The module’s main objective is to develop a framework for equity valuation and rational decision-making through the use and critical analysis of published financial statements. The course begins with a presentation and analysis of the main financial statements, and explores the contribution of conventional accounts to the information needs of the markets for equity, debt, executives and corporate control. It then discusses the techniques of fundamental analysis, and proceeds to cash flow and ratio analysis for assessing the profitability, liquidity, and gearing of a business entity.
Case studies are used to illustrate “creative accounting” issues and to discuss factors affecting the quality of reported accounting information. The module concludes with the implementation of accounting data in equity analysis and valuation.