This course helps you understand the flow of money in a business and its link to shareholder value and credit ratings. The course presents a framework for analysis and provides spreadsheets to implement the framework.
need to bring a computer to class with sufficient battery
power. If you have any technical
questions, please contact the IT department (212-998-0180),
- I will be using Excel 365. Any version from Excel 2010 onwards should work for you but the older versions may be missing some of the required features. You can get Office 365 for free from Microsoft because you are a student.
- Make sure that you can connect your computer to the NYU wireless network.
Help and Office
- Teaching assistant:
TBD Contact TAs first.
Please do NOT copy me on your messages to the TAs.
- Me: firstname.lastname@example.org,
212-998-0021, Office: KMC 10-86.
- Administrative assistant: Justin Pilozo email@example.com 212-998-4143, Office: Suite 10-185A, KMC 10th Floor, left-hand corne as you enter the department.
- I will not require a textbook. I will distribute my own materials.
- Please do not email me to reconfirm any of the statements below.
- The assignments count towards 20% of your grade. If you don't do them carefully, you will bomb the final. I glance at the assignment record before final grading.
- The assignments appear as tests on Almaris.
- See the grading section below. Some assignments are short, others are long. Please manage your time. Click on each assignment to see how to prepare for that assignment.
- NO EXTENSIONS will be granted for any reason except medical or family emergencies. If you have religious or personal conflicts, submit the assignments early. The related materials are covered well in advance of the assignments. Please do not email me to request extensions unless you have a medical or family emergency.
- You can learn concepts from others, but you must work on the actual
assignment alone. You may be called upon in class to explain your answer to the assignments.
- All assignments are mandatory. To view the on-line assignments, login at http://www.almaris.com/assess/ using your official Stern email (no aliases) and most recent password emailed to you by Almaris. To retrieve the password, use your Stern email id as it appears in the registrar's records. If you were added to the class list after the initial registration date, see instructions on Blackboard.
- Assignments are marked “late” if you do not meet or exceed the passing score described below before the deadline. There is no additional penalty for lateness other than the low score.
- Assignments have a “passing score” of either 100% or less than 100%.
- I set the passing score at 100% if I believe that you should be able to ace the assignment. In reality, there is no passing grade. Whatever you get on your last attempt is your final score. That is, you are graded on accuracy but not the number of attempts. If you are allowed five attempts, and you use them, then your score on the fifth attempt is your final score for the assignment. There is a difference between “passing” and getting full credit. If you get 70/100 on your fifth attempt, you “pass” but you don't score a 100.
- On a few assignments, I set the passing score to be less than 100% if I believe that you may not be able to get every question right. Any score above that score is rounded up to 100%. For example, if the passing score is set at 90%, and you get 93%, then your score is rounded up to 100%. I do the rounding up in a separate spreadsheet. You will see only the raw score on line.
- Almaris is not affiliated with Stern in any way. It is offering these tests to Stern at no charge to Stern.
- Almaris staff is not authorized to extend deadlines under any circumstances. Only my TAs can do that. Almaris staff will reply to your emails only if they pertain to technical issues with the Almaris system. You should contact Stern IT for technical issues with your network.
Exams and Grading
- The purpose of financial statement analysis: Valuation, credit risk assessment, and performance evaluation
- Introduction to deriving unlevered free cash flows
- Unlevered net income or net operating profit after tax
- Unlevered net assets or net operating assets
- Deriving unlevered net income
- Distinguishing between operating and financial items
- Drivers of unlevered net income: Size, growth, and NOPAT margin
- Deriving net operating assets
- Financial assets versus non-financial assets
- Financial liabilities versus non-financial liabilities
- Drivers of net operating assets: Revenue-related metrics
- Days of receivables, bad debts, days of deferred revenues
- Drivers of net operating assets: Expense-related metrics
- Days of prepayments, days of inventories, PP&E turnover, days of payable
- Distinguishing between operating working capital and fixed capital
- Fixed versus variable items
- Seasonal versus cyclical items
- Financial assets and financial liabilities
- Distinguishing between solvency and liquidity
- Leverage and liquidity ratios
- Leverage: Debt/EBITDA, Debt/EBIT, Debt/FFO,
- Liquidity: Financial assets/Sales, (Financial assets + Undrawn revolver)/Sales
- Effect of leverage and liquidity: ROIC versus ROE
- How leverage amplifies changes in ROE vis-a-vis changes in ROIC
- How liquidity dampens changes in ROE vis-a-vis changes in ROIC