FIN 448 Fundamental Financial Analysis

Transcription

1 FIN 448 Fundamental Financial Analysis Course Syllabus for spring 2016 Professor Pawan Jain I am Pawan Jain and I will be your guide on this exciting journey this semester. I have been teaching online since 2005 but I am still learning more every semester. Since many of you are new to online instruction, I am sure this will be a learning experience for all of us. One thing I have learned while teaching online - that is to be FLEXIBLE. I have also learned how critical communication (i.e., , the class message center, threaded discussion, chat room) is in online education. Let me stress that online education has many benefits. But it is still in many respects self-directed learning. It requires a high level of responsibility, dedication and self-discipline on your part. Even though we do not have class meetings, there are still weekly assignments and deadlines to meet. In this class you will be responsible for your own work, your own progress, and your own grade. What you get from this class will be in direct relationship to what you put in! I really enjoy the flexibility of online education, but it is also VERY easy to get behind. General Information Prerequisites: Required Text: Office Hours: To enable you to gain a richer and more satisfying learning experience in this course, it is necessary for you to have a basic foundation of knowledge prior to the course: FIN 302 or FIN 332; 56 semester hours completed; admission to Professional Business Studies or listed on a signed major or minor. Wahlen, Baginski, and Bradshaw, Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective, Cengage Learning, 8th Edition (denoted WBB), ISBN: By appointment ( me to set up) Office: Sloan Hall jain1p@cmich.edu 1

2 Phone: Class Website: Late/extra credit: Note: Central Michigan University Global ID and password required There will not be any makeup assignments/ exams or any extra credit opportunities. The only exception to this will be if you have any University-approved reason (participation in an athletic event, military requirements, etc.), in which case you will need to inform me ahead of time. COURSE OBJECTIVES: After completing this course you should be able to: Analyze and exploit information in corporate financial statements. Use financial statement information for firm valuation and other economic decisions. Understand and analyze the issues that corporate managers face as they design and implement financial reporting strategies. Increase your ability to assess accounting quality, and detect and undo earnings management. The six-step analytical framework and practical tools of this course will help you to improve your ability to read and analyze financial statements, which should be useful whether your career interests arise in finance, marketing, strategy, consulting, accounting, operations, or entrepreneurship. COURSE EMPHASIS: The course consists of three integrated parts: I. Financial Statement Information: Upon entering the course, I assume that you have at least a working understanding of the accounting information contained in company annual reports. This information provides the foundation of financial statement analysis and valuation. We will examine the many value relevant pieces of information that financial statements contain, as well as the accounting choices managers make in light of their business strategy, contractual constraints and incentives, and U.S. GAAP. II. Tools of Financial Statement Analysis: We will examine and apply a set of tools to analyze financial statement data in order to assess the firm s financial profitability, risk, growth, and performance. III. Forecasting and Valuation Techniques: We will use the insights we obtain from our analysis of the financial statements to forecast the future business activities, profitability, risk, growth, financial position, and cash flows of the firm. We will develop a set of prospective analysis techniques to build a model of a firm s pro forma financial statements and to 2

3 estimate the value of a firm. These tools will include forecasting financial statements, and valuing firms based on expected future dividends, free cash flows, abnormal earnings, and various market-based valuation multiples. STRUCTURE: Together we will conduct the course in a practical and applied format because you will learn the material more thoroughly by working directly with firms financial statements. We will use readings and active lecture/discussion sessions throughout the course to establish important groundwork in the conceptual frameworks and analytical tools of the course. We will apply these frameworks and tools extensively in case analysis, which comprises the major component of the course. In particular, we will apply all of the tools of the course in real time to conduct an extensive fundamental analysis and valuation of a real company using their current financial statements. Study Teams: We will form teams during the first day of the class. Your team should meet before each class session throughout the course to prepare the cases, complete the team assignments, and discuss the readings and lectures. I hope that team discussions will enable each of you to more fully and efficiently understand the assignments, cases, readings and lectures. EVALUATION: I will evaluate your performance in the course through class participation, quizzes, assignments, a group project and presentation, and a final case study assignment. This course will have a total of 1200 possible points. The breakdown of these points is: Participation Discussion threads = 270 Online Office meeting = Online Quizzes (5) 250 Assignments (2) Assignment 1 = 100 Assignment 2 = Group Project and Presentation Write-up = Presentation = 80 Peer evaluation=20 Final Exam (via web cam or proctor) 200 Total points earned by the student will determine the grade assigned. I intend to use a 90 / 80 / 70 / 60 percent grading scale. Individual assignments may be curved; however, at no time will the final grading scale exceed the above listed scale. 3

