Financial Analysis
95-711
Fall 2002
Class Hours:
Office Hours:
Instructor:
Teaching Assistants
TA Hours
Monday
2:00 PM to 4:50 PM
Doherty Hall A317
Wednesday
5:30 PM to 8:40 PM
BH A53
Thursday
2:00 PM to 4:50 PM
HBH 1002
After class
By appointment
Lynne Pastor
Email: lp23@andrew.cmu.edu
Phone 412 421 6906 (10 am to 9 pm)
Deepa Mani
Email: dmani@andrew.cmu.edu
Wednesday from 2 to 5 pm
HBH 3rd floor Lounge
Yunfeng Shi
Email: yungfens@andrew.cmu.edu
Saturday 2 to 6 pm
Room 1504 Hamburg Hall (on the same floor and at the
opposite side of the Classroom).
Course Information
Prerequisites and Requirements
The course is heavily dependent on technology not only for analytical purposes
but also for communication. You will be turning in weekly group assignments
which will require you to use the Internet to access data, enter it into Excel
spreadsheets and provide in a formal in MSWord. You are expected to have a
reasonable level of competency in use of these programs.
You are also expected to check your Email and the announcements on the
course website each day for messages from your teaching assistant or me. In
addition, you should be aware that the information in the website is subject to
change and you are responsible for any changes made to the schedule or
assignments.
I also check my Email frequently (unless out of town) so this is likely to be the
best method to stay in touch with me. If you should not receive a response from
me within 24 hours, I may be out of town so please check with the teaching
assistants.
Course Description
Purpose
This course focuses as much as possible on the practical application of financial
analysis. The purpose of this course is to teach students the key analytical skills
involved in reading and interpreting the financial position of a firm using financial
statements, knowledge of the industry and information about the marketplace to
make better business decisions.
Format
This class will use a combination of readings, exercises, case analysis and stock
portfolio management project. Case studies will be used to practice the skills
covered in lecture. The class involves a combination of individual and group
work, with participation in both aspects of the course being equally important.
Class Session
Each week you are expected to have checked the course website and
downloaded the lecture notes. Supplemental readings on the web may also be
assigned. Class time will be use to discuss topics in the lecture notes, case
analysis and progress on your investment portfolios.
Several individuals from the local business community have been invited to help
us understand key issues covered in the course. We may have to reschedule
some sessions in order to accommodate their schedules. I will send you
information on the speaker in advance. Please be prepared to give the speaker
your most gracious attention and appreciation and also demonstrate your interest
in their experience by having a few pertinent questions to ask them.
Decorum
Appropriate business conduct is expected in class. You are expected to be in
class at the beginning of the session and remain until the end of the session
unless you have previously discussed the reason with me.
Cell phones should be turned off prior to coming to class and I reserve the right
to confiscate any ringing cell phones and you may be subject to loss of
attendance and participation points.
Individual discussions should be limited to those directed to the entire class and
relevant to the topic at hand.
This is not a lunch/dinner meeting. While coffee and sodas are fine, please do
not bring your lunch or dinner to class, the odor and activity of eating is
disruptive and distracting.
Do not sleep in class. This should be obvious. Again you will be asked to leave
rather than disrupt the class.
Text
The optional text for this class is Analysis for Financial Management by Higgins.
Evaluation
You will be evaluated on an individual basis through quizzes and the final exam
as well as attendance and participation. You will also be evaluated by your peers
in any group assignments.
Point Assignments
3 Scheduled Quizzes
5 Case Analysis
Investment Project (see portfolio instructions)
Attendance & Participation
375
300
300
25
1,000
Grading Scheme
You must complete all the assignments and requirements of this course to pass.
This course is not “curved” in the traditional sense however you will be evaluated
to a certain extent by comparison to the performance of others in the course and
the grading will adhere to the school policy that the class average will not exceed
90% which is equivalent to an A-.
Note that regardless of total points, no more than 10% of the class will receive A+
as a final grade. I expect that you all will complete each assignment competently
and as instructed resulting in a grade of 87% to 90%. Only exceptional effort will
earn a grade above 90%.
