira, M.; A. Mota e J. P. Nunes (2006), Finanças Empresariais: Teoria e Prática, Publisher Team.

José Paulo Esperança, Fernanda Matias (2009),Finanças Empresariais, Texto editora

 Koller, T., Goedhart, M., and Wessels, D. (2005), Valuation: Measuring and Managing the Value of Companies, 4th edition, John Wiley & Sons.

Lando, D. (2004), Credit Risk Modeling: Theory and Applications, Princeton University Press.

Lawrence Revsine; Daniel Collins; Bruce Johnson; Fred Mittelstaedt and Leonard Soffer (2018), Financial Reporting and Analysis 7^th Edition, McGraw-Hill.

Martin S. F & Fernando A. (2011). Financial Statment Analysis: A Pratitioner´s Guide, 4th edition, Wiley Finance.

Mota, G. A., Barroso C., Nunes J., Ferreira M. (2012): Finanças da Empresa- Teoria e Prática, Edições Sílabo

Neves, J. C. (2002), Avaliação de Empresas e Negócios, McGraw-Hill.

 Neves, J. C. (2005a), Análise Financeira: Técnicas Fundamentais, 16.ª edição, Texto Editores.

Neves, J. C. (2011), Avaliação e Gestão da Performance Estratégica da Empresa, Texto Editores.

Penman, S. H. (2013), Financial Statement Analysis and Security Valuation, 5.ª edição, McGraw-Hill.

Richard A. Brealey, Myers, Marcus (2015), Fundamentals of Corporate Finance,McGraw-Hill Education, 8ª edição

Robert, H. (2018). Analysis for Financial Management. 12^th Edition, Macgraw-Hill.

Ross, S.; R. Westerfield e J. Jaffe, (2018), Corporate Finance, McGraw Hill,12ª edição.

Xiao-Jun Zhang Peter D. Easton Mary Lea McAnally Gregory A. Sommers (2014). Financial Statement Analysis and Valuation Hardcover 

 3-Outra bibliografia

Asness, C., Frazzini, A., Israel, R., Moskowitz, T. J., & Pedersen, L. H. (2018). Size matters, if you control your junk. Journal of Financial Economics, 129(3), 479-509.

Cancela, B., Neves, M.E., Rodrigues, L.L., & Dias, A. (2020). The influence of Corporate Governance on Corporate Sustainability: new evidence using panel data in the Iberian macroeconomic environment. International Journal of Accounting and Information Management, 28 (4), pp. 785-806. https://doi.org/10.1108/IJAIM-05-2020-0068

Gupta, H. (2018). Evaluating service quality of airline industry using hybrid best worst method and VIKOR. Journal of Air Transport Management, 68, 35-47.

McDavid, J. C., Huse, I., & Hawthorn, L. R. (2018). Program evaluation and performance measurement: An introduction to practice. Sage Publications.

Neves, M.E., Manuela, M., & Vilas, J. (2020).Determinantes dos Dividendos no Setor das Telecomunicações, Revista Brasileira de Gestão de Negócios, 22 (3), 669-685 https://doi.org/10.7819/rbgn.v22i3.4069.

Neves, M.E; Dias, A., Ferreira, M., & Henriques, C. (2022). Determinants of wine firms’ performance: the Iberian Case using Panel Data, International Journal of Accounting and Information Management (forthcoming, accepted 21 january)

Neves, M. E., Serrasqueiro, Z., Dias, A. and Hermano, C. (2020), Capital structure decisions in a period of economic intervention: Empirical evidence of Portuguese companies with panel data, International Journal of Accounting & Information Management, Vol. 28 No. 3, pp. 465-495, https://doi.org/10.1108/IJAIM-08-2019-0094

Neves, M.E., do Castelo Gouveia, M., Proença, C. (2020). European Bank´s Performance and Efficiency. Journal of Risk and Financial Management, 13(4), 67.doi.org/10.3390/jrfm13040067 

Paul, A., Lawrence A. W. (2019). Lessons in Corporate Finance: A Case Studies Approach to Financial Tools, Financial Policies, and Valuation, 2nd Edition, Wiley.

Proença, C., & Neves, E. (2022). Determinants of Iberian Companies Performance: Corporate boards and non-linearity of gender diversity. Gender in Management, forthcoming.

Vieira, E. S., Neves, M. E., & Dias, A. G. (2019). Determinants of Portuguese firms’ financial performance: panel data evidence. International Journal of Productivity and Performance Management 68 (7), 1323-1342

Williams, E. E., & Dobelman, J. A. (2017). Financial statement analysis. World Scientific Book Chapters, 109-169.

Schoenmaker, D. & Schramade, W. (2019). Principles of Sustainable Finance, Oxford, United Kingdom

Steiner-Khamsi, G., Appleton, M., & Vellani, S. (2018). Understanding business interests in international large-scale student assessments: a media analysis of The Economist, Financial Times, and Wall Street Journal. Oxford Review of Education, 44(2), 190-203.

Zopounidis, C., Doumpos, M., & Kosmidou, K. (2018). Preface: analytical models for financial modeling and risk management.