4 Class Participation: Your learning and the success of this course rely heavily upon your preparation and discussion of the cases and readings. An important aspect of this class will be communication. Your involvement in this class, through discussion threads, will be evaluated at the end of each unit. 36 points are available for Units 1 through 7 (and 18 points for the Introduction Thread) for a total of 270 points for the course. To receive credit for your threaded discussion, your posts must be made by 11:59 PM (SORRY for the strange time - I would state "midnight" but that is really 12:00 AM the next day!) on the due date of the unit of material. You must post your main answer to each question prior to the last day to receive full credit for it. Additionally, you must reply to a few other students' posts per question. Threads will not only be used for discussion, but I will also use the threads to cover questions about the subject material. In evaluating your contribution, I will not emphasize on offering the "right" solution. Typically, no single "right" solution exists, and moreover, there is much to be gained if we examine a wide variety of viewpoints. You can provide valuable contribution by posing intelligent questions, raising alternative viewpoints, and providing well-reasoned challenges to expressed views. I would like encourage you to call me or participate in online chat session during my office hours. To earn the 30 points you will have to contact me with a question (or providing feedback) at least once during the 6 th or 7 th week of the semester. Online Quizzes: There will be 5 quizzes. Each quiz will be worth 50 points and can be taken up to two times. Your grade will be your highest score. When the quiz is retaken, most of the questions will be new so there is no guarantee that you will do better unless you read the text and attend lectures. Feel free to use your text / notes while taking these quizzes. These quizzes are individual assignments -- teamwork is not permitted. These quizzes will be administered on Blackboard. Assignments: There are a total of two assignments. Each assignment must be turned in on the due date given in the course outline. There will not be any makeup assignments. Logistics The assignments give you opportunities to demonstrate your preparation for that day s class discussion, and to demonstrate your understanding of key takeaways from readings and prior classes. These assignments are individual assignments and team work is not permitted. Grading If your assignment reflects careful thought and a strong effort, you will receive full credit; if the assignment is not completed on time or lacks thought or effort, you will receive no credit. The completed assignments must be submitted to the online Blackboard course shell. Solutions - The assignments may not have a single correct answer so getting an assignment correct is less important than the learning that occurs while preparing the assignment and participating in the class discussion of the assignment. In-class discussions are structured to provide you with feedback and insight into the solutions and key takeaways for each assignment. Graded copies of the assignments will not be returned, so please keep an extra copy for your reference. 4

5 Group Project and Presentation: The final project will consist of the fundamental analysis of financial statement information and the valuation of a company. The content of the final case will closely reflect the content of the course. The final project will enable you to apply the skills learned in the course. This is a group project. During the last week of class each team will have the opportunity to present their analysis and valuation to the entire class. Please review the Final Project folder for further details. To encourage full participation by all team members (and to discourage free-riding), on the last day of the course each of you will be asked to submit an evaluation of the performance and contribution of each member of your team. Your teammates evaluations of your contributions will be incorporated in the group participation and final case write-up components of your grade. Final Exam (via web cam or proctor): The final exam will consist of questions asking you to apply the content learned during the semester. The best preparation for the exam is careful reading of the text, presentation videos, quizzes, active involvement in completing the assignments, and the comprehensive final project. You may use course textbooks, course notes and materials, and any other materials from this course for reference for this assignment. This is an individual assignment and team work is not permitted. NOTE: Course examinations will be completed either by an approved proctor who will administer the exam to the student at their location or on a student-provided computer at a location of the student s choosing. Examinations will be completed on a student-provided computer and will require the use of Respondus Lockdown Browser and Monitor. This software is free to download and use on your computer. Immediately before and during an examination, the use of a webcam will be necessary. The webcam will be used to record completion of the examination and may be required to capture a student photograph, proof of identification, and/or a scan of surroundings. If you do not have a web cam, one can be purchased through either the MBS Bookstore or the CMU Bookstore. If you opt to use a proctor to complete your exams, your proctor must have the ability to download software called Respondus Lockdown Browser onto their organization s computer that you will use to take your exam on. If you choose to use a proctor, please contact CMU Online at , option 1, to discuss the requirements your proctor must be able to complete. Additional Administrative Information Syllabus updates Please note that the timing of topics and reading assignments in this syllabus are subject to change. Changes are at my discretion with the intention of optimizing the quality and flow of the course content. 5

