Financial Accounting Electives
Earnings Quality and Fundamental Analysis (B8008)
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 required to accurately measure and evaluate firm performance, risk, growth prospects, and value. This course is devoted to a systematic study of these topics, often in industry-specific contexts. We will discuss key GAAP in detail, and analyze many actual financial disclosures and accounting abuses. We will also cover standard and not-so-standard financial analysis techniques, and incorporate insights from practitioner and academic research. The primary objective is to acquire a deep understanding of accounting information and how to intelligently use it in making investment and related decisions. Such knowledge is required of executives, bankers, analysts, investment managers, and other sophisticated users of financial information.
Financial Statement Analysis and Valuation (B8009)
This course helps students understand how firms communicate through financial statements. They learn how to:
- use financial statement analysis as an integral part of the strategic analysis of firms;
- interpret financial statements, make judgments about earnings quality, and uncover hidden assets and liabilities;
- apply financial statement analysis prospectively to forecast and value firms by applying modern accounting-based technologies.
The course has a very practical emphasis, with a wide variety of cases, in-class exercises, and a group project, all involving comprehensive analyses of publicly traded companies.
Fundamental Analysis of Investment and Management Decisions: A Practical Guide (B8010)
Most business decisions of investors, analysts, consultants and managers
require us to assess the future. You will learn a different approach to make
better decisions using the fundamentals of businesses. Students who have taken
this course often comment on how it transforms their thinking and analysis.
It also is a useful “capstone” to an MBA.
We consider how to use financial reports and to supplement the accounting information to understand the company.
It will cover some topics/concepts that are in financial statement analysis, earnings quality, security analysis and valuation classes. But I have never received feedback that the coverage in this course is redundant irrespective of other courses taken. We will focus on understanding how businesses create/destroy value and how to change this, and discuss if this is in the price or not.
You draw on > 30 years of my experience: advising and analyzing companies, creating a new framework for analysis and investment, and as part of senior management at Morgan Stanley, plus as an academic researcher, auditor and participant in accounting regulation. My objective is to pass on as much of this knowledge to you as possible.
Financial Planning and Analysis (B8007)
This course introduces students to modern tools and techniques designed to generate performance measures used for decision-making, management, and control purposes. Accounting information is used for a variety of managerial decisions such as product pricing, profitability analysis (e.g., activity-based costing for customer lifetime value). This course further illustrates how performance measures are integrated into incentive systems so as to align the objectives of (division) managers with those of the shareholders. Key building blocks of such incentive systems are cost allocations, transfer pricing, and compensation schemes. At a time where performance measurement is one of the fastest-growth areas for consulting firms, this course illustrates the strengths and weaknesses of commonly-used performance metrics, e.g., Economic Value Added (EVA), Balanced Scorecard. It serves as an important background for a variety of electives in management and accounting as well as for consulting-related courses.