Financial Statements Analysis

Learning Results

The fundamental objective of this course is to provide students with a set of techniques and methods that
allow them to perform diagnostics on the financial situation of a company as well as predictions about future
performance.
Specifically it is intended that the student is able to perform an assessment or viability study, stability and
profitability of a business or project.
After successfully completing this course, the student should be able to:
-Identify the sources of information necessary for the production of a report of a company’s financial analysis;
-Be endowed with the most important methods and techniques, like himself an analyst, to draw its conclusions
in relation to the financial situation of a company and thus learn to evaluate the company and the business.

Program

I- Introduction
Financial Equilibrium
Return on equity, EPS and growth
Productivity and cash flow
Operational risk and Financial risk
Scoring and rating
Credit scoring-insolvency risk models
II- Capital Structure of firms
CAPM and estimation cost of capital: Levered e unlevered beta.
Types of financial structures
Costs and Benefits of debt
Opportunity cost
Modigliani and Miller Theorem
Agency costs and insolvency costs
III- Valuation of Firms
Concept of Value
Estimation of cash flow, growth rates and terminal value
Models of valuation based on DCF
Relative valuation models.
Special cases in valuation
IV- Strategy and Corporate Restructuring
Basic concepts
Mechanisms of corporate restructuring, control and economic rationality
Corporate governance and corporate control
V- Valuation of investments in real assets
Traditional models for valuing investments in real assets.
Real options valuation models.

Curricular Unit Teachers

Internship(s)

NAO

Bibliography

Brealey, R..; Stewart C. Myers, F. (2007), Princípios de finanças empresariais, 7 ed.
Copeland, T. E., Weston, J. F., and Shastri, K. (2004). Financial Theory and Corporate Policy. 4th ed, Addison-
Wesley.
Damodaran, A. (2006), Damodaran on Valuation: Security Analysis for Investment and Corporate Finance, 2nd
Ed, John Wiley & Sons.
Ferreira, M.; A. Mota and J. P. Nunes (2004), Finanças Empresariais: Teoria e Prática, Publisher Team.
Koller, T., Goedhart, M., and Wessels, D. (2005), Valuation, 4th edition, John Wiley & Sons.
Lando, D. (2004), Credit Risk Modeling: Theory and Applications, Princeton University Press.
Neves, J. C. (2002), Avaliação de Empresas e Negócios, McGraw-Hill.
Neves, J. C. (2005a), Análise Financeira, 16.ª edição, Texto Editores.
Neves, J. C. (2005b), Avaliação e Gestão da Performance Estratégica da Empresa, Texto Editores.
Penman, S. H. (2006), Financial Statement Analysis and Security Valuation, 3.ª ed, McGraw-Hill.