MFIN 6641

The course examines financial statements from the perspective of both preparers and users of financial information. The course begins with the conceptual framework underlying the reporting process and proceeds to a structured analysis of the basic financial statements: The income statement, the balance sheet and the statement of cash flows. Here, the supply side (the various models of information production) will be emphasized. The course then shifts to the demand side of the financial information, where the focus is on the myriad mechanisms of information extraction. Modern techniques such as multiples and forecasting are used to establish a functional relationship between the accrual process and the economic position of a firm. The course will focus on the valuation approach: The informed use of accounting numbers in projecting cash flows and determining fundamental security values. The student will appreciate the judicious use of accrual accounting in all facets of financial decision-making.