Course Details in 2023/24 Session

Module Title	LM Financial Statement Analysis and Security Valuation
School	Birmingham Business School
Department	Finance
Module Code	07 36335
Module Lead	Dr. Chun Yu Mak
Level	Masters Level
Credits	20
Semester	Semester 1
Pre-requisites
Co-requisites
Restrictions	None
Contact Hours	Lecture-30 hours Seminar-10 hours Guided independent study-160 hours Total: 200 hours
Exclusions
Description	This module introduces fundamental analysis that is an economic framework for business analysis and security valuation based on accounting information. The main focus is on integrating key concepts of economics, accounting and finance in order to effectively evaluate the information content of financial reports, derive forecasts and apply valuation techniques for the purpose of implementing investment strategies and consulting. All lectures are backed by relevant discussion on cutting-edge research in areas of Capital Market-based Accounting Research and Corporate Finance. Additionally, students are encouraged to analyse the quality of accounting information and to explore empirical studies concerned with the value relevance of accounting information by using real data from financial reports and electronic databases like Datastream, Compustat and CRSP among others. Via these practices, students explore how the value of a stock or operating asset in an efficient market reflects investors’ expectations on its future performance. In align with technical analysis skills offered by another module – Market Microstructure and Trading Techniques, this module equips students with key security analysis and valuation techniques commonly applied in trading rooms of financial industry. Throughout, this course also spends a reasonable amount of time on the role of theories and industry practices introduced, in promoting ethical and sustainable businesses practices. Some other topics that will be considered in this module include cash flow forecasting using EXCEL, financial modelling, simulation, stress testing in simulated scenarios, using EXCEL.
Learning Outcomes	By the end of the module students should be able to: Critically explain the accounting framework, the conceptual basis of financial reporting and financial statements; Apply and calculate suitable financial ratios using published accounting data like annual reports and data from financial database like Datastream, Compustat, etc.; Critically explain how assets, liability and earnings numbers may be affected by accounting policy choice, creative accounting and international differences in accounting practices; Perform strategy analysis to identify the firm's profit drivers and key risks, and how business value is created; Explain and understand accruals-based and cash flow-based models relevant to business forecasting and fundamental valuation; Apply forecasting techniques to business, and understand the foundation of relative valuation models such as cash and earnings-based models, P/E, book to market ratios etc. Write a report on the analysis of a company’s financial statement information from a valuation perspective; and Critically integrate and apply concepts from accounting and finance to analyse business plans and company valuation.
Assessment	36335-01 : Individual Report : Coursework (50%) 36335-02 : Individual Assignment : Coursework (50%)
Assessment Methods & Exceptions	Main & reassessment: 2,000 word report (50%) & 2,000 word individual assignment (50%). Students who fail the module resit the failed component(s) only.
Other
Reading List