AFC4170

Analysis of financial statements

Associate Professor Alan Ramsay

7 points · Two 1.5-hour sessions per week · Second semester · Clayton · Prerequisite: AFC3140 or MBA5190 · Corequisite: AFC4140 or with approval of lecturer

Objectives On completion of this subject students should be able to interpret published financial statements using ratio analysis; apply other statistical techniques to the analysis of accounting data and interpret the results in light of the existing literature; critically evaluate the theoretical and empirical research on the fundamental analysis approach to security valuation; critically evaluate the empirical research on the association between share returns and financial information; and understand the use of financial statement analysis in predicting financial distress.

Synopsis The subject concentrates on the analysis and interpretation of financial statements for public companies. It combines the practicalities of financial ratio analysis for public companies with the conceptual issues raised by the efficient capital market hypothesis, portfolio theory and risk adjustment. Topics covered will be drawn from financial ratio analysis, analysis of short-term financial stability, properties of accounting numbers and financial ratios, predicting company failure - methodology and results, fundamental analysis, risk and financial information, 'event study' methodology, share returns and financial information (including forecasts), timeliness of accounting information, options and financial information.

Assessment Written (2 assignments): 40% · Class presentation: 10% · Examination (3 hours): 50%

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