Advanced Financial Statement Analysis

Objective
The Advanced Financial Statement Analysis training course will provide participants with an analytical framework and practical tools to analyze and exploit information about profitability and risk in corporate financial statements.

Key benefits
By attending this program you will:

• Learn and apply a six-step analytical framework for financial statement analysis
• Enhance your ability and efficiency in extracting and using accounting information contained in company annual reports using IFRS and GAAP
• Develop skills for analyzing a firm’s profitability and risk
• Improve your ability to forecast expected future earnings and cash flows
• Sharpen your ability to detect and undo earnings management
• Deepen your understanding of the impact of earnings numbers on share prices in the capital markets, and the roles of earnings and cash flows in valuation
   

Program summary
The analytical framework for the Advanced Financial Statement Analysis program involves analyzing and linking six elements:

• Competitive dynamics within an industry
• Firm strategy
• Accounting and financial reporting quality
• Financial analysis
• Forecasting future earnings and cash flows
• Decision-making (such as firm valuation and other types of financial decisions)
   

The program demonstrates and applies this analytical framework and a wide array of practical tools in order to emphasize the use of financial accounting information in equity valuation and other financial decision-making contexts. We will also examine the issues that corporate managers face as they design and implement financial reporting strategies, increasing your abilities to detect and undo the effects of earnings management. The framework and tools developed in this program are intended to enhance your analytical skills if you are interested in using financial statements in decision-making, particularly equity valuation.

The program consists of the following three integrated parts:

I. Financial Statement Information: Enhance your understanding of the accounting information contained in company annual reports (balance sheets, income statements, statements of cash flows, and related footnotes and disclosures). This section provides the foundation of financial statement analysis and valuation. We will examine the many value relevant pieces of information that financial statements contain, as well as the accounting choices managers make in light of their business strategy, contractual constraints and incentives, and GAAP.

II. Analysis: Deepen your ability to analyze how financial statement information captures and reflects the critical factors of risk and success in the competitive environment and strategy of firms. Here we will introduce you to a variety of advanced practical tools that allow you to obtain much more information out of a set of financial statements, enabling you to better assess a firm’s profitability and risk. This section of the program will also enable you to work through an advanced set of cases that will require you to analyze accounting and earnings quality, assess the likelihood of earnings management, and undo the effects of earnings management.

III. Accounting-based Valuation: Learn and apply a variety of state-of-the-art accounting-based valuation techniques used on Wall Street, including discounted free cash flows, residual income, and valuation multiples such as price-earnings ratios and market-to-book ratios. You will be introduced to techniques to reverse engineer stock prices and together we will apply these valuation models to a variety of advanced settings, including the valuation of so-called new economy companies. In addition, you will be exposed to the interplay between firms and analysts, and the striking impact of earnings numbers on share prices in the capital markets.

Day 1
A Framework for Business Analysis and Valuation using Financial Statement
Information - Fundamental Analysis

• The information content of financial statements
• Economic consequences of accounting numbers
• Introduction to the use of accounting numbers in valuation and credit decisions
• Evidence on the impact of earnings on stock prices
• The relation between accounting and strategy
• Introduction to financial analysis tools
• Application and interpretation of financial analysis tools

Case study

Day 2
Ratios Analysis, Cash Flows Analysis, Accounting Adjustments, and Forecasting Financial Statements

• Financial statement ratios
• The statement of cash flows and cash flow analysis tools
• Cash flows differences across the life cycle of the firm
• Developing forecasts and building financial statement forecasts

Case study

Day 3
A Framework for Business Analysis and Valuation using Financial Statement Information
Information - Advanced Accounting Quality Analysis

• Communicating with the capital markets
• What earnings numbers are the right ones?
• Accounting for corporate structures

Case study

Day 4
Advanced Adjustments to Reported Financial Statements and Advanced Accounting Quality Analysis

• The value of assets under uncertainty
• Case study
• When is revenue really revenue?
• Case study
• Reading between the lines

Case study

Day 5
Accounting-Based Valuation

• The use of accounting numbers in valuation – free cash flows valuation, residual income valuation, and accounting-based valuation multiples
• Business analysis and valuation: implementing the tools
• Reverse-engineering stock prices

Case study

The Advanced Financial Statement Analysis training course is recommended for finance professionals who need to deepen their knowledge and skills in analyzing and using financial statement information (balance sheets, income statements, statements of cash flows, footnotes).

Participants that already have solid working understanding and appreciation for financial statements, basic financial statement analysis ratios, and the role financial statement information can play in financial decisions, can skip the first two days of the program, and begin on day 3.Those who lack a substantial understanding of financial statements and financial statements analysis tools, or who wish to refresh this knowledge, are strongly encouraged to attend all five days. Past participants have also highly recommended attending the complete program.
 

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Amsterdam Institute of Finance is registered with CFA Institute as an Approved Provider of continuing education programs. This program is eligible for 30 CE credit hours (5-day program) or 18 CE credit hours (3-day program) as granted by CFA Institute. If you are a CFA Institute member, CE credit for your attendance at this event will be automatically recorded in your CE Diary.

“I would recommend this program not only to deepen your financial analyses skills but also to increase your conceptual understanding of how corporates provide you with information and how to interpret this.”
Account Manager, Credit Restructuring
ING Bank
The Netherlands

“The program helps you think outside the box when analyzing financial statements.”
Senior Credit Analyst
Saudi Industrial Development Fund
Saudi Arabia

"The program teaches 'non-accountants' how to critically read financial statements and provides a good understanding of the quality of accounting information, as well as how it can be used in valuations."
Associate, Financial Institutions Group,
CA IB Corporate Finance
Austria

"It is a good practical way of improving your analytical skills."
Manager, Corporate Finance,
Xantic
The Netherlands

"I already knew a lot about financial statements and valuation, but the training helped me to put these areas together and see them from a different perspective.”
Manager, Financial Reporting
Ahold
The Netherlands