The Language and Tools of Financial Analysis

About this course: In this course, participants will learn the foundations of accounting principles and financial analysis, develop an understanding of the links between these, and the measurement of value creation at the firm level. This is the first course in a four-course Specialization on the Essentials of Corporate Financial Analysis and Decision-Making, created in partnership between the University of Melbourne and Bank of New York Mellon (BNY Mellon). View the MOOC promotional video here: http://tinyurl.com/jeoa83t

Who is this class for: Learners who want an introduction to the key financial statements companies use to summarize their financial performance and position, and who wish to learn about the financial tools that facilitate comparison between companies. This course also describes some of the limitations in relying on published financial statements to assess the performance of a company, and introduces the critical concept of 'discounted cash flow' analysis as a key tool in financial decision-making.

Created by:  The University of Melbourne

• Taught by:  Paul Kofman, Dean, Faculty of Business and Economics

  Sidney Myer Chair of Commerce

• Taught by:  Sean Pinder, Associate Professor

  Faculty of Business and Economics

Basic Info Course 1 of 5 in the Essentials of Corporate Finance Specialization Commitment 4-6 hours/week Language English How To Pass Pass all graded assignments to complete the course. User Ratings 4.6 stars Average User Rating 4.6See what learners said Trabajo del curso

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The University of Melbourne The University of Melbourne is an internationally recognised research intensive University with a strong tradition of excellence in teaching, research, and community engagement. Established in 1853, it is Australia's second oldest University.

Syllabus


WEEK 1


An Introduction to Accounting Principles: The Language of Capital Markets



This week we will define and explain the key financial statements produced by a company and reported to its shareholders. We will discuss the different core elements within those statements following basic accounting principles with the discussion framed in reference to excerpts from the actual financial statements produced by the US-listed food company Kellogg's.


8 videos, 7 readings, 1 practice quiz expand

1. Video: Essentials of Corporate Finance Specialization Overview
2. Video: The Language and Tools of Financial Analysis - Overview
3. Leyendo: Course Syllabus
4. Leyendo: Your Teaching Team
5. Leyendo: Week 1 Outline
6. Leyendo: Start of Course Survey
7. Video: 1.0 Welcome and Introduction (It all begins with accounting)
8. Video: 1.1 The Balance Sheet 1: Assets (What the company owns)
9. Video: 1.2 The Balance Sheet 2: Liabilities (What the company owes)
10. Video: 1.3 The Balance Sheet 3: Equity (What the owners own)
11. Video: 1.4 The Profit and Loss Statement: Revenues (What the company earns)
12. Video: 1.5 The Profit and Loss Statement: Expenses (What the company spends)
13. Cuestionario de práctica: Week 1 practice quiz - This quiz does not contribute to your final grade
14. Leyendo: Resources
15. Leyendo: Social Media
16. Leyendo: Study Tools and Tips

Graded: Week 1 graded quiz - This quiz contributes 10% towards your final grade

WEEK 2


An Intuition-based Introduction to Financial Analysis



Understanding the importance and the accounting principles underpinning the key financial statements of a company, we now turn our attention to synthesizing and condensing the financial statement information for the purpose of financial analysis. Specifically, we demonstrate how financial analysts use ratio analysis to measure relative profitability, leverage, efficiency and the liquidity of a company. Again, we utilise information from the financial statements of Kellogg's and its competitor Kraft to demonstrate these financial analysis techniques.


8 videos, 1 reading, 1 practice quiz expand

1. Leyendo: Week 2 Outline
2. Video: 2.0 Introduction: An Intuitive Understanding of Financial Analysis (Let‘s get crunching!)
3. Video: 2.1 Profitability Measures 1 (When is good really good?)
4. Video: 2.2 Profitability Measures 2 (When is really good, good enough?)
5. Video: 2.3 Leverage Measures (Creating value with other people‘s money)
6. Video: 2.4 Efficiency Measures (Are we doing more with less?)
7. Video: 2.5 Liquidity Measures (Staying ahead of the curve?)
8. Cuestionario de práctica: Week 2 practice quiz - This quiz does not contribute to your final grade
9. Video: Mid Course Check-in
10. Video: A View from Industry with BNY Mellon

Graded: Week 2 graded quiz - This quiz contributes 10% towards your final grade

WEEK 3


The Links Between Accounting Principles and Financial Decision-making



Having established initial basic financial analyst's toolset in the first two weeks of this course, some caution is warranted as we turn our attention to some of the pitfalls associated with uncritical use of financial statements by analysts. Specifically, we highlight how the use of historical cost and accrual-based accounting might lead to sub-optimal corporate financial decision-making. We then discuss how the agency relationship between management and the owners of a company may also lead to poor corporate decision-making. We conclude with a cautionary tale of misleading accounting practices and the regulator's response to these cases.


6 videos, 1 reading, 1 practice quiz expand

1. Leyendo: Week 3 Outline
2. Video: 3.0 Accounting Principles and Financial Decision-Making (Trust in numbers)
3. Video: 3.1 Limitations 1: Historical Cost And Market Value (The market is always right...)
4. Video: 3.2 Limitations 2: Accrual versus Cash Accounting (Money in the bank)
5. Video: 3.3 Limitations 3: Profit versus Wealth Creation (Raising the bar)
6. Video: 3.4 Accounting Scandals 1: The Fall-out From Enron (What to look out for…)
7. Video: 3.5 Accounting Scandals 2: Earnings Management (Smoke and mirrors)
8. Cuestionario de práctica: Week 3 practice quiz - This quiz does not contribute to your final grade

Graded: Week 3 graded quiz - This quiz contributes 10% towards your final grade

WEEK 4


Value Measurement via Discounted Cash Flow Analysis



Having identified the key elements of a company's financial statements, and the way in which information from these statements can be utilized in financial analysis, we shift our focus this week to discounted cash flow (DCF) analysis. Sound financial decision-making by CFOs and investors, requires an assessment of future (uncertain) financial outcomes. DCF analysis allows the financial analyst to extrapolate the financial statement information in a forward-looking manner. The DCF technique provides an objective way in which we can evaluate financial decisions while overcoming many of the shortcomings associated with standard ratio analysis.


6 videos, 4 readings, 1 practice quiz expand

1. Leyendo: Week 4 Outline
2. Video: 4.0 Value Measurement Using Discounted Cash Flow Analysis
3. Video: 4.1 Discounting Cash Flows (Not every dollar is equal)
4. Video: 4.2 Forecasting Cash Flows (Back to the future)
5. Video: 4.3 Fair Value Using Net Present Value (Finance meets accounting)
6. Video: 4.4 Caution When Using DCF Analysis (Rubbish in… rubbish out)
7. Video: 4.5 The Accountant Signs Off (A summary of the course)
8. Cuestionario de práctica: Week 4 practice quiz - This quiz does not contribute to your final grade
9. Leyendo: Academic Integrity
10. Leyendo: Where to From Here? The Next Step.
11. Leyendo: End of Course Survey

Graded: Week 4 graded quiz - This quiz contributes 10% towards your final grade
Graded: Course Final Exam - This quiz contributes 40% towards your final grade
Graded: Peer Assessment - This contributes 10% towards your final grade
Graded: Peer Assessment Calculations - Worth 10% of your final grade