Accounting 594 - Financial Statement Analysis Case Approach- Fall Semester 2005
Preliminary Syllabus revised 09.11.05
Jim Kurtenbach, Ph.D.
3411 Gerdin Business Building
Office 515.294.9994
E-mail jmk@iastate.edu
Home Page www.bus.iastate.edu/jmk
Meeting information
This course will meet for 12 weeks beginning Monday, August 29, 6:00 p.m. to 9:30 p.m., Gerdin
Business Building 2133.
You are responsible for communicating with a classmate to ensure complete coverage of notes
and materials for our regularly scheduled class session; however, I will always make myself
available to address your questions.
Office hours
Historically, office hours have been underutilized so please do not hesitate to arrange an
appointment. Office hours will be scheduled during the first class meeting, but will include time
before and after each class meeting.
Text and Materials
Business Analysis and Valuation (text and cases with CD), by Palepu, Healy, and
Bernard, published by Thomson South-Western, ISBN 0-324-11894-5 (required)
(NOTE: this text is different than the one ordered by the previous instructor, so please
check with your bookstore for availability)
Understanding Financial Statements, Lynn Fraser and Aileen Ormiston, 7th Edition,
Pearson Prentice Hall Publishing (suggested) (Note: earlier editions were sole-authored
by Lynn Fraser)
The Elements of Style, William Strunk, Jr. and E.B. White, Allyn and Bacon Publishers
(recommended)
(See "useful links" on the course homepage for an on-line edition.)
Reading the Wall Street Journal on a regular basis is strongly recommended. An
enrollment form, for discount subscriptions, will be circulated during the first class period.
Also, you can subscribe for an on-line student subscription for approximately $60 per
year.
Preliminary Point Assignment
Grades will be based upon the following preliminary allocation of points (subject to revision):
Meaningful class contribution
500
Other assignments and short projects
400
Five case analysis and pro forma assignments
1,000
Comprehensive Company Analysis
1,000
Total Potentially Available
2,900
Access
Iowa State University complies with the American with Disabilities Act and Section 504 of the
Rehabilitation Act. Any student who may require an accommodation under such provisions
should contact me as soon as possible and no later than the end of the first week of class or as
soon as you become aware. No retroactive accommodations will be provided in this class. You
may also want to contact the Disability Resources (DR) office, located on the main floor of the
Student Services Building, Room 1076 or call them at 515-294-6624.
Course expectations
This course is for graduate students who have significant exposure to the disciplines of
accounting and finance. The course prerequisite is Accounting 592 or Intermediate Accounting I
and II at the undergraduate level.
This course is not simply a “numbers crunching” course. Rather, this course requires us to
integrate concepts from marketing, strategic management, production operations, information
technology, statistics, economics and other disciplines. This course is a communication-intensive
course and, as such, you will have the opportunity to improve your written and verbal
communication skills. You should be comfortable with Microsoft Word and Excel, or competitive
products, and you should be comfortable with navigating the Internet.
In-lieu of team projects, I have attempted to implement a system to assess meaningful classroom
contributions. I have taken the liberty of borrowing heavily from a colleague, Dr. Gary
Koppenhaver, who notes there are several reasons for grading class participation. The recipient
of a graduate degree should be a leader who can contribute in almost any group setting.
Participation in class helps develop leadership skills. Class participation also helps develop oral
communication skills - a characteristic that employers highly value. For this reason graded class
participation is a fundamental element in the most highly-rated MBA degree programs across the
country. Finally, there is the belief that students learn the material best through their clear verbal
expression of ideas and listening to other students. Class participation contributes to the creation
of a learning community among students. The value of class discussion also justifies the use of
cases in course pedagogy.
I should also note my expectations regarding our required time commitment for this course. In
my experience, graduate courses typically require between four and six hours of study for every
contact hour of class. Those who have the minimum background in accounting and finance may
exceed the upper limit of the commitment expectations. However, all of the material is explored
at a level where your commitment to acquiring the information is the only limitation. I will always
make myself available to assist you in knowledge development.
