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: email@example.com,
212-998-0021, Office: KMC 10-86.
- I use my materials. Therefore, there is no required textbook, and you need not purchase anything.
- Classes are not videotaped unless there is a special session.
- Please do not email me to reconfirm any of the statements below.
- The assignments appear as tests on Almaris. I may update the deadlines as the course progresses. The deadlines shown at Almaris are the correct deadlines.
- Some assignments are short; others are long. Please manage your time.
- NO EXTENSIONS will be granted for any reason except medical or family emergencies. If you have religious or personal conflicts, please 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 collaborate with others while doing
- All assignments are mandatory. After the first day of class, you can view the online assignments at http://www.almaris.com/assess/ using your official Stern email (no aliases) and most recent password emailed to you by Almaris. The Almaris password is different from the Stern password. To retrieve the password, use your Stern email id as it appears in the registrar's records.
- 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 you should 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. There is a difference between “passing” and getting full credit. If you get 70/100 on your final attempt, you “pass,” but you do not score a 100.
- I set the passing score of less than 100% on a few assignments if you might not get every question right. Any score above that score is rounded up to 100%. For example, if the passing score is 90%, and you get 93%, your score is rounded up to 100%. I do the rounding up in a separate spreadsheet. You will see only the raw score online.
- Almaris is not affiliated with Stern in any way. It is offering these tests to Stern at no charge.
- 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. Please 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