Securities Analysis and Financial Modelling
Aims & Objectives
This course focuses on the tools and techniques of securities analysis and the development of a framework for making investment decisions. The course covers fundamental analysis (“bottom up”, firm-level, business and financial analysis) and development of financial models for determining the intrinsic value of a firm’s stock. The firms’ financial statements provide the major source of information for the analyses. The course develops the analytical framework necessary to understand business performance and financial structure, and shows how to produce a full financial model of the firm. We then see how this framework can be used by investors and outside analysts to appraise and value companies and, in doing so will cover alternative methods of appraisal and valuation.
The framework of ideas that we develop in this course is valuable for anyone wanting to understand the financial performance of firms or conduct corporate valuation. The course is particularly appropriate if you are planning a career in investment banking, consulting, equity research, credit analysis or fund management.
Topics Covered
• Use of financial statement analysis to measure economic profitability and financial condition of a firm, and to identify the sources of its competitive advantage
• Evaluation of accounting quality in the context of financial analysis and valuation
• Development of proforma financial statements
• Use of financial models to forecast dividends, cash flows and earnings
• Analysis of credit risks and computation of cost of capital
• Construction of models for corporate valuation, such as Residual-income, DCF, etc.
• Valuation of different types of firms
• Use of financial analysis and modelling techniques in financial, strategic and restructuring decisions.
Format & Teaching Methods
The course will consist of lectures and case study discussions.
Pre-Requisites
Participants must have completed a first course in accounting (Financial Accounting and Analysis / Financial Analysis / Understanding Financial Analysis) and in finance (Finance 1/Corporate Finance and Valuation).
Assignments & Assessment
Individual report 40%
Group report 60%