Tuesday 11-12; Friday 12:30-1:30 and by appoi
MW, 9:30am to 10:45am
This course is designed to prepare you to interpret and analyze financial statements effectively. This course explores in greater depth financial reporting topics introduced in the core course in financial accounting and also examines additional topics not covered in that course. The viewpoint is that of the user of financial statements. This course is designed primarily for students who expect to be intensive users of financial statements as part of their professional responsibilities.
Core Course in Financial Accounting
September 7: Introduction to Course: What is Financial Statement Analysis?
Overview of financial reporting and financial statement analysis
Understand most effective means of mastering course
September 12: Overview of Finanical Reporting
Read Chapter 1: pp. 17-41; 55-56
Hand-in 1: Target Case (on blackboard)
September 14: Balance Sheet Analysis - Asset Analysis
Read Chapter 7: pp. 541-546; Chapter 8 pp. 649-657
Hand-in 2: ConocoPhillips vs. Exxon Mobil (on blackboard)
Problem 8.21 is another LIFO-FIFO problem which you might find useful to do.
September 19: Income Statement Analysis
Read: Chapter 6 pp. 632-638; "Analysis of Waranty Accruals Reveals Margin Issues" (on blackboard)
September 21 & 26: Pro-forma Earnings
Read Chapter 9 - read this chapter to understand why we exclude certain types of income. This chapter is a little wordy for my taste, but bear with it.
9/21 We will go over Problem 9.9 in class. Not a hand-in
Homework: Problem 9.10
9/26: Hand-In 3: General Mills (on blackboard)
September 28 & October 3 & 5 Tool 3: Statement of Cash Flows
9/28 and 10/3 Creating a Statement of Cash Flows
Read Chapter 3: 164-194. Make sure you can do exhibits 3.14, 3.15 and 3.16.
We will go over problem 3.25 in class. Not a hand-in.
Homework: 3.24. Not a hand-in
10/5 Patterns of Cash Flows
Read Chapter 3: 155-164
In class: we will go over Coca-Cola (3.15), Sirius XM Radio (3.18), Sunbeam (3.19), and Montgomery Ward (3.20); and Case 3.3 W.T. Grant. Not a hand-in
October 12 & 17 & 19: Profitability Analysis - Using ROA and ROCE
10/12 ROA and its Components
Read: Chapter 4 (pp. 259-261; 266-295)
10/12: Hand-In 4 - Problem 4.10. After class, I will post the answers on blackboard. I will assume for these two classes that you can do the computations to derive the components.
Homework: Problems 4.15 – 4.19. If you have any questions on these problems, ask them in class.
October 17: ROCE and relating ROA to ROCE
Read: Chapter 4: pp. 295-308
10/17: Hand-In 5 - Problem 4.11. After class, I will post the answers on blackboard. I will assume that you can do the computations to derive the components.
10/19: Hand-in 6: Lehman Brothers Case (on blackboard)
October 24: Review for Midterm
October 26: Midterm
October 31 & November 2: Risk Analysis – Using Ratios and Comparisons Among Statements
Read Chapter 5: pp. 361-380
10/31: Hand-In 7: Clorox (on blackboard)
November 7 & 9: Equity Analysis
No reading or homework assignment
November 14: Guest Speaker (TBA and flexible date)
November 16 & 21: Income Taxes
Read Chapter 8: pp. 661-672
9/21: Hand-In 8: Home Depot
November 23: Operating and Capital Leases
Read Chapter 6: pp. 459-464; 484-493 - don’t worry about the journal entries for the capital leases – we will be concentrating on pp. 490-492.
11/23: Hand-In 9: Case 6.1 (Starbucks) from your textbook
November 28: Introduction to Pensions
Read Chapter 8: pp. 672-684
11/28: Hand-In 10: Problem 8.13, parts a-c only from your textbook.
Homework: Problem 8.22, parts a and b only
November 30: Practice presentation
December 5 & 7 & 12: Class Presentations
December 14: Review for Final Exam
Final Exam: TBA
1. There will be a customized version of Finanical Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, 7th edition, by James M. Wahlen, Stephen P. Baginski, and Mark T. Bradshaw that will be available for sale in the bookstore.
2. There will be other items posted on blackboard.
Grading will be based on the following weights:
Class Preparation** 10%
Group Oral Presentation 25%
Final Exam 40%
* Class preparation are the 10 Hand-Ins that are due throughout the syllabus. No late assignments will be accepted nor will I accept e-mailed or faxed assignments. All hand-ins are due by 9:45 AM on the day of the class as indicated in the syllabus.
You will self-select yourselves into groups of 5 or 6 in class on September 26. In total, I would like to see 9 groups (based on class size). On October 3, each group will choose an industry to analyze, for example, fast food or women’s clothes. You will pick two firms from each industry - one an "old line" firm and one a "cutting edge" firm. For example, if you choose energy, then the old line firm could be Exxon Mobil and the cutting edge firm could be FPL Group, the largest owner of wind farms in the U.S. In your analysis, you will discuss how the industry is changing and do a thorough analysis of each firm. The analysis should include all of the tools that we covered in class, including an equity analysis of the firms. Your bottom line is to decide if you would recommend a buy, hold, or sell of each of your firms. Your group will present orally a 20 minute industry analysis using the firms in your industry, followed by 5 minutes of Q &A. The 20 minutes will be strictly adhered to – like the NFL football draft, you will be on the clock and cut-off after the 15 minutes.
