This course is the first in the four-course Specialization Essentials of Corporate Financial Analysis and Decision-Making.
In this course you will develop an understanding of the definitions of key accounting measures – but more importantly you will learn how accounting information is used on a daily basis in financial markets by analysts, investors and CFOs.
Instructors from the University of Melbourne, together with their partners at BNY Mellon, bridge the gap between historical asset valuation reflected in financial statements and the forward-looking needs of market participants seeking to assess current value in the face of future uncertainty.
Courses created in partnership with:
Module 1: An introduction to accounting principles: The language of capital markets
Define the objectives of the key financial statements issued by companies.
Explain the core elements of a company’s financial statements.
Distinguish between classes of assets and liabilities on the basis of individual characteristics of these elements.
Module 2: An intuition-based introduction to financial analysis
Demonstrate how the profitability of a company can be measured in a way that allows comparison with other similar companies.
Employ measurement tools that provide information about the risk of financial distress for a company
Utilize ratio analysis to demonstrate whether the assets of the company are being used efficiently – relative to comparable companies.
Module 3: The links between accounting principles and financial decision-making
Identify the possible shortcomings associated with using published financial statements to conduct financial analysis.
Understand the role of accounting practices by financial managers and internal auditors to misrepresent a company’s financial position.
Understand how the management-shareholder agency relationship can promote poor corporate practices such as earnings management.
Module 4: Value measurement via discounted cash flow analysis
Demonstrate how the discounted cash flow technique explicitly allows for the time value of money via the use of a risk-adjusted discount rate.
Identify the three key factors that are reflected in the discount rate used to evaluate cash flows in a discounted cash flow analysis.
Understand the situations where discounted cash flow analysis might be challenging – in light of the individual characteristics of the asset being addressed.
A basic knowledge of statistics and an ability to employ simple algebra to solve straightforward problems
Familiarity with Microsoft Excel (or a functionally-equivalent spreadsheet program). Specifically participants should possess the ability to summarise data using the graphical tools contained within that program.
Apart from that, a natural curiosity about not only how markets operate, but also how participants in those markets gather and then transform information so as to make financial decisions that maximise firm value
Texts which should be found on every finance professional’s shelf…
Berk, J. & Demarzo, P. (2014) Corporate finance – the core (3rd ed.) Boston: Pearson.
Harrison, W.T., Herngren, C.T. & Thomas, C.W. (2015) Financial accounting (10th ed.) Boston: Pearson.
Graham, J.R. & Smart, S.B (2012) Introduction to corporate finance: what companies do (3rd ed.) Australia: South-Western/Cengage Learning.
This course will run for 4 weeks, and consist of 4 modules each with a series of lecture videos between 5 to 8 minutes long. Each video will contain a range of integrated quiz questions or reflection questions. Assessment will be multiple-choice questions, and a final peer reviewed assessment.
Course hero image reproduced with permission from BNY Mellon.