Insegnamento a.a. 2024-2025

Main topics are:

• Introduction to Financial Statements Analysis (FSA).
• Analysis of Income Statement: overall reformulation choices; core vs. non-core operating income.
• (cont.) Unusual items and Recurring/Persistent Earnings.
• (cont.) Focus on operating income and EBITDA.
• Analysis of Balance Sheet: from the liquidity format to the managerial format.
• (cont.) Managerial format: reformulation options and ratios; alternatives to measure the financial indebtness.
• The ratio system: analysis of ROI (return on investment): correlation of working capital and CAPEX to sales revenues.
• The ratios system: analysis of ROE (return on equity): from the financial leverage to the operating liabilities leverage.
• Analysis of the Cash Flow Statement: the Standard Cash Flow Statement according to IFRS (IAS 7).
• (cont.) Analysis of the Cash Flow Statement: reformulations and ratios.
• (cont.) A comprehensive exercise
• (cont.) Creative Cash Flow Reporting and Empirical Research.
• The influence of Accounting Principles (IFRS vs Local GAAP) on FSA.
• Industry, strategic analysis and FSA: linkage between financials and KPIs; how to apply a sensitivity analysis (using a Monte Carlo simulation).
• FSA for a listed group of companies: A Comprehensive Case Study.
• Focus on financial planning: a Case Study
• Fraud Analysis: how to identify the "red flags" through FSA; Case Study.

• Understand the discretionary choices an analyst has to make in order to assess the financial statements (and the related reformulations and ratios) coherently with the objectives of the financial analysis (decision-making process).
• Understand the definitions and measurement options underlying the concept of core operating income and unusual items in order to measure the persistent income-based results.
• Understand the relevant alternatives for the analysis of the profitability.
• Understand the relevant choices in order to prepare and analyze the cash flow statement and the relevant cash-based ratios.
• Understand how to approach the analysis of the relationships between financials and KPIs.

• Define and measure the core operating income and the related ratios.
• Define and measure the unusual items in order to analyze the persistent or recurring income.
• Define and measure all the ratios that are commonly used in professional practice.
• Prepare and analyze the cash flow statement and related reformulations and ratios.

• Lectures
• Practical Exercises

During the course teachers will present several incidents and case studies that are all based on real companies.

Exercises and quantitative examples will also be presented by the teachers.

Because of the professional approach of this course, we will work together in classroom to
analyze some incidents and case studies. So that you can understand how the teachers
approach a specific problem. Therefore no group/individual assignments are required.

The final exam (written) comprises exercises (ex. reformulation of cash flow statement, calculation of some ratios etc.), multiple choice (answers: numbers or sentences) and matching questions.

• Exercises and quantitative multiple choice questions aim at verifying the ability to apply specific techniques of analysis (ex. calculations of cash flows and ratios);
• Matching questions and qualitative multiple choice questions aim at verifying:
  • the comprehension of definitions/concepts that are relevant for a financial analyst;
  • the objectives and usefulness of some reformulation choices and ratios.

The exam lasts approximately 1 hour and 15 minutes.

Available on the course website:

• Slides (required).
• Short readings (required).
• Exercises and questions grouped by topic (required).
• Supplemental professional and academic readings (optional, not required for the final exam).

For some topics (ex. cash flow statement preparation): basic materials (slides + exercises) are available at the beginning of the course: students are required to study these basic materials before lectures.

Suggested (but not required) Textbooks:

• Thomas R. Robinson, Elaine Henry, Wendy L. Pirie, Michael A. Broihahn, International Financial Statement Analysis, CFA Institute, WILEY, 3/e, 2015.
• Stephen H. Penman, Financial Statement Analysis and Security Valuation, 5/e, 2013