Cambridge Business Publishers

INNOVATIVE APPROACH

Financial Statement Analysis & Valuation is applications oriented and focuses on the most salient aspects of accounting, analysis, and valuation. It teaches students how to read, analyze, and interpret financial statement data to make informed business decisions. This textbook makes financial statement analysis and valuation engaging, relevant, and contemporary. To that end, it consistently incorporates real company data, both in the body of each module and throughout the assignment material.

FLEXIBLE STRUCTURE

The curricula, instructor preferences, and course lengths vary across colleges. Accordingly and to the extent possible, the 15 modules that make up Financial Statement Analysis & Valuation were designed independently of one another. This modular presentation enables each college and instructor to “customize” the book to best fit their needs. Our introduction and discussion of financial statements constitute Modules 1 and 2. Module 3 presents the analysis of financial statements with an emphasis on analysis of operating profitability. Module 4 introduces credit risk analysis. Modules 5 through 10 offer an analysis of accounting numbers and disclosures. The aim of those modules is to help us better interpret financial statements and to adjust those statements as necessary to improve our financial statement analysis. Modules 11 through 15 describe forecasting, cost of capital estimation, and company valuation.

Flexibility for Courses of Varying Lengths

Many instructors have approached us to ask about suggested class structures based on courses of varying length. To that end, we provide the following table of possible course designs. For instructors desiring greater emphasis on accounting analysis, additional time can be spent on Modules 1 through 10. For instructors desiring greater emphasis on analysis and valuation, additional time can be spent on Modules 11 through 15.

	15 Week Semester-Course	10 Week Quarter-Course	6 Week Mini-Course	1 Week Intensive-Course
Module 1 Framework for Analysis and Valueation	Week 1	Week 1 (Modules 1 and 2)	Week 1 (Modules 1 and 2)	Day 1 (Modules 1 and 2)
MODULE 2 Overview of Business Activities and Financial Statements	Weeks 1 and 2
MODULE 3 Profi tability Analysis and Interpretation	Week 3	Week 2	Week 2	Day 2
MODULE 4 Credit Risk Analysis and Interpretation	Week 4	Week 3	Optional	Optional
MODULE 5 Revenue Recognition and Operating Income	Week 5	Week 4	Week 3	Day 3 (Modules 5 and 6)
MODULE 6 Asset Recognition and Operating Assets	Week 6	Week 5	Skim
MODULE 7 Liability Recognition and Nonowner Financing	Week 7	Optional	Optional	Optional
MODULE 8 Equity Recognition and Owner Financing	Week 8	Optional	Optional	Optional
MODULE 9 Incorporate Entities	Week 9	Week 6	Optional	Optional
MODULE 10 Off-Balance-Sheet Financing	Week 10	Week 7	Skim	Optional
MODULE 11 Forecasting Financial Statements	Week 11	Week 8	Week 4	Day 4 (Modules 11 and 12)
MODULE 12 Cost of Capital and Valuation Basics	Week 12	Week 9	Week 5
MODULE 13 Cash-Flow-Based Valuation	Week 13	Weeks 9 and 10	Weeks 5 and 6	Day 5 (Modules 13 and 14)
MODULE 14 Operating-Income-Based Valuation	Week 14	Week 10	Week 6
MODULE 15 Market-Based Valuation	Week 15	Optional	Optional	Optional

Financial Statement Effects Template

As instructors, we recognize that the financial statement analysis and valuation course is not directed solely toward accounting majors. Financial Statement Analysis & Valuation embraces this reality. This book highlights financial reporting, analysis, valuation, interpretation, applications and decision making. We incorporate the following financial statement effects template to train students in understanding the economic ramifications of transactions and their impacts on all key financial statements. This analytical tool is a great resource for students in learning analysis and applying it to their future courses and careers. Each transaction is identified in the “Transaction” column. Then, the dollar amounts (positive or negative) of the financial statement effects are recorded in the appropriate balance sheet or income statement columns. The template also reflects the statement of cash flow effects (via the cash column) and the statement of stockholders’ equity effects (via the contributed capital and earned capital columns). The earned capital account is immediately updated to reflect any income or loss arising from each transaction (denoted by the arrow line from net income to earned capital). This template is instructive as it reveals the financial impacts of transactions, and it provides insights into the effects of accounting choices.

Mid-Module and Module-end Reviews

Financial statement analysis and valuation can be challenging—especially for students lacking business experience or previous exposure to finance, management, and other business courses. To reinforce concepts presented in each module and to ensure student comprehension, we include mid-module and module-end reviews that require students to recall and apply the financial statement analysis and valuation techniques and concepts described in each module. in addition, to aid students in developing their comparative analysis skills, most of those review problems center on a company or companies that compete with the focus company of that module.

Excellent, Class-Tested Assignment Materials

Excellent assignment material is a must-have component of any successful textbook (and class). We went to great lengths to create the best assignments possible from contemporary financial statements. in keeping with the rest of the book, we used real company data extensively. We also ensured that assignments reflect our belief that students should be trained in analyzing accounting information to make business decisions, as opposed to working on mechanical tasks. Assignments encourage students to analyze accounting information, interpret it, and apply the knowledge gained to a business decision or in a valuation context. There are five categories of assignments: Questions, Mini Exercises, Exercises, Problems, and Discussion Points.