Faculty: Prof. Suren Mansinghka, Hong Kong University of Science and Technology

Course Overview:
Financial statement analysis, an interdisciplinary topic, draws from accounting, finance, economics, strategy as well as many other areas. The focus of analysis, while always tailored to the specific needs of the users, has several common themes; viz., to evaluate a firm’s overall performance, to examine effects of operating, financial and investment decisions on a firm’s profitability, solvency, liquidity and cash flows for lending, investment, acquisitions and corporate restructuring, and finally, to communicate the scope and effects of these decisions to various stakeholders.

Therefore, it is very critical that we not only learn about accounting measurement and disclosure issues, but also understand analytical needs of various users of accounting information. Accordingly, sound financial statement analysis involves important elements of both accounting and finance.

Course Objectives:

• Understand conceptual and analytical techniques necessary to conduct business analysis, using financial statement information for primary purpose of making decisions related to valuation and risk assessment.

   

• Develop several fundamental analytical tools – business strategy analysis, accounting analysis, financial and cash flow analysis, and prospective analysis – and practice using them.

   

• Learn to apply analytical techniques by taking examples from equity valuation and credit analysis, and possibly merger and acquisition analysis, subject to time constraints.