Assignments
Each person enrolled in the class will select a unique firm to analyze during the semester. A firm
will be awarded to the first person that requests the firm in an e-mail message sent to my office
address (jmk@iastate.edu). Please select a firm that is publicly-traded. I suggest analyzing your
current employer, a competitor, or a firm that you would like to have as your employer. Please
note that you are not restricted to a firm that is in the current industry that employs you, if you are
employed or have an internship.
Upon receiving confirmation that your firm is acceptable, please obtain the most recent copy of
the annual report and read the entire report. The SEC version of the annual report contains more
information than is contained in the company annual report for investors. You may find it
advantageous to obtain the SEC version of the annual report from www.sec.gov via the EDGAR
file system.
The written assignments generally have a limit of one typed page. The acceptable margin is one
inch for all borders. A font of size 10 or larger is required.
The goal of limiting the written assignments to a single page is to force us to focus on the
essential information that must be conveyed to the reader. If you need help in written
communication, you are encouraged to purchase and read Strunk and White's "The Elements of
Style" prior to our first meeting.
You are encouraged to submit your assignments as attachments via electronic mail.
Incorporating the report in the body of an electronic message is not acceptable, unless you are
proficient at formatting messages using HTML, JavaScript, or some form of script editing program
that can ensure the integrity of the format. If you elect to attach your submissions within
electronic mail, please remember to provide a unique name to your assignments. For example, a
naming convention is to name the first assignment YourNameAssignOne. Remember that most
word processing packages automatically include the appropriate file extension, e.g., ".doc".
Preliminary Assignments
Please study the appendices unless noted otherwise.
Please note that the chapter assignments are not collected in class. The class participation
points (see above) are based upon your ability to discuss the assignments.
Week 1
August 29, Monday, Business Analysis
Review of the financial statements, overview of the accounting cycle
Chapters 1; 2, and 3
Please read “The Dot-Com Crash” at the end of Chapter 1.
Ch. 1 – 3, 4
Ch. 2 – 3, 4, 10
Ch. 3 – 4, 7 and begin the Harnischfeger Corporation case
Week 2
September 5
Week 3
September 12, Accounting Analysis
Chapter 4
Ch. 4 – 2, 4, 6, 7, 9, 10, 11
Week 4
September 19, Financial Analysis
Chapter 5
We will focus on the Home Depot Case
Ch. 5 – 1, 2, 4, 7
Week 5
September 26, Forecasting
We will focus on the Krispy Kreme Case
Assignment 1 due, SWOT Analysis of Krispy Kreme
Ch. 6 – 3, 4, 6
Week 6
October 3, Valuation Theory and Implementation (Chapters 7 and 8)
Focus on Valuation in the Airline Industry
Ch. 7 – 2, 3, 4, 5, 8
Ch. 8 – 1, 4, 5, 8, 9
Week 7
October 10, Equity Security Valuation
Assignment 2 due, Financial Analysis of Delta
UPS IPO, what price would you have recommended for UPS?
Ch. 9 – 3, 4, 6
Week 8
October 17, Credit Analysis and Distress Prediction
Amazon.com case – could you write a negative report on a popular firm?
Assignment 3, Valuation of UPS
Ch. 10 – 1, 4, 5, 6, 7
Week 9
October 24, Mergers and Acquisitions
Schneider and Square D case
Assignment 4, Initial Pro forma financials and assumptions due
Ch. 11 – 2, 3, 7, 8
Week 10
October 31, Financing and Corporate Governance (Chapters 12 and 13)
CUC case (Chapter 12)
Ch. 12 – 1, 2, 3, 7
Ch. 13 – 3, 4, 9, 10
Week 11
November 7
Assignment 5, BMC Software Valuation (not in your textbook)
Case – to be assigned
Week 12
November 14 – Final meeting
Comprehensive Case due
No Class (sorry) due to Labor Day Holiday