Financial Accounting Electives
Earnings Quality (B8100)
Projecting a company’s earnings and cash flows and performing high quality financial analysis requires a mastery of basic accounting principles, practices and financial reports. Recent accounting failures and investment scandals highlight the need for executives, bankers and investment managers to understand financial statements and not accept reported numbers at face value. Earnings Quality teaches MBA students to understand and interpret accounting numbers and “off balance sheet” footnote disclosures. Through examples, class discussion and homework and exam exercises, student overcome prior misconceptions about accounting practices and learn to “take control” of a financial statement. We describe the central cash flow, earnings and profitability concepts, major balance sheet accounts (capital leases, inventories, deferred taxes, goodwill, and “reserve” accounts) and off-balance sheet activities (hidden debt, pension funds, and M&A). Several sessions are devoted to mergers and acquisitions accounting and how loopholes in the GAAP rules enable aggressive, acquisitive companies to buy growth and mislead investors. B8100 offers a professional tool-kit of skills that will last your entire career - from the executive suite to the boardroom.
Financial Statement Analysis and Valuation (B8110)
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, analyze cash flows, 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.
Students are also exposed to the latest academic research on fundamental analysis.
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.
Fundamentals-Based Investment Management (B8130)
Fundamentals-based investment strategies are based on the observation that market prices often deviate from fundamental valuations. To take advantage of these arbitrage opportunities one needs to understand the underlying accounting anomalies, the reasons behind the price dynamics, and the techniques on how to create successful investment strategies.
This course is taught from a practitioner’s point of view and will greatly benefit students interested in a career in the financial industry.
The course is divided into two parts:
- Single company analysis: covering accounting irregularities, earnings quality, ratio analysis and fundamental valuation.
- Portfolio analysis and strategy creation: covering the modern tools of the trade, systematic techniques in analyzing large universes of companies, the interplay between fundamentals and the macro economy, and the role of behavioral finance in explaining investment anomalies.
