Dr Xi Li, OLD 2.16 (Business analysis component)

Dr Kenneth Lee, OLD 3.29 (Valuation component)

This course is available on the CEMS Exchange, Global MSc in Management, Global MSc in Management (CEMS MiM), Global MSc in Management (MBA Exchange), MBA Exchange, MSc in Accounting and Finance, MSc in Accounting, Organisations and Institutions, MSc in Management and Strategy and MSc in Risk and Finance. This course is available with permission as an outside option to students on other programmes where regulations permit.

Other students may be admitted to the course if they have a strong knowledge of financial accounting and finance acquired at undergraduate or equivalent level, and only with the agreement, in writing, of the teacher responsible for this course.

Enrolment on this course is constrained by section size and the number of sessions available. Students are admitted on the course on a first-come-first-served basis. If the course is over-subscribed, students on the waiting list will continue to be admitted on a first-come-first-served basis as places become available, but MSc students on the Accounting programmes will only then be given priority although cannot be guaranteed a place if no places become available. Therefore, to avoid frustration and possibly being unable to take the course, students wishing to reduce the risk of non-admittance on the course should prioritise their courses and register early for their preferred, “must have” courses. Late registrations or late changes to this course choice may be unsuccessful.

Students will be assumed to have a solid understanding of corporate finance as well as financial accounting principles, techniques and methods. Completion of AC416 in Michaelmas term is strongly recommended for this course.

Attendance at the "Modelling skills" workshop typically held on a Saturday in Michaelmas term is also strongly recommended. Further details will be provided nearer the time.

The aim of this course is to introduce students to security analysis and valuation from both academic and practical perspectives. The course materials include many real-world cases, where students are placed in the role of investors to conduct financial statement analysis and make investment decisions. At the end of the course, students are furthermore provided with an opportunity to apply their skills by analysing and valuing, in small groups, from the point of view of a "sell-side analyst", a firm’s equity of their choice. The course should appeal to students interested in equity research, investment banking, and fund management.

The course is presented in two parts. The first part, financial analysis, focuses on past and present performance evaluation, which is used by financial analysts to generate expectations about future performance (prospective analysis). The second part, security valuation, focuses on the determination of intrinsic security prices, which, in efficient markets, reflect prospective performance. This second part provides students with a valuation ‘toolkit’ which they can draw on when valuing equities in a variety of contexts such as banking, asset management, research, accountancy or consulting.

30 hours of seminars in the LT.

Student group project presentations in week 11 of Lent Term.

Teaching is delivered in two 90-minute sessions per week. Each session is conducted in groups of about 55 students, often involving both lecturing and case study analyses and discussions. In the case study sessions, students break into small groups to work and collaborate as a team. This mode of teaching requires good advance preparation by the students; hence, every student should be ready to contribute to the discussion when called upon. Active participation is expected and encouraged.

There is no required textbook for this course. However, we recommend the following book for reading and additional exercises: K Palepu, P. Healy and E. Peek, Business Analysis & Valuation, 4th IFRS edition, CENGAGE Learning, 2016.  For the valuation section the recommended text is Company Valuation under IFRS, N.Antill, K.Lee and D.Taylor, 3rd Edition, 2019, Harriman House publishing.

Exam (50%, duration: 2 hours) in the summer exam period.
Project (40%) in the LT.
Class participation (10%).