FI 403 E
Financial Analysis
ACADEMIC AREA : FINANCE, ACCOUNTING AND ECONOMICS
PROGRAMME(S) PGE 2 - AUTC
INSTRUCTOR(S) : Donatien HAINAUT (Coordinator)
Guillaume BAGNAROSA – Helmi HAMMAMI – Christian HYTTE
Jean-Marc LAGODA – Amine LAHIANI – Alexander NIESS
Course Instructor: Helmi HAMMAMI
CONTACT HOURS / FORMAT : 30 hours / 10 x 3 hours
OFFICE HOURS : Group O: Monday 2PM to 3PM.
Group G: Monday 3PM to 4PM.
Other timing, upon request (Appointment).
Office location: #: 333 – 3rd Floor – Campus 1.
@:
T: Ext: 4855
STUDY TIME : 95 hours
CREDITS : 5 ECTS credits – M1
This is equivalent to 30 hours of in-class activities and 95 hours outside class (Class preparation, homework and assessment)
PRE-REQUISITE MODULES: AC 301 and an introduction to main capital budgeting tools QM 302 or equivalent.
MODULE OBJECTIVES:
This module provides an introduction to some key concepts and tools for financial analysis and management. The module will first focus on published financial statements (income statements, balance sheets and cash flow statements). The aim here is help students to understand the structure and content of the financial reports provided to external stakeholders of an enterprise. Next, the module introduces criterions commonly used in stocks market to appraise the equity or the enterprise, and its evolution. Finally, as investors will increasingly incorporate Environmental, Social and Governance considerations into their investment process, the module introduces the main ESG indicators. The relation between the performance/risk management and these indicators is next discussed.
LINKS WITH THE SCHOOL GRP OBJECTIVE (GLOBAL RESPONSIBLE PIONEER) :
Global managers have to master all aspects of finance: from the analysis of disclosed annual statements to financial markets. But not only, the school being committed to train Global responsible pioneers, this module also presents ESG indicators, increasingly taken into account by investors. And students will have to incorporate these indicators in the financial analysis of one firm.
MODULE INTENDED LEARNING OUTCOMES (ILOs):
Knowledge-based outcomes – by the end of the sessions, the students should know and understand:
1. how a company's annual report and company’s accounts are structured
2. what is the difference between investment and financing
3. what are the different sources of financing for a firm and for each of them their advantages and disadvantages
4. the common valuation methods to appraise a firm equity or a firm’s value.
5. How ESG indicators should be taken into account into the investment decision.
Skill-based outcomes – by the end of the sessions, the students should be able to:
5. use financial information to assess a company's health and its strategy
6. select the appropriate ratios to perform a financial analysis
7. select the appropriate tools for any computation (Excel, solver, financial tables)
8. determine whether or not they agree to work for, invest in, or trade with, a particular company.
TOPICS COVERED:
This module focuses on the interpretation of companies accounts. The main elements of the module are:
1. Description of the financial statements used for external communication
2. Margin analysis
3. Working capital management
4. Debt structure and its cost and stakes
5. Ratio analysis
6. Stocks markets and market ratios
7. Technical Analysis
8. ESG indicators
LINK WITH AND CONTRIBUTION TO PROGRAMME:
This module is a mandatory module of the PGE program. The learning objectives of the PGE program that are met through this module are:
1. the student learn the fundamental techniques in finance.
2. the student starts the acquisition of management problem solving techniques based on accounting and quantitative methods.
3. the student uses English in a business context.
LINKS WITH COMPANIES: N/A
TEACHING METHODS:
Typically classroom time will be used in the following way:
Learning outcomesLectures led by the module leader / All
In-class exercises linked to lectures / All
Class discussions / All
In addition, students are expected to prepare themselves through the following mechanisms:
Reading / 1 to 7Research and preparation of the exercises / case studies / 5 to 10
Students are expected to have read all available material before the session. Each session will start with a short presentation of the concepts, where the instructor will be ready to answer questions. The concepts will then be applied to examples taken from companies annual reports or from recent international finance articles when appropriate. Students are expected to take part in class discussion, and to work in small groups when necessary.
METHODS OF ASSESSMENT:
Assessment / Individual /Group / Type (oral, written) / Length of exam (when applicable) / Weight % / ILOs assessedContinuous / Group / Oral and Written / Report, 15 pages / 40 % / 5 to 8
Final / Individual / Written final examination / Exam 3 hours / 60 % / 1 to 5
Students’ work will be assessed both through continuous assessment & the final exam.
The assessment will be through both individual and group work.
Assessment Type / % of Overall Assessment / Learning OutcomesContinuous Assessment:
- Group analysis presentations (written)
- Group analysis presentations (oral) / 25%
15% / 5 to 8
Final Examination / 60% / All
Final examination
It may cover any material taught in the module and is closed book. It tests the students on their assimilation of the main concepts, on their ability to apply them judiciously on exercises and/or on their aptitude to analyse a situation critically.
