30526 - FINANCIAL ANALYSIS AND PERFORMANCE MEASUREMENT

The course assumes a good command of basic financial accounting topics (e.g., assets, liabilities, present value calculations, and discounting).

This course has two primary goals. First, it intends to develop students’ skills in understanding, analyzing, and interpreting financial statements. Conceptually, the course emphasizes that producers and users of financial statements have different objectives and informational needs. At the same time, the course is applied in that it teaches students how to analyze actual financial statements data to make informed business decisions and assessments. The course assumes a good command of basic financial accounting topics (e.g., assets, liabilities, present value calculations, and discounting). Second this course is designed to broaden and deepen students’ conceptual and technical understanding of accounting as it is used for management purposes. The emphasis in the course is on financial controls, which provides the dominant form of control in the vast majority of decentralized organizations. This module provides support in business decisions, evaluation of organizational performance, or in evaluation of others (and/or be evaluated) through the use of financial and nonfinancial information.

The first goal of the course is to advance your understanding of how financial statements are analyzed and used in various decision-making and investment settings. This goal is accomplished through four (6) individual steps:

• Business strategy analysis.
• Accounting analysis.
• Financial analysis.
• Prospective analysis.

The second goal of the course is to focus on management and control systems for ensuring good enterprise control. Using financial controls requires managers to make decisions about:

• Responsibility structures.
• Performance measures.
• Performance evaluations.
• Rewards.

• Be knowledgeable users of financial statements as part of their professional responsibilities as financial analysts.

• Carry-out the following analyses. This goal is accomplished through six individual steps:

1. Business strategy analysis.
2. Accounting analysis.
3. Financial analysis.
4. Prospective analysis.
5. Equity security analysis.
6. Credit analysis.

• Face-to-face lectures
• Case studies /Incidents (traditional, online)
• Individual assignments
• Group assignments

Homework assignments (individual and group homework assignments) may be a short textbook problem, a set of questions related to an article discussed in class, a case study, etc. In case of individual homeworks, you may discuss the assignment with your classmates, but each student composes his or her answer, which I grade. 

Your course grade reflects how you perform relative to your peers on one in-class test, homework/case assignments, and class participation. The weights of the test, assignments and class participation are as follows: 

• Homework assignments: 40%.
• Class participation: 10%.
• Final test: 50%.

• P.M. HEALY, K. PALEPU, E. PEEK, Business Analysis and Valuation, IFRS Edition, 2016, 4th edition, ISBN-13: 9781473722651 Chapters 1 – 6. Lecture notes and homework assignments.
• K.A. MERCHANT, W.A. VAN DER STEDE, Management Control Systems: performance measurement, evaluation and incentives, 2017, 4th edition, ISBN-13: 9781292110554 (print) / 9781292110585 (PDF) / 9781292181875 (ePub)