Advanced Financial Analysis

Course overview

Course outline

1. 1Day 1: Financial Statements and the Annual Report

   • Understanding the income statement, balance sheet, and cash flow statement
   • Other comprehensive income components
2. 2Day 2: Accounting considerations in financial analysis

   • Receivables and the Expected Credit Loss (ECL) provision
   • Fixed assets accounting options: Cost vs. Fair Value models
   • Accounting for capital expenditures and impairment
   • Impact of lease accounting
   • Various investment accounting considerations
   • Accounting treatment of goodwill
   • Content of the annual financial report
   • Non-financial elements of the annual financial report
   • Types of external audit opinions
   • Management Discussion and Analysis (MD&A)
   • Basics of Macroeconomic and Industry Analysis
   • Macroeconomic factors to assess country exposure
   • Indicators of Gross Domestic Product (GDP), unemployment rate, inflation and interest rates
   • Deficit-to-GDP, debt-to-GDP, and GDP growth rates
   • Industry analysis: Understanding Michael Porter's Five Forces shaping an industry's competitiveness
   • Threat of new entrants
   • Threat of substitutes
   • Bargaining power of buyers
   • Bargaining power of suppliers
   • Rivalry of competitors
   • Segment reporting in annual reports
3. 3Day 3: Financial Ratios Analysis Using Excel

   • Common size analysis to improve comparability
   • Calculating trends and growth patterns
   • Ratio analysis to assess key aspects of company performance:
   • Profitability
   • Liquidity
   • Efficiency and working capital management
   • Financing structure and risk
   • DuPont analysis
   • Altman Z-score to assess potential bankruptcy
   • Using graphical representation
4. 4Day 4: Assessing the Quality of Financial Reports

   • Quality of financial reporting vs. quality of earnings
   • Framework for assessing a company's quality of financial reports
   • Potential problems that affect the quality of financial reports
   • Beneish model: M-score to describe the degree to which earnings are manipulated
   • Evaluating the earnings quality of a company
   • Evaluating the cash flow quality of a company
   • Indicators of financial position quality
   • Sources of information about risk
5. 5Day 5: Financial Forecasting Techniques for Analysts

   • Revenue forecasting: Bottom-up versus top-down
   • Forecasting cost of goods sold
   • Forecasting fixed and variable costs
   • Forecasting financial position accounts
   • Working capital: accounts receivables, inventory, payables
   • Fixed assets forecasting
   • Retained earnings and dividend pay-out policy
   • Modeling financial statements forecast