Continuous assessment: group work
The class is divided into 7 groups. Each group must present a written report presenting a thorough financial analysis of one specific firm. A list of possible firms to be selected by the students will be given in due time.
Students will be required to present orally their main conclusions.
ACADEMIC INTEGRITY:
Plagiarism is copying another’s work or ideas. This includes sections (sentences, tables, diagram) of books or articles, another student’s work or text, diagram, data from the internet without proper referencing etc. Adding your name to group work in which you have not participated or letting a student who has not participated add his/her name to work is also considered as an offence and will lead to disciplinary action for all involved.
Plagiarism in any assessed work (continuous assessment, examinations and projects) is considered as a serious offence and will lead to disciplinary action.
Other forms of academic dishonesty are subject to disciplinary sanctions. Academic dishonesty, other than plagiarism may take any number of forms such as submission of the work more than once whether the earlier submission was at another institution, unless prior approval has been obtained, cheating on an examination, aiding another student’s dishonesty, unauthorized or inappropriate use of computers, calculators and other forms of technology in course work, assignments or examinations.
BIBLIOGRAPHY:
Recommended Textbook :
Vernimmen P. (Latest Edition) Corporate Finance: Theory and Practice, John Wiley & Sons
(eBook available : 2009 english version)
Other Reading :
è Also available in French: Vernimmen P.(2013) Finance d’entreprise 2014, 10ème édition, Dalloz
è Their English website: http://www.vernimmen.com
è Their French website: http://www.vernimmen.net
Brealey R.A., Myers S. (2014), Principles of Corporate Finance, Mc Graw Hill
è Also available in French: Brealey R.A., Myers S. (2006) Principes de gestion financière, Pearson Education
Students are strongly urged to read the financial press on a regular basis
MODULE OUTLINE
FI 403 E
SESSIONS / Meeting Patterns / TOPICS / ACTIVITIES, READING / ASSIGNMENTS TO BE DONE BEFORE CLASS1 / O: Mon 08/09/14: 8.15 – 11.25
G: Tue 09/09/14:
8.15 – 11.25. / A review of financial statements
o Balance sheet: liquidity ratio, debts ratio
o Income Statement : analysis of margins & profitabiliy / Prepare session of exercise 1
2 / O: Mon 15/09/14: 8.15 – 11.25
G: Tue 16/09/14:
8.15 – 11.25. / · A review of financial statements (con’t)
o Income Statement (con’t)
o Cash-flow Statement
o Link between income statement & balance sheet / Prepare session of exercise 2
3 / O: Mon 29/09/14: 8.15 – 11.25
G: Tue 30/09/14:
8.15 – 11.25. / · The working capital
o The working capital
o The net treasury
o Restatement of the balance sheet (capital employed analysis) / Prepare session of exercise 3
4 / O: Mon 06/10/14: 8.15 – 11.25
G: Tue 07/10/14:
8.15 – 11.25. / · The working capital (Con’t)
o Ratio analysis (turnover ratios) / Prepare session of exercise 4
5 / O: Mon 13/10/14: 8.15 – 11.25
G: Tue 14/10/14:
8.15 – 11.25. / · The analysis of returns (Con’t)
o ROE , ROA ROCE
o Leverage effect / .
Prepare session of exercise 5
6 / O: Mon 20/10/14: 8.15 – 11.25
G: Tue 21/10/14:
8.15 – 11.25. / · Stocks markets
o Why stocks markets?
o Market capitalization & accounting equity
o PER, MBR, Dividends Yields
o Multiples / Prepare session of exercise 6
7 / O: Mon 03/11/14: 8.15 – 11.25
G: Tue 04/11/14:
8.15 – 11.25. / · CAPM
· Technical Analysis
o Market efficiency
o Candlestick,
o Moving Averages,
o Momentum / Prepare session of exercise 7
8 / O: Mon 10/11/14: 8.15 – 11.25
G: Tue 18/11/14:
8.15– 11.25.(*)
(*)11/11 is holiday for G: Armistice / · Technical Analysis
· ESG indicators
o Motivations & main indicators
o Link with performance / Prepare questions.
Try to answer to previous exams (2012)
9 / O: Mon 17/11/14: 8.15 – 11.25 / · Training session: exercises from previous exams / Try to answer to previous exams (2013)
10 / O: Mon 24/11/14: 8.15 – 11.25
G: Tue 25/11/14:
8.15 – 11.25 / · Group assignments and complementary exercises. / Oral presentation of the group report
G: Tue 25/11/14:
16.35 – 18.05.
G: Mon 01/12/14
16.35 – 18.05. / · Training session: exercises from previous exams / Try to answer to previous exams (2013)
ESC Rennes School of Business – Academic Year 2014 2015 – Semester 1
Date de mise à jour : Juillet 2014 FI 403 E - 1/5