ACCT 313 - Accounting-Based Valuation at Stanford University


This course is structured to develop students' ability to interpret and use financial accounting information in equity valuation contexts. The perspective taken is that of an outsider relying on publicly available financial information for investment purposes, and builds heavily on the residual income framework for equity valuation. The first half of the course covers financial statement analysis-based tools for assessing a firm's current financial performance and economic condition, including traditional ratio analysis and financial distress/bankruptcy prediction models. The second half of the course introduces the accounting-based valuation framework, and develops the link between financial statement analysis, forecasting and valuation. This portion of the course focuses on techniques for forecasting specific income statement and balance sheet items, the creation of pro-forma financial statements, and the implementation of several accounting-based valuation models. The capstone to the course is the completion of a comprehensive equity valuation project. In addition to learning basic financial statement analysis tools and accounting-based valuation theory, students benefits from applying these tools and theories in the context of weekly cases and the final project. The course is structured for students to gain a deeper understanding of the economic pressures behind the valuation process by drawing upon and synthesizing concepts from microeconomics, corporate finance, corporate strategy, statistics and accounting. The course will be of value to those students who, as either senior managers or outsiders, anticipate making investment or credit decisions at least partially based on financial statement information.

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