Baruch College
Executive MS in Financial Statement Analysis
Jan 4 – Feb 8, 2014
Instructor:
Chris Droussiotis
Office hours:
by appointment – Saturdays 7:30-8:30am and after class
Office Location:
VC 10-265D
Cell Phone:
(908) 930-4725 (Voice and Text)
E-mail:
christakis.droussiotis@baruch.cuny.edu
Website:
www.ProfessorDrou.com
Course:
ACC 9808 - Financial Statement Analysis II – Equity Valuation (Part I)
Course Objective:
After completing this course, the student should be able to:

Understand the fundamental concepts and tools that represent the core of equity
Investment analysis (Return, Risk & Time).
 Demonstrate various enterprise value (EV) and equity valuation techniques using
such methods as Discounted Cash Flow, Dividend Discount Model, comparable
acquisition and trading PE/EBITDA multiples methods, as well as understanding
other fundamental EMH models such as Capital Appreciation Pricing Model,
Arbitrage Pricing Model and Ben Graham’s Intrinsic Value investing model to
calculate investment returns.
 Understand how private companies access the Capital Markets such as equity
offerings (IPO), as well as the valuation techniques used by M&A advisors to
determine initial stock price.
 Understand Time-Value of money concepts such HPR, IRR, NPV and FV of
investment. Be able to apply these techniques (DCF, CAPM) on public traded and
private companies.
 By compiling data from available financial data sources, the student will be able to
construct a financial model on Excel to assess the stock performance against
various valuation scenarios.
Course Overview:
The course is a continuation to understanding financial statements and ratio analysis and
their use by Wall Street analysts to determine the market value of a firm. The Course is
divided into three parts consisting of three to five chapters each from the accompanying
textbook. The first part includes an overview of fundamentals in investment analysis such
as the measurement and quantification of risk, return and time, as well as the introduction
of Efficient Market Hypothesis (EMH) models to derive market and intrinsic values. The
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second part includes an overview of equity valuation analysis of publicly traded and private
companies accessing the Capital Markets. This part will include case studies of Leverage
Buyouts (LBO), M&A transactions and general capital investments. The third part will
prepare the student to build an excel model to value publicly traded companies with the
ultimate goal of assessing the company’s current stock price.
Required Text:
Investment Valuation - 3rd edition
by Aswath Damodaran
ISBN13: 978-1118130735
ISBN10: 1118130731
www.amazon.com
Materials to be provided by the Instructor:


IPO offering prospectus on a live deal
Excel spreadsheets of various portfolio management analyses Equity and DCF /
CAPM models
Course Requirements:
Attendance:
Students are expected to attend and to participate in classroom discussions. It is important
to attend every class because the Exams are based on the instructor’s lectures and classroom
notes. Class participation will count as part of the course grade. Attendance accounts for
10% of your grade.
Homework:
Reading assignments and application projects will be assigned. Check Homework
assignments and datelines on the professor’s website at www.ProfessorDrou.com under
ACC9808 . Homework accounts for 15% of your grade. Also check datelines on the
syllabus schedule below.
Handouts
The instructor will provide handouts before the class. All Handouts and lecture notes are
posted on the website: www.ProfessorDrou.com under ACC9808.
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Project:
On the first class each student will be assigned a publicly traded company. The Project will
consist of spreading the projections by using financial statements, valuing the company
using the 4 methods of valuations taught during class.
Exams:
There will be a midterm (1.5 hours) and a final exam (3 hours).
Midterm Studies: Text Book Chapters 1-9.
Final Exam Studies: Text Book Chapters 10-17 (except 12).
Grading:
Mid Term Exam *
Final Exam*
Homework
Attendance
Project
Total
20%
35%
15%
10%
20%
100%
Academic Integrity
Cheating and plagiarism are serious offenses. The following definitions are based
on the College's Academic Honesty website:
Cheating is the attempted or unauthorized use of materials, information, notes,
study aids, devices or communication during an academic exercise.
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Examples include but are not limited to:
Copying from another student during an examination or allowing another to copy
your work
Unauthorized collaborating on a take home assignment or examination
Using unauthorized notes during a closed book examination
Using unauthorized electronic devices during an examination
Taking an examination for another student
Asking or allowing another student to take an examination for you
Changing a corrected exam and returning it for more credit
Submitting substantial portions of the same paper to two classes without consulting
the second instructor
Preparing answers or writing notes in a blue book (exam booklet) before an
examination
Allowing others to research and write assigned papers including the use of
commercial term paper services
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Plagiarism is the act of presenting another person's ideas, research or writing as
your own, such as:
Copying another person's actual words without the use of quotation marks and
footnotes (a functional limit is four or more words taken from the work of another)
Presenting another person's ideas or theories in your own words without
acknowledging them
Using information that is not considered common knowledge without
acknowledging the source
Failure to acknowledge collaborators on homework and laboratory assignment
My policy is to give a 0 grade to any assignment that has been plagiarized or an exam in
which you have cheated. In addition, I am required by College policy to submit a report of
suspected academic dishonesty to the Office of the Dean of Students. This report becomes
part of your permanent file.
Other Information
 Cell phones must be turn off during class
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ACC9808 Equity Valuation
Course Outline
Instructor:
Chris Droussiotis (908) 930-4725
christakis.droussiotis@baruch.cuny.edu
Lecture
*
Date
Chapter *
1
Jan 4
1,2
2
Jan 7
Partial 3,4
and prof’s
notes
3
Jan 11
6,7, 8
4
Jan 14
11,12,13
and
handout
5
Jan 18
14,15,16,
6
Jan 21
17,18,19
Handout &
Powerpoint
7
Jan 25
30 &
Handout
Jan 28
Handout
8
Subject
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Handout /
Spreadsheet
Homework/Assignments /
Exams
Course Overview
Introduction to Valuation
Approaches to Valuation
Introduction to valuation methodologies
DCF, Comparable and other
 Understanding Financial Statements to value
Equity
 Fundamental Analysis BV Vs MV
 Sharpe’s CAPM, Ross;s APM)
 Beta Coefficient
 Technical Analysis & Behavioral Analysis
(EMH)
HOMEWORK #1
DUE
Question 3a and 3b
from Text Book
 Riskless Rates & Risk Premiums
 General Models for Risk/Return
 Cost of Equity/WACC as Discount Rate
 Equity Valuation Models
 Building Projections
 Estimating Terminal Values
 Dividend Discount Model
 FCF to Equity Discount Model
 Trading and Acquisition Multiples
 Valuing a Firm /EV
 DCF for PublicTraded Companies
 P/E and EBITDA Multiples
 Price/Book Multiples
HOMEWORK #2
DUE
Handout spreadsheet
Celerity
Technology
MIDTERM EXAM
(1.5 Hours)
Starwood
(“HOT”)
HOMEWORK #3
DUE
 Valuation Models
 DCF for Private Companies
 LBO and M&A
Alexandria
Hotel
HOMEWORK #4
DUE
 Valuing a Company as an Option (using
Black Sholes, Standard Deviation ,
Covariance and Variance concepts)
Wang &
Airline Co.
 Workshop: Building Equity Models on Excel
using the 4 basic methods of valuation.
 Final Exam Preview
Feb 8
FINAL EXAM
All lecture notes could be obtain by going to Professor Droussiotis’s Website at www.ProfessorDrou.com under ACC9808
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PROJECT DUE