Financial analysis: course description

Course: Financial analysis
Semester: 2nd semester, academic year 2010-2011
Course Manager: André Cabannes
Code:
Email: andre.cabannes@m4x.org
Course taught by: André Cabannes
Teaching language: English
Class hours: 18 Credits

PRE-REQUISITES

A course in General accounting

COURSE SUMMARY

Introduction to evaluating investments

COURSE OBJECTIVES

Understand the difference between Accounting and Finance
Use elementary probability to model the randomness of future cash flows
Learn how to evaluate investments

SKILLS ACQUIRED

Elementary probability theory
Discounted cash flow analysis
Calculate opportunity cost of capital and IRR

COURSE SCHEDULE

Twelve 1 ½ hour classes + a 1 ½ hour written final examination

Lesson1	Correction of last exam	Correction of final exam of Financial accounting
Lesson 2	Difference between accounting and finance	Role of time Present value of a promise of future payment
Lesson 3	Financial investment and physical investment	φ inv : the cash flows I buy just add up to mine. NPV = 0 phys. inv : the increase of my CF is more than just the CF I buy. NPV > 0
Lesson 4	Modelling of variable future CF. Introduction to elementary probabilities	Securities with sure future CF and with random future CF. Random experiment, random variable, stability of experimental frequencies in long series.
Lesson 5	Elementary probability (cont'd)	Distribution, expectation, histogram, variance
Lesson 6	The no arbitrage principle	Calculation of the price of a security
Lesson 7	Present value, discounting	Discounting future CF of investment
Lesson 8	Opportunity cost of capital	Opportunity cost of capital
Lesson 9	IRR	IRR
Lesson 10	Application of discounting	Polyzone example
Lesson 11	General review	Exercises
Lesson 12	General review	Exercises

TIE-IN WITH THE CORPORATE WORLD

All concepts are illustrated with examples from the real world and when possible from the current news.

TEACHING METHODOLOGY

Lectures by the teacher and many in class exercises
Reading assignments prior to each lesson

ASSESSMENT

Continuous assessment and Final exam (50% - 50%)

READING MATERIALS

Textbook: John R. Dyson, Accounting for non-accounting students, FT Prentice Hall, 7^th edition, 2007
Website of the course: Financial accounting