6 Re-grade policy You may disagree with my grading of your work on the final case project or the final exam. To request a re-grade of the project or exam, please submit the original project or exam (without changes) and a written description and explanation of your concern within a week following the return of the project or exam. I reserve the right to re-grade the entire project or exam, so your grade could go down or up. For group work, the entire team must agree to the re-grade request. Communication Expectations Since this class meets over the Internet, it is critical that constant communication is maintained. For my part, I will check my daily (Monday through Friday), usually late afternoon, and will check the Threaded Discussions at least three times a week. From past experience, communication works best. To better serve you, PLEASE include in the subject line of your "FIN 448". Also, please make sure to include your name in your message - it is often hard knowing who you are when all I have is an address! This makes it easier to identify each of you. If at all possible, I will respond to your questions / problems within 24 hours or sooner. Don't be surprised if you hear from one of my TAs. They will be helping me teach this class this semester. Policies To contact me, please me from within the course shell. This makes sure that ALL my online communication goes to one location. This way it makes it easier for me to have access to JUST my online class correspondence. can be a valuable tool; however, it can be easily abused. Each of you has the option to the entire class; however, PLEASE keep these messages related to course content. Also, I suggest that you do not give the entire class your phone number or address. If you want to share this selectively, that is fine. These policies are designed so each of you are not inundated with junk mail and you are able to maintain some degree of privacy. Further, often posting your question / comment in the threads is better than sending an message to the entire class. Finally, please realize that the Central Michigan University or this instructor cannot and will not be held responsible for the content of any personal messages which are sent from one student directly to another student using the online delivery system. It is expected that all students will adhere to accepted codes of ethical, personal, and civil conduct when conversing online using or engaging in any real time online chat sessions. Failure to abide by such codes of conduct and etiquette will result in expulsion from the course with a failing grade. Threads Policies I will not place limits on the use of conference threads other than to clearly state that I will not tolerate rudeness or inconsiderate comments being posted. Please treat each other s views with the same amount of respect that you would want your views handled. Remember, it is VERY easy to be guilty of "flaming" in a thread situation. If handled properly, you may find that the "threads" are the most enjoyable aspect of the class. 6

7 Grammar / Spelling There is a tendency to become lax when posting responses to threaded discussions and when sending . This is not an English class; however, I still expect proper grammar and spelling to be used. I do not intend to grade participation based on the quality of your writing style; however, it is disconcerting when it is HARD to understand what someone is expressing because their writing is unclear. As a suggestion, you may want to compose your threaded comments or messages in a word processing program where you can check spelling, edit, and revise your writing. Once you are finished, you can cut and paste the work into the threaded discussion or into . File Format of Assignments When I deliver material to the class for downloading, I will save text files in "pdf" format. This is an easy format to read with a free Adobe Acrobat reader. You can download this reader at Non-text files will be saved in Microsoft Office format. To send files to me, you can send files in either WordPerfect / Word / Adobe Acrobat or Excel format. If you have any concerns regarding my ability to read a file, please contact me. Again, I am very flexible! Technical Problems If you need technical help, you can also reach the Help Desk by phone at (989) , by chat at by at helpdesk@cmich.edu, or in person at Park Library 101. Self-help materials are also available at the Help Desk website at lt.aspx. If you have problems with the course content, please contact me. Unfortunately, Internet Service Provides (ISP) periodically have problems. I have also found that all ISPs are not "created equal" - many class problems have resulted from an inferior ISP. These problems are not an excuse for failing to complete assignments or for turning them in late, not being involved in threaded discussion, or having no access. Since computer crashes and disasters are bound to happen, I encourage you to make hard copies of your assignments and communication. If you have problems with your ISP, notify them immediately. If problems persist, you may have to access this course from another computer or through another ISP. Keep in mind that your ISP is your only link to this class. Access to Course The way this class is designed, you are not permitted to work ahead; however, I have provided some overlap of the units for flexibility (please check out the schedule shown under "Class Schedule"). After each unit is completed, you will still have access to it; however, work done on prior units (involvement in past threads and quizzes) will not be graded. Library resources CMU offers you a variety of library services. For your course work, you may request up to 20 items per week from the CMU Libraries on the main campus. For specific articles and books, call For reference assistance, call the Off-Campus Librarian s office for your location. Your program administrator or the Document Delivery Office staff ( ) can give you contact information. 7