On October 4, each group also will choose the presentation date (tie breakers will be decided in class). There will be three presentation dates: December 5, 7 and 12..
You will be graded on clarity of presentation, on quality of your analysis, your ability to field questions after the presentation. In addition, peer review forms will be given to each member of your group. A member who is consistently singled out as being especially hard working will get a grade higher than the group grade. Similarly, a member who is consistently singled out as not contributing his/her fair share will get a grade lower than the group grade.
More details of the project will be given as the semester progresses.
Select group of 5-6 in class September 26
Select industry and firms October 3
Select presentation date October 3
Guidelines for Group Projects
Business activities involve group effort. Consequently, learning how to work effectively in a group is a critical part of your business education.
Every member is expected to carry an equal share of the group’s workload. As such, it is in your interest to be involved in all aspects of the project. Even if you divide the work rather than work on each piece together, you are still responsible for the entire group presentation. The group project will be graded as a whole: The group project contributes 25% towards your final grade.
It is recommended that each group establish ground rules early in the process to facilitate your joint work including a problem-solving process for handling conflicts. In the infrequent case where you believe that a group member is not carrying out his or her fair share of work, you are urged not to permit problems to develop to a point where they become serious. If you cannot resolve conflicts internally after your best efforts, they should be brought to my attention and I will work with you to find a resolution.
You will be asked to complete a peer evaluation form to evaluate the contribution of each of your group members (including your own contribution) at the conclusion of each project. If there is consensus that a group member did not contribute a fair share of work to the project, I will consider this feedback during grading. If there is consensus that a group member contributed more than his/her fair share of work to the project, I will consider this feedback during grading.
At NYU Stern we seek to teach challenging courses that allow students to demonstrate their mastery of the subject matter. Assigning grades that reward excellence and reflect differences in performance is important to ensuring the integrity of our curriculum.
In general, students in this elective course can expect a grading distribution where about 50% of students will receive A’s for excellent work and the remainder will receive B’s for good or very good work. In the event that a student performs only adequately or below, he or she can expect to receive a C or lower.
Note that the actual distribution for this course and your own grade will depend upon how well each of you actually performs in this course.
The process of assigning grades is intended to be one of unbiased evaluation. Students are encouraged to respect the integrity and authority of the professor’s grading system and are discouraged from pursuing arbitrary challenges to it.
If you believe an inadvertent error has been made in the grading of an individual assignment or in assessing an overall course grade, a request to have the grade re-evaluated may be submitted. You must submit such requests in writing to me within 7 days of receiving the grade, including a brief written statement of why you believe that an error in grading has been made.
Crossed out responses or erasures will not be considered.
I do not take attendance. However, under the guidelines of the Stern School, class attendance is part of a student’s grade. If you miss a class, it is your responsibility to make it up.
In-class contribution is an important part of our shared learning experience. You can excel in this area if you come to class on time and contribute to the course by:
I would appreciate it if you could arrive in class on time. If you are late, please enter the class w/o disrupting the other students. Similarly, if you need to leave class early, please do it as quietly and inconspicuously as possible.
I am sorry, but I do not allow students to use computers in class. Please put them away. Studies have found that use of the computer in class is disruptive to both the student using the computer and to those surrounding the computer.
Unless you are expecting an urgent message, please turn off your cell phones and other electronic devices. And NO TEXTING in class.
The School expects that students will conduct themselves with respect and professionalism toward faculty, students, and others present in class and will follow the rules laid down by the instructor for classroom behavior. Students who fail to do so may be asked to leave the classroom.
Collaboration on Graded Assignments
Students may not work together on graded assignment unless the instructor gives express permission. You may work in groups to discuss homework assignments. However, each person should prepare his/her own individual homework solutions to be submitted. Ideally, you should work through each day’s assignment on your own before discussing it with anyone. You can then make changes to your solution based on your learning in any discussion. Interpretations of the analysis should be in your own words.
Course evaluations are important to us and to students who come after you. Please complete them thoughtfully.
Integrity is critical to the learning process and to all that we do here at NYU Stern. As members of our community, all students agree to abide by the NYU Stern Student Code of Conduct, which includes a commitment to:
The entire Stern Student Code of Conduct applies to all students enrolled in Stern courses and can be found here:
Undergraduate College: http://www.stern.nyu.edu/uc/codeofconduct
Graduate Programs: http://w4.stern.nyu.edu/studentactivities/involved.cfm?doc_id=102505
To help ensure the integrity of our learning community, prose assignments you submit to Blackboard will be submitted to Turnitin. Turnitin will compare your submission to a database of prior submissions to Turnitin, current and archived Web pages, periodicals, journals, and publications. Additionally, your document will become part of the Turnitin database.
Your class may be recorded for educational purposes
If you have a qualified disability and will require academic accommodation of any kind during this course, you must notify me at the beginning of the course and provide a letter from the Moses Center for Students with Disabilities (CSD, 998-4980, www.nyu.edu/csd) verifying your registration and outlining the accommodations they recommend. If you will need to take an exam at the CSD, you must submit a completed Exam Accommodations Form to them at least one week prior to the scheduled exam time to be guaranteed accommodation.