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Analysis of IFRS Financial Statements (800495)

Spring Term 2010

Lectures:

Tuesday, 10.15 11.45 a.m. (Oeconomicum 0.168)


Prof. Dr. Joerg-Markus Hitz
First lecture: Tuesday, 6 April 2010

Tutorials:

Monday, 2.15 3.45 p.m. (Oeconomicum 0.168)


Dipl.-Betriebswirt Nico Lehmann, M.A.
First tutorial: Monday, 26 April 2010

Examination:

Written Examination Tuesday, 20 July 2010, 10.15 11.45 a.m., ZHG 001

Course Description and Objectives:


The aim of this course is to familiarize students with contemporary methods of financial statement
analysis and accounting-based valuation. Special emphasis will be put on (1) the interrelation between
valuation theory and accounting, (2) relevant characteristics of financial statements prepared on the
basis of International Financial Reporting Standards (IFRS), and (3) application of the valuation and
analysis framework to real world cases and examples. The course will discuss several approaches to
valuation of equity and debt investments and their respective merits. Based on the concept of
accounting-based valuation, an analytical framework for analysis of financial statements will be
developed, with an emphasis on ratio analysis of profitability and growth. Having identified the major
value drivers at work, forecasting tools will be outlined. The role of accounting and accounting quality in
general, and with respect to International Financial Reporting Standards (IFRS), will be assessed
throughout the course.
This course rests on a user perspective of financial statements and is therefore well suited for
participants who expect to be active users of financial statements as part of their professional
responsibilities, e.g. in investment banking, consulting or equity analysis. Students with prospective
careers in the preparation and auditing of financial statements will also benefit from a deeper
understanding of the capital markets impact and use of financial information.
This course qualifies as elective course for master students. Successful candidates will receive 6 credit
points (ECTS). Also, this course is open for diploma students (Diplomstudiengang), which will be
awarded 4 credits upon passing the exam.

Platz der Gttinger Sieben 3


D-37073 Gttingen

Tel. +49 (0) 551 / 39-7313


Fax +49 (0) 551 / 39-9498

accounting@wiwi.uni-goettingen.de
www.accounting.uni-goettingen.de

Prerequisites:
This course requires a solid understanding of the principles of accounting and of International Financial
Reporting Standards (IFRS). Since financial statement analysis brings together valuation and
accounting, familiarity with principles of finance, especially investment analysis, is also helpful.
Therefore, having taken the Basismodul Rechnungslegung (Financial Reporting) is of potential benefit.
Naturally, the course in Corporate Finance (Basismodul Finanzierung der Unternehmung) is also
helpful.
Assessment:
Assessment is based on a 90 minute written examination at the end of the term. The exam will be in
English answers in German are not valid and will not be considered for assessment. Further details
will be announced during the lecture, and examples of prior exam papers will be presented during the
tutorial sessions.
Course Material and Readings:
Lecture slides will be provided via the download section at the homepage of the Chair for Financial
Reporting and Auditing (Professur fr Rechnungslegung und Wirtschaftsprfung). The password will be
announced during lectures and tutorial sessions.
Reading a textbook is recommended. Relevant textbook passages for compulsory readings will be
announced as appropriate during the lecture. The lecture draws heavily from

Penman, Stephen H.: Financial Statement Analysis and Security Valuation, 4th edition,
McGrawHill 2010.

Other books you might find useful include:

Palepu, Krishna G., Healy, Paul M. and Victor L. Bernard: Business Analysis and Valuation Using
Financial Statements, Text & Cases, 2nd edition, Thomson Learning 2000.

Wild, John J., Bernstein, Leopold A. and K. R. Subramanyam: Financial Statement Analysis, 7th
edition, McGrawHill 2001.

White, Gerald I., Sondhi, Ashwinpaul C. and Dov Fried: The Analysis and Use of Financial
Statements, 3rd edition, Wiley 2003.

Platz der Gttinger Sieben 3


D-37073 Gttingen

Tel. +49 (0) 551 / 39-7313


Fax +49 (0) 551 / 39-9498

accounting@wiwi.uni-goettingen.de
www.accounting.uni-goettingen.de

Course Outline:
I. Foundations of Financial Statement Analysis
1. Financial Statement Analysis A Capital Markets Perspective
2. Theoretical Foundations
3. Fundamental Analysis
II. IFRS Financial Statements
1. Institutional Background
2. Financial Statements
3. Recognition and Measurement
4. Accrual Accounting
III. Valuation Methods
1. Choice of Valuation Methods
2. Heuristic Methods No Forecasting
3. Valuation: Forecasting Methods
IV. Analysis of Financial Statements
1. Reformulation of Financial Statements
2. Analytical Framework
3. Analysis of Accounting Quality
V. Forecasting and Valuation Analysis
1. Business Analysis
2. Simple Forecasting and Simple Valuation
3. Full Information Forecasting

Platz der Gttinger Sieben 3


D-37073 Gttingen

Tel. +49 (0) 551 / 39-7313


Fax +49 (0) 551 / 39-9498

accounting@wiwi.uni-goettingen.de
www.accounting.uni-goettingen.de