Financial Statement Analysis and

Equity Valuation
BE-414-1

Included in Study
 Master's Programme in Accounting and Auditing
 Master's Programme in Business Administration
 Master's Programme in Business Administration (5 years)

Recommended pre-requisites
Bachelor level course in Accounting, Investment and Finance

Course contents
This course will examine how the underlying (or theoretically "correct") value of
firms can be estimated. The course integrates the learning from finance and
accounting courses. Specifically, it shows how the structure of accounting can be
exploited for valuation purposes. While traditional finance courses view investors
as relatively passive, accepting prices as fair value, this course takes an activist's
perspective. Active investors exploit what is perceived to be mispricing in the
market to earn superior returns.

The course's primary focus is on earnings forecasting and methods for

converting forecasts to a valuation. While valuation texts often use discounted
cash flow analysis to value enterprises, analysts typically forecast earnings to
indicate business value. Earnings, appropriately measured, give a better
indication of the value generating process of an enterprise. The course shows
how the analysis of earnings prospects leads to a firmer understanding of
fundamental value. As earnings differ from cash flow because of accrual
accounting, the course lays out how accruals can help in understanding a
business and its value

Learning outcomes
On successful completion of this course the student should be able to
 analyze historical performance, including reorganizing a company´s financial
statements to reflect economic performance
 forecast performance by preparing business forecasts/pro forma financial
statements
 use simple valuation techniques such as asset based valuation and the
method of comparables
 demonstrate how financial statements prepared in accordance with
internationally accepted accounting standards are used in valuation
 apply fundamentals such as dividends, cash flows, earnings and equity book
value to compute equity value/company value
 analyze and provide evidence that the fundamental valuation models in
general are identical
 provide evidence that company value is unaffected of the accounting methods
employed
 link a company's valuation multiples, such as price/earnings ratio and price--
book ratio, to the core drivers of its performance
 trade on fundamental information

Teaching methods and workload

Lectures, and individual/group work. Estimated workload is about 200 hours.

Evaluation
The study programme manager, in consultation with the student representative,
decides the method of evaluation and whether the courses will have a midterm-
or end of term evaluation, see also the Quality System, section 4.1. Information
about evaluation method for the course will be posted on Canvas.

Examination requirements
Approved compulsory assignment. Further information will be given in Canvas at
the start of the semester.

Assessment methods and criteria

4-hour written examination with letter grades.

Due to grade requirements for state authorised public accountants, a regular

examination will be held both autumn and spring.

Admission for external candidates

No
Type of course
Theoretical.

Level of course
Second cycle i.e. master level.

Year of study
Normally fourth year.

Name of lecturer
For additional information, please contact School of Business and Law, phone
no. (+47)38141068

Language of instruction
English.

Mode of delivery
Face-to-face

Credit reduction
 BE-407-1 with 7.5 credits.
 IN-5600-1 with 7.5 credits.
 IN-5600-2 with 7.5 credits.
 BE-504-1 with 7.5 credits.