8 CMU s Academic Integrity Policy: All students are expected to abide by CMU s Academic Integrity Policy, which can be found online at Cheating is hugely damaging to everyone cheaters and non-cheaters alike. Those who cheat deprive themselves of the knowledge and tools they need to be successful. If that were the only ramification of cheating, we might turn a blind eye and let the cheaters eventually fail in their chosen pursuits as poetic justice slams down its unforgiving gavel. However, cheaters also artificially inflate their grades relative to the non-cheaters. This creates situations where those getting some of the highest grades are the ones lacking the fundamental knowledge and skills expected from high performing students. Recruiters and employers then may hire cheaters and graduate schools may accept cheaters because they appear to be the top performing students. The employers and graduate schools are soon sorely disappointed by the incompetence of the students they hire and accept a result of the students cheating to get through school. This has far-reaching, negative effects for two reasons: (1) the cheaters steal jobs and graduate-school placements from the non-cheaters who are more deserving of the positions, and (2) the cheaters damage the reputation of our school in the workplace and at graduate schools making it difficult for all CMU students to get jobs and acceptance to graduate school in the future. Clearly, then, we all have a vested interest in extinguishing cheating at its earliest stages. The following additional information reflects my expectations with respect to the assignments and examination for this course: Assignments, quizzes, and exam are expected to represent the original work of the students. No group work is allowed. Solutions and course notes of other students and faculty should not be obtained or discussed prior to in-class discussion, either electronically or from other students who have been exposed to the case/solution, including students that are currently taking or have taken FIN 448 in prior semesters. Students are not permitted to discuss any part of an exam (including questions and answers) with students in their own and other sections of FIN 448 until the exam has been completed by both sections of the class. Disabilities Act Accommodation Statement CMU provides individuals with disabilities reasonable accommodations to participate in educational programs, activities and services. Students with disabilities requiring accommodations to participate in class activities or meet course requirements should contact Susie Rood, Director of Student Disability Services at (800) , extension 3018 or her at sds@cmich.edu. Students may find additional information on ADA and forms at Personal Involvement and Time There is often a misperception that taking a course online is easier since you don't have to physically go to a classroom. It is true that there are some things that become easier for 8

9 online students. However, it is also easier to get behind. Even though you have flexibility in attending class, the work still needs to be done. Further, you have to take more responsibility for your learning. Finally, an online course requires more personal involvement where participation is the KEY. For success, don't put off your assignments. When possible, get an early start on each unit of material. How much you learn in this class will be in direct relationship to the amount of time spent on this material. Even though this class will be a lot of work, I also hope it can be an enjoyable experience! Finally, I ask that you check your daily. I may be making adjustments to the course from time to time depending on the needs of the class. I will use and the message center to keep you informed. Also, I ask that you access conference threads several times during the week. Don't be surprised if you find most of your learning results from this form of communication. Class Attendance / Involvement This is NOT A CORRESPONDENCE class! We don't have class meetings, but we have weekly assignments AND deadlines! We will move through this material AS A CLASS, not as individuals. You will find that I stress communication. This is not possible if everyone is at a different place in the material. My TAs and I are here to help you, but you will likely find your classmates can help a lot as well! Get to know them. I would suggest that you set aside a time each day that you plan on working on this class. If you need to miss a day, that is fine, but the work still needs to be done! The way this class is designed, you have approximately 2 weeks to complete a unit of material. Even though this may sound like a lot of time, it really isn't considering the amount of material that needs to be covered in each unit. I had considered breaking these units up into smaller pieces; however, leaving them larger gives each of you more flexibility (or more rope to hang yourself with!). I realize that problems occur. I am usually fairly flexible; however, if you are having problems (technical or otherwise) it is YOUR responsibility to contact me. Additional Reference Materials The following list contains books that I think are useful additional sources of information on these topics. These are not required reading for the course, but rather are additional resources for you if you wish to broaden your understanding of these and related topics. Koller, Goedhart and Wessels (McKinsey & Company): Valuation: Measuring and Managing the Value of Companies, John Wiley & Sons, 2010, 5th edition Penman, Stephen H., Financial Statement Analysis and Security Valuation, 4th edition, McGraw- Hill/Irwin, Soffer, Leonard and Robin Soffer, Financial Statement Analysis: A Valuation Approach, Prentice-Hall,

10 COURSE SCHEDULE Week Material Covered Begin and End Dates Assignments due Week 1 Chapters 1 & 2 Jan 11- Jan 18 Introduction Discussion and threaded discussion 1 due by Jan 18 Week 2 Chapters 3 & 6 Jan 16 Jan 25 Quiz 1 and threaded discussion 2 due by Jan 25 Week 3 Chapters 4 & 5 Jan 23 Feb 1 Quiz 2 and threaded discussion 3, Steps 1 and 2 write-up due by Feb 1 Week 4 Chapter 10 Jan 30 Feb 8 Quiz 3, threaded discussion 4 & Assignment 1 due by Feb 8 Week 5 Chapter 11 & work on your projects Week 6 Chapters 13 & work on your projects Week 7 Final Presentations & work on your projects Week 8 Final Exam (Proctored) Feb 6 Feb 15 Quiz 4, threaded discussion 5 & Assignment 2, and Step 3 write-up due by Feb 15 Feb 13 Feb 22 Quiz 5 and threaded discussion 6, and Steps 4 and 5 write-up due by Feb 22 Feb 20 Feb 29 Final Project and threaded discussion 7 due by Feb 29 Feb 29 Mar 4 Due by Mar 4 Project Jan 13: Name and ticker of the company Jan 15: Five min step 1 Jan 20: Name of the competitor Jan 22: Five min step 2 Jan 29: Five min step 3 Feb 5: Five min step 4 Feb 12: Five min step 5 Feb 19: Five min Step 6 Presentations group projects of 10