Faculté des Hautes Etudes Commerciales (HEC)

Objectifs

The purpose of this course is to provide a comprehensive understanding of financial analysis with a special focus on credit risk.

It is designed to develop a critical evaluation of the way accounting values are represented and, in particular, to advance student skills in analyse and interpret accounting information.

The course is organized according to the framework for financial statement analysis. Thus, we initially discuss the role of accounting information and how financial analysis can create value. Then we develop the three steps of financial statement analysis:

• Business strategy analysis
• Accounting analysis
• Financial analysis

The first step, business strategy analysis, develops an understanding of the industry characteristics in which a firm operates and the firm’s strategies adopted to create a competitive advantage. Accounting analysis explores the degree to which accounting values capture the underlying business reality by evaluating firm’s accounting policies and estimates. Financial analysis involves analysing financial ratio to evaluate a company’s profitability, liquidity and solvency position.

We then focus on the analysis of firms’ creditworthiness implementing methods that predict the financial distress and evaluating the mechanisms of credit rating. We finally analyse the extreme case of insolvency and bankruptcy.  

Contenus

• Introduction
• Overview of Financial Analysis
• Business strategy analysis
• Accounting Analysis: Institutional framework
• Accounting Analysis: Implementation
• Financial Analysis: Profitability, Liquidity and Solvency
• Distress predictions  
• Credit Rating and Rating Agencies
• Insolvency, Bankruptcy and Regulation
• Seminar: Head of Portfolio Models, Credit Agricole

Références

• Palepu K.G, Healy P.M., Peek E. “Business Analysis and Valuation: IFRS Edition – Text and Cases”, 2nd edition, Cengage Learning, ©2010, ISBN 978-1-4080-1749-4. (Required).
• Langohr H., Langohr P., ‘The Rating Agencies and Their Credit Ratings: What They Are, How They Work, and Why They are Relevant”, John Wiley & Sons, ©2009, ISBN 978-0-470-01800-2.

Pré-requis

A basic knowledge of financial accounting concepts and techniques is assumed. This should normally be obtained by graduating with a bachelor degree in management or a comparable education. An introductory financial accounting course at the bachelor level normally encompasses:

• Nature and objectives of financial accounting;
• Bookkeeping;
• Fundamental accounting principles, concepts and policies;
• Preparing final accounts;
• Elements of financial statements.

Evaluation

1ère tentative

Examen:

Ecrit 1h30 heures

Documentation:

Non autorisée

Calculatrice:

Autorisée avec restrictions

Evaluation:

Final exam (100%)

[ Calculatrice 4 opérations selon directive HEC ]

- Only calculator with one-line display

Rattrapage

Examen:

Ecrit 1h30 heures

Documentation:

Non autorisée

Calculatrice:

Autorisée avec restrictions

Evaluation:

Retake exam (100%)

[ Calculatrice 4 opérations selon directive HEC ]

- Only calculator with one-line display