AC444      Half Unit
Valuation and Security Analysis

This information is for the 2024/25 session.

Teacher responsible

Dr Xi Li MAR 3.40

Availability

This course is available on the CEMS Exchange, Global MSc in Management, Global MSc in Management (CEMS MIM), Global MSc in Management (MBA Exchange), MBA Exchange, MSc in Accounting and Finance, MSc in Accounting, Organisations and Institutions, MSc in Finance and Risk and MSc in Management and Strategy. This course is available with permission as an outside option to students on other programmes where regulations permit.

Other students may be admitted to the course if they have a strong knowledge of financial accounting and finance acquired at undergraduate or equivalent level, and only with the agreement, in writing, of the teacher responsible for this course.

Enrolment on this course is constrained by section size and the number of sessions available. Students are admitted on the course on a first-come-first-served basis. If the course is over-subscribed, students on the waiting list will continue to be admitted on a first-come-first-served basis as places become available, although MSc students on Accounting programmes will be given priority. Therefore, to avoid frustration and possibly being unable to take the course, students wishing to reduce the risk of non-admittance on the course should prioritise their courses and register early for their preferred, “must have” courses. Late registrations or late changes to this course choice may be unsuccessful.

In previous years we have been able to provide places for all students that apply but that may not continue to be the case.

Pre-requisites

Students will be assumed to have a solid understanding of corporate finance as well as financial accounting principles, techniques and methods. Completion of AC416 in Michaelmas term is recommended for this course.

Course content

The aim of this course is to introduce students to security analysis and valuation from both academic and practical perspectives. The course materials include many real-world cases, where students are placed in the role of investors to conduct financial statement analysis and make investment decisions. At the end of the course, students are furthermore provided with an opportunity to apply their skills by analysing and valuing, in small groups, from the point of view of a "sell-side analyst", a firm’s equity of their choice. The course should appeal to students interested in equity research, investment banking, and fund management.

The course is presented in two parts. The first part, financial analysis, focuses on past and present performance evaluation, which is used by financial analysts to generate expectations about future performance (prospective analysis). The second part, security valuation, focuses on the determination of intrinsic security prices, which, in efficient markets, reflect prospective performance. This second part provides students with a valuation ‘toolkit’ which they can draw on when valuing equities in a variety of contexts such as banking, asset management, research, accountancy or consulting.

Teaching

30 hours of seminars in the WT.

Student group project presentations in week 11 of Winter Term.

Teaching is delivered in two 90-minute sessions per week. Depending on the state of the ongoing pandemic, some or all of the teaching on this course may be delivered using virtual means as an alternative to face-to-face teaching due to social-distancing or other pandemic-related restrictions that may need to be observed. Each session involves both lecturing and case study analyses and discussions. In the case study sessions, students break into small groups to work and collaborate as a team. This mode of teaching requires good advance preparation by the students; hence, every student should be ready to contribute to the discussion when called upon. Active participation is expected and encouraged.

Indicative reading

For the business analysis section, there is no required textbook for this course. However, we recommend the following book for reading and additional exercises: Business Analysis & Valuation (Palepu, Healy and Peek), 4th IFRS edition, CENGAGE Learning, 2016. 

Assessment

Exam (55%, duration: 2 hours) in the spring exam period.
Group project (40%) and quiz (5%) in the WT.

Student performance results

(2020/21 - 2022/23 combined)

Classification % of students
Distinction 38.3
Merit 45.9
Pass 13.6
Fail 2.3

Key facts

Department: Accounting

Total students 2023/24: 145

Average class size 2023/24: 36

Controlled access 2023/24: No

Value: Half Unit

Guidelines for interpreting course guide information

Course selection videos

Some departments have produced short videos to introduce their courses. Please refer to the course selection videos index page for further information.

Personal development skills

  • Self-management
  • Team working
  • Problem solving
  • Communication
  • Application of numeracy skills
  • Specialist skills