Dr Xi Li MAR 3.40 and Dr Jose Carabias Palmeiro MAR 3.41

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, although MSc students on Accounting programmes will be given priority. 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.

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 WT.

Student group project presentations in week 11 of Winter Term.

Teaching is delivered in two 90-minute sessions per week. Depending on the state of the ongoing pandemic, some or all of the teaching on this course may be delivered using virtual means as an alternative to face-to-face teaching due to social-distancing or other pandemic-related restrictions that may need to be observed. Each session involves 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.

For the business analysis section, there is no required textbook for this course. However, we recommend the following book for reading and additional exercises: Business Analysis & Valuation (Palepu, Healy and Peek), 4th IFRS edition, CENGAGE Learning, 2016. 

Exam (55%, duration: 2 hours) in the spring exam period.
Group project (40%) and quiz (5%) in the WT.