Please contact NYU IT (, 212-998-3333) or NYU Stern IT (, 212-998-0180) for all ZOOM/email/NYU Brightspace/Admin/CapitalIQ issues. Please do not copy/contact me regarding such issues. If NYU/Stern support cannot help you, please contact Student Affairs/Dean's office. All emails are sent to the email address in the NYU Brightspace roster. NYU Brightspace lists email for some of you and email for others. This mess is beyond my control. Please contact NYU/Stern support to learn how to read/forward/check spam for and accounts. Their instructions are rather poor. Students do not realize that they are logged in as a Stern student and think they are checking their NYU email when they are still checking NYU Stern's email. Please use a new browser to ensure that you check NYU's email. Do not write to Almaris or me if you are not getting Almaris emails sent to the NYU email address because this issue is between NYU and you.


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.


Help and Office



Exams and Grading


Class Topic
  • 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