Finance Analysis 506: Unit Outline

Finance Analysis 506 is an advanced course designed to provide students with a deep understanding of sophisticated financial analysis techniques and their practical applications in real-world business scenarios. This unit outline details the key topics covered, learning objectives, assessment methods, and required resources.

Course Objectives

Upon successful completion of this course, students will be able to:

• Apply advanced financial modeling techniques to analyze complex business problems.
• Critically evaluate financial statements and identify key performance indicators.
• Conduct comprehensive valuation analyses using various methodologies, including discounted cash flow (DCF), relative valuation, and asset-based valuation.
• Understand and apply risk management strategies to mitigate financial risks.
• Analyze and interpret financial data to make informed investment decisions.
• Communicate complex financial information effectively to a variety of audiences.

Course Modules

The course is structured around several key modules, each building upon the previous one:

Module 1: Advanced Financial Statement Analysis

This module focuses on in-depth analysis of financial statements, including income statements, balance sheets, and cash flow statements. We will explore techniques for identifying accounting manipulations, assessing earnings quality, and analyzing off-balance-sheet financing. Ratio analysis will be covered in detail, enabling students to compare companies and identify trends.

Module 2: Valuation Methodologies

This module delves into various valuation methodologies. Discounted Cash Flow (DCF) valuation will be examined rigorously, covering forecasting techniques, sensitivity analysis, and terminal value estimations. Relative valuation techniques, such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) multiples, will also be explored. Asset-based valuation will be used when appropriate.

Module 3: Capital Budgeting and Investment Decisions

This module focuses on the capital budgeting process and investment decision-making. Techniques such as Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period will be reviewed and applied to complex investment projects. Students will also learn about real options analysis and its role in evaluating strategic investment opportunities.

Module 4: Risk Management

This module introduces students to various risk management strategies. We will explore methods for identifying, measuring, and mitigating financial risks, including market risk, credit risk, and operational risk. Hedging techniques using derivatives will also be covered.

Module 5: Mergers and Acquisitions (M&A) Analysis

This module examines the financial aspects of mergers and acquisitions. Students will learn how to analyze potential M&A targets, conduct valuation analyses to determine fair deal prices, and assess the potential synergies of a merger. Post-merger integration challenges will also be discussed.

Assessment

The course assessment will comprise:

• Midterm Exam: Covering Modules 1 and 2 (30%)
• Group Project: Comprehensive financial analysis and valuation of a selected company (30%)
• Final Exam: Covering all course modules (40%)

Required Resources

The required resources for this course include a standard finance textbook (details will be provided at the beginning of the semester), access to financial databases such as Bloomberg or Thomson Reuters, and spreadsheet software (e.g., Microsoft Excel).