AFC3230

Financial analysis and valuation

Associate Professor Alan Ramsay

6 points · Two 1-hour lectures and one 1-hour tutorial per week · Second semester · Clayton · Prerequisite: AFC2120

Objectives On completion of this subject students should be able to access financial information in published financial reports; calculate and interpret relevant financial ratios concerned with solvency, liquidity, profitability and financial structure for listed public companies; outline and critically assess cash flow and accounting approaches to valuation; apply cash flow and accounting techniques to valuation of equity securities; and use financial ratios and forecasting techniques to assess credit standing and predict financial distress.

Synopsis This subject aims to provide students with an understanding of the main issues in financial analysis and valuation. The subject consists of three parts. The first part, tools and techniques, includes the form and content of published financial statements, application and use of financial ratios and forecasting techniques. The second part, valuation concepts, covers cash flow-based valuation, including discounted cash flow and free cash flow approaches to valuation as well as accounting based valuation including earnings multiples, residual income valuation models and economic value added. The third part, applications, covers credit analysis and financial distress prediction, equity security analysis and mergers and takeovers.

Assessment Written (2500 words): 25% · Group presentation: 15% Examination (3 hours): 60%

Prescribed texts

Palepu K G, Bernard V L and Healy P M Introduction to business analysis and valuation South Western, 1997

Back to the 1999 Business and Economics Handbook