This course is designed to develop students' ability to interpret and use financial accounting information across various economic decision contexts. The perspective taken is that of an outsider relying on publicly-available financial information for investment, credit, and strategic decision-making purposes. The course relies heavily upon financial statement analysis tools and the economic profit-based valuation framework. Through lectures, in-depth case studies, and real-time exercises, the first half of the course covers traditional financial statement analysis-based tools for critically analyzing and assessing a firm's current financial performance and economic condition, including ratio analysis, accounting quality analysis, and financial distress / bankruptcy prediction models. The second half of the course introduces an accounting-based valuation framework and develops the link between financial statement analysis, firm performance, and firm value. The capstone to the course is the completion of a comprehensive, real-time analysis and valuation of a publicly traded firm (or registered IPO candidate). The course is structured for students to gain a deeper understanding of the economic pressures behind the valuation creation and valuation process. The course will be useful to those students who anticipate making investment or credit decisions at least partially based on historical and prospective financial statement information, and those who want to have a better understanding of how to use financial information to assess whether and how any organization is creating value through its operations and strategic actions.
3 units · GSB Letter Graded
This course is designed to develop students' ability to interpret and use financial accounting information across various economic decision contexts. The perspective taken is that of an outsider relying on publicly-available financial information for investment, credit, and strategic decision-making purposes. The course relies heavily upon financial statement analysis tools and the economic profit-based valuation framework. Through lectures, in-depth case studies, and real-time exercises, the first half of the course covers traditional financial statement analysis-based tools for critically analyzing and assessing a firm's current financial performance and economic condition, including ratio analysis, accounting quality analysis, and financial distress / bankruptcy prediction models. The second half of the course introduces an accounting-based valuation framework and develops the link between financial statement analysis, firm performance, and firm value. The capstone to the course is the completion of a comprehensive, real-time analysis and valuation of a publicly traded firm (or registered IPO candidate). The course is structured for students to gain a deeper understanding of the economic pressures behind the valuation creation and valuation process. The course will be useful to those students who anticipate making investment or credit decisions at least partially based on historical and prospective financial statement information, and those who want to have a better understanding of how to use financial information to assess whether and how any organization is creating value through its operations and strategic actions.
Offered in Winter 2027 at Stanford University.