Acc.Information and Security Valuation

This subject has the following teaching availabilities in 2016:

Estimated total time commitment of 120 hours per semester

• Acceptance into the Graduate Certificate in Business Forensics or the Master of Accounting and completion of ACCT90002 Financial Statement Analysis (or equivalent) OR

• Acceptance into the Master of Management (Accounting) and completion of ACCT90012 Corporate Reporting (or equivalent) and FNCE90060 Financial Management (or equivalent).

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For the purposes of considering request for Reasonable Adjustments under the Disability Standards for Education (Cwth 2005), and Student Support and Engagement Policy, academic requirements for this subject are articulated in the Subject Overview, Learning Outcomes, Assessment and Generic Skills sections of this entry.

It is University policy to take all reasonable steps to minimise the impact of disability upon academic study, and reasonable adjustments will be made to enhance a student's participation in the University's programs. Students who feel their disability may impact on meeting the requirements of this subject are encouraged to discuss this matter with a Faculty Student Adviser and Student Equity and Disability Support: http://services.unimelb.edu.au/disability

This subject examines the use of financial statements for the fundamental valuation of listed and non-listed entities. Fundamental analysis will be examined in detail and applied to valuation projects involving local and multinational companies. This subject is built around the use of residual earnings as a means of determining the intrinsic value of an entity using only accounting data. It explores the relation between the residual income valuation model, discounted cash flow valuation methods and dividend discount model. It also refers to EVA as a parallel valuation methodology. The subject will also consider forecasting firms' future performance and how it determines the firm’s price/earnings and market to book ratios.

On successful completion of this subject, students should be able to:

• Describe how 'intrinsic values' are calculated;
• Identify the relevant firm attributes that determine value;
• Explain the role of financial statements in determining intrinsic values;
• Analyse whether some aspects of the financial statements are more important than others and explain the role of 'bottom line' earnings (net income) and book value;
• Analyse financial statements in order to extract the relevant information;
• Describe how traditional ratio analysis aids valuation;
• Evaluate the relevance of cash-flow information and of the accruals in accounting;
• Explain how accounting methods are applied to financial statements;
• Explain what determines a firm's P/E ratio and a firm's market-to-book (P/B) ratio;
• Describe how the P/E and P/B ratios are articulated;
• Explain how analysis differs across countries and how P/E ratios can consequently be compared across countries;
• Describe how risk is evaluated, particularly in relation to equity and debt;
• Identify what EVA is and explain how it is used in performance evaluation.

• Two-hour mid-semester test (30%)
• 3000 word group project due late in the semester (20%)
• One 3-hour end of semester examination (50%)

Note: Successful completion of this subject requires a pass (50%) in the final exam.

You will be advised of prescribed texts by your lecturer.

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This subject is not available as a breadth subject.

On successful completion of this subject, students should have improved the following generic skills:

• Develop an argument logically and coherently;
• Synthesis of information;
• Application of current technologies to practice;
• Accessing data and other information from various sources;
• Using computer programs, particularly in relation to the processing of data;
• Problem solving;
• Statistical reasoning;
• Critical thinking;
• Oral and written communication.

Students who have completed ACCT30006 Business and Financial Analysis should take an elective in place of ACCT90008 Acc.Information and Security Valuation.