Earnings Quality & Fundamental Analysis

Course Content
Financial reporting provides a window into the operational and financial workings of a company. However, translating this information into actionable insights is anything but straightforward. It requires an understanding of: Generally Accepted Accounting Principles (GAAP), the quality of financial information, and adjustments and analyses used to assess profitability, risk, growth, and value. The course starts with a short review of financial reporting and then focuses on various modules of fundamental analysis, including earnings quality, performance evaluation, risk assessment, forecasting, and valuation. The remaining class meetings are devoted to a deeper dive into the reporting and analysis of key transactions (e.g., business combinations, leasing) and financial statement line items (e.g., revenue, income taxes). We will also cover non-GAAP/pro-forma reporting. This is a case-based class. Much of our time will be spent discussing real-world cases rather than in a lecture format. We will study many actual financial disclosures and cases of accounting abuses. Studying financial disclosures will help you better understand the underlying assumptions and accounting choices the firm made in arriving at its accounting numbers. This information can be used to make earnings quality adjustments to the accounting numbers to make them more consistent across time or more comparable across companies. Studying cases of accounting abuses will help you improve your ability to “read between the lines” and develop a set of red flags to look for in analyzing financial statements. The class also incorporates insights from practitioner and academic research.

Division: Accounting

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