COURSE NUMBER: EWMBA 222-1

COURSE TITLE: Financial Information Analysis

UNITS OF CREDIT: 3 Units

INSTRUCTOR: Patricia Dechow

E-MAIL ADDRESS: dechow@umich.edu

CLASS WEB PAGE LOCATION (HTTP URL): CATALYST

MEETING DAY(S)/TIME: Wednesdays, 6:00 pm to 9:30 pm

PREREQUISITE(S): EWMBA 202 (Accounting) and EWMBA 203 (Finance)

CLASS FORMAT: The course is case oriented. You are responsible for preparing all cases in advance of the class sessions, including familiarizing yourself with the relevant accounting issues. You will be organized into groups of three to four and each group will work together on the case material. I will assume proficiency in all aspects of accounting covered in your introductory accounting class

REQUIRED READINGS: Book: Lundholm, R. and R. Sloan, Equity Analysis and Valuation with eVal, McGraw-Hill/Irwin (Book and CD-ROM second edition), 2007.

BASIS FOR FINAL GRADE: Case write-ups, final exam, class participation

ABSTRACT OF COURSE'S CONTENT AND OBJECTIVES:
This course (i) provides you with a framework for business analysis and valuation using financial statement data; and (ii) shows you how to apply this framework to a variety of business decisions. The course assumes that you have a good working knowledge of accounting, finance, economics and business strategy. The focus is on integrating key concepts from each of these areas and applying them to financial decision-making.

PART I: INTRODUCTION
Course Introduction and Overview
Reading: Lundholm and Sloan (LS) Chapter 1

PART II: BUSINESS STRATEGY ANALYSIS

Business Strategy Analysis (I)
Reading: LS Chapters 2 and 3

Business Strategy Analysis (II)
Case: Overstock.com, Inc. A [Case]

PART III: ACCOUNTING ANALYSIS

Accounting Analysis (I)
Reading: LS Chapter 4
Case: EnCom Corporation Stage 1 [Case]

Accounting Analysis (II)
Reading: None
Case: EnCom Corporation Stage 2 [Case]

Accounting Analysis (III)
Reading: None
Case: Overstock.com, Inc. B [Case]

Accounting Analysis: (IV)
Reading: None
Case: Boston Chicken [Case]

Accounting Analysis: (V)
Reading: None
Case: Turnaround at Bally Total Fitness [Case]

PART IV: FINANCIAL ANALYSIS

Financial Analysis (I)
Reading: LS Chapters 5 and 6

Financial Analysis (II)
Reading: None
Case: Interpreting Margin and Turnover Ratios [Case]

Financial Analysis (III)
Reading: None
Case: Overstock.com, Inc. C [Case]

PART V: FORECASTING

Forecasting (I)
Reading: LS Chapters 7 and 8

Forecasting (II)
Reading: None
Case: Overstock.com, Inc. D [Case]

PART VI: VALUATION

Valuation (I)
Reading: LS Chapters 9 and 10
Case: EnCom Corporation Stage 3 [Case]

Valuation (II)
Reading: None
Case: Overstock.com, Inc. E [Case]

Valuation (III)
Reading: None
Case: Evaluating Intel’s Earnings Torpedo [Case]

Valuation (IV)
Reading: LS Chapter 11
Case: The Restaurant Industry in 2003 [Case]

PART V: VALUATION COMPLICATIONS

Complications (I)
Reading: LS Chapter 12
Case: Amazon.com [Case]

Complications (II)
Reading: None
Case: AOL-Time Warner Merger [Case]

BIOGRAPHICAL SKETCH:
Patricia M. Dechow is the Carleton H. Griffin-Deloitte & Touche LLP Collegiate Professor of Accounting at the University of Michigan Business School. She is currently visiting at The Haas School of Business, University of California, Berkeley. She has a Bachelor of Commerce with First Class Honors from the University of Western Australia and a PhD in Accounting and Finance from the University of Rochester. Professor Dechow has been a faculty member at University of Michigan since 1997. Prior to joining University of Michigan she was a faculty member at the Wharton School at the University of Pennsylvania.

Professor Dechow’s research interests focus on the nature and purpose of accounting accruals, evaluating the quality of earnings and the informativeness of earnings to capital markets, the use of accounting information in predicting stock returns, and the effect of analysts' forecasts on investors’ perceptions of firm value. Her research has been published in journals such as The Accounting Review, Journal of Accounting and Economics, Journal of Accounting Research, Journal of Financial Economics, Review of Accounting Studies, and Contemporary Accounting Research. In 2004 she published a monograph on Earnings Quality for the CFA Institute. Professor Dechow has also been an editor for The Accounting Review, and an Associate Editor for the Journal of Accounting and Economics and Review of Accounting Studies.