AC210: Financial Statement Analysis for Investment Banking and Asset Management

Accounting information is of critical importance to capital markets. This introductory course combines academic theory and real-world cases to provide students with a thorough grounding in the use of financial statements for investment analysis and banking.

The aim of the course is to help students become sophisticated users of financial information. The course is thus suitable for students interested in learning how financial information can be useful in asset allocation and, more broadly, in making decisions about providing equity and debt financing to firms. 

The course covers several important topics, including revenue and expense recognition, accounting for debt and equity financing and complex M&A transactions, cash flow analysis, and security valuation using multiples and discounted cash flows. 

The course blends cutting-edge research and extensive real-world applications. It is especially suitable for those students interested in pursuing careers in equity research, asset management, and investment banking and provides an excellent foundation for those preparing for interviews and assessment centres in these fields.

Prerequisites: Any undergraduate-level course with some accounting or finance content.

Level: 200 level. Read more information on levels in our FAQs

Fees: Please see Fees and payments

Lectures: 36 hours

Classes: 18 hours

Assessment: Two written examinations (Midterm exam 50% and final exam 50%)

Typical credit: 3-4 credits (US) 7.5 ECTS points (EU)

Please note: Assessment is optional but may be required for credit by your home institution. Your home institution will be able to advise how you can meet their credit requirements. For more information on exams and credit, read Teaching and assessment

The course will be particularly valuable to students who plan to pursue careers in equity research, asset management, and investment banking. 

The course is suitable for students with little prior exposure to accounting. However, students who have already taken several accounting courses will also find the unique blend of academic evidence and real-world applications novel and appealing. 

The course is designed for a diverse international audience and therefore emphasizes differences between international accounting standards (IFRS) and US GAAP when appropriate. 

• Understand the roles of key players in capital markets

• Learn how to extract and interpret relevant financial statement information

• Understand how financial statement information is used in investment banking and asset management

• Apply discounted cash flow models and multiples to value a firm

• Conduct fundamental analysis in equity and credit markets

• Relate economic events to financial statements and disclosures

• Critically evaluate financial reporting choices made by corporations

• Understand different ways in which companies communicate information to financial markets

• Assess how environmental factors might impact financial analysis

• Learn how to account for different types of equity and debt financing and M&A transactions

• Understand firms’ reporting incentives and detect earnings management

The design of this course is guided by LSE faculty, as well as industry experts, who will share their experience and in-depth knowledge with you throughout the course.