Financial Analysis Credit

This course is designed to provide students with an effective understanding of financial analysis of credit risk with special focus on the impact of financial reporting. In particular, methods are analysed to predict the likelihood a firm will face financial distress. Therefore, first methods to evaluate the firm and equity are analysed and applied for the analysis of credit risk, including ratio analysis and forecasting. Next, emphasis is laid on the impact of financial reporting on the quality of financial analysis in a credit risk context.

 

Course Essentials

Credits:                                         3

Instructor:                                   Professor Morricone

Office:                                           Internef 511

Phone:                                          021-692-3459

Email:                                            Serena.Morricone@unil.ch                            

Course Website:                       http://moodle.unil.ch/course/view.php?id=2098

Assistant:                                     Max Wirz   (Internef 510)

                                                         <max.wirz@unil.ch>

 

 

Course Organization

·         4academic hours every 2 weeks during fall semester

·         Final exam (end of semester)

·         Course Hours:

Lecture                         THU 13:15-17:00; Internef 232

·       Office hour:

Max                                WED  17:00-19:00; Internef 510

Professor                     upon appointment

 

Course Outline

·         Introduction to Financial Analysis

·         Using Financial Statement information

·         Liabilities and Shareholders’ Equity

·         Reformulation of the balance sheet and income statement

·         Reformulation of the cash flow statement

·         Ratio analysis for credit evaluation

·         Forecasting: credit analysis and pro-forma analysis

·         Credit rating 

·         Insolvency Bankruptcy and Regulation

 

Course References

Pre-reading

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.

 

Students who do not qualify for these prerequisites or who wish to refresh their knowledge and skills are advised to prepare themselves in advance respectively! I recommend the following books:

·       Loughram M. , 2011, Financial Accounting for Dummies, John Wiley & Sons, ISBN 978-0-470-93065-6;

·       Bonham A. , 2008, Interpreting Company Reports for Dummies, John Wiley & Sons, ISBN 978-0-470-51906-6.

Books:

·         Stephen H. Penman: Financial Statement Analysis and Securities Valuation, 3rd edition, McGraw-Hill 2007 (Recommended)

·         Langohr H., Langohr P., The Rating Agencies and Their Credit Ratings: What They Are, How They Work, and Why They are Relevant, January 2009, John Wiley & Sons, ISBN 978-0-470-01800-2.

·         Bessis J., Risk Management in Banking, 3rd Edition, John Wiley & Sons, ISBN 978-0-470-01912-2

 

Course Policies

Class Attendance:

·       I strongly encourage class participation. Ask if there is something you do not understand!

Evaluation:

·       In order to pass the course it is mandatory to pass the final exam, i.e. you need a grade of 4 or higher in the final exam to pass.

·       In case of a retake exam,the final exam grade will be discarded and you need a grade of 4 or higher to pass the class.

 

Exams Regulation:

·       All exams are closed-book

·       You are allowed no material other than a black or blue ink pen, a standard non-programmable calculator, and a dictionary without any markings.

·       A calculator is considered programmable if it can save text, formulas, or code, if it can graph functions or solve equations, or if it can execute programmed functions. As a general guideline, Casio SL models and equivalents are generally allowed; Casio FX models and equivalents are not allowed. Please check the official HEC rules for more details.

·       Exam paper is provided by the proctors during the exam. No other paper is allowed. You must turn in the exam questions and all exam sheets at the end of the exam, including any scratch paper.