97thru 100% (up to 10% of
A+
Exceptional
A
AB+
B
BC+
C
CR
Excellent
Very Good
Average
Fair
Marginal
Poor
Very Poor
Minimal Pass
Fail
the class)
93 up to 97%
90 up to 93%
87 up to 90%
83 up to 87%
80 up to 83%
77 up to 80%
73 up to 77%
70 up to 73%
below 70%
Quizzes
The questions on the quizzes will evaluate the student's ability to identify the
critical issues, analyze the data provided and draw an appropriate conclusion.
Quiz format will primarily be short answer objective – emphasis on “short”.
Although you should be thorough, you should also be concise. Your responses
will not be searched in hopes of finding the correct answer buried there. Note that
if you include extraneous and incorrect information in your answers you will lose
points. Quizzes may contain versions of questions from the previous quiz and
knowledge of prior material may be necessary to answer some questions.
You should bring a calculator, and may bring one sheet of handwritten notes.
You may not use a PDA or computer files during the quiz. Neatness counts, if
the answer is not legible it’s not possible to give you credit.
Case Analysis
Choose a public company on which to base your case analysis. Please see the
attached list for companies that were used in the earlier term and therefore
cannot be used this semester. I must approve your choice of companies and no
more than two students may choose the same company. Note that the cases are
an individual effort even if two of you choose the same company - you must do
your own analysis. I suggest you choose a company that you may someday like
to work for or invest in. The sooner you choose a company the better since your
first case analysis is due at the beginning of the second class session.
Five times during the semester, you will be given a series of questions to answer
about your chosen company. You will be required to provide appropriate
attribution of sources and whenever possible and copies of the documents you
used to derive information for your answer in an appendix to your report. This
may mean copying and pasting the raw data into a word document.
The analysis must be submitted by the beginning of class – do not blow off class
to do the write up as it will be considered late. Late assignments are not
accepted and you will receive a zero.
Investment Game Project
The goal of this project is to gain experience with financial analysis via the stock
market. This is a group assignment with emphasis on “group”. You should plan to
meet at least once a week and assign the write up and submission to one of the
group.
Each member of the group will also turn in a “Peer Eval” which will impact your
individual grade on the project. You will loose points if you fail to turn in your
“Peer Eval”.
In the first session of class you will form investment groups of 4 students. Your
objective is to maximize the value of your portfolio over the investment horizon
(most of the semester).
You must revalue your portfolio at the close of the market once a week the day
before your class meeting. Five times during the semester you will summarize
the activity in your portfolio, explain the reasoning behind your trading decision
referencing the material we have covered in the last classes and chart your
portfolio’s performance on a weekly basis. You should submit this document prior
to the beginning of class as scheduled.
At the end of the term you will submit a 10 page paper on the performance of
your portfolio (see portfolio instructions for more information).
Group Participation
Business is almost always conducted in teams. You should note that a significant
portion of your grade is dependent on your group project. You will turn in a “Peer
Eval” with each group assignment and your individual grade will be adjusted up
or down accordingly. Peer evaluations are designed mainly to highlight any
problems your team may be having so we can address them together before the
project and the semester have progressed too far.
Keep in mind that your group has the option to “fire” you from the group if
problems persist. In this event you will be required to complete all the Stock
Portfolio Project on your own and 100 points will be deducted from your overall
grade at the end of the term.
Attendance and Participation
Your career success depends critically on your skill in articulating and defending
your ideas and engaging in a productive dialogue with your colleagues.
Simply attending class is not enough. In order to make a contribution, you will
need to be well prepared for class. Please be aware that you are responsible for
your own level of participation: your ability to respond to questions as well as the
quality of the contributions to the discussion you volunteer will be reflected in
your grade. The class encourages questions and debate, and thus respect for
other students’ views and cultural perspectives is essential. You should
assume 0 points in the grading scheme for Attendance and Participation
unless you have made a serious effort to contribute in class.
Late Assignments and Make-ups
In short there are none. No assignments will be accepted for credit after the
beginning of the class in which they are due.
You are not permitted to switch sections to delay taking a quiz or turning in an
assignment. If you need to switch lecture sections, your assignments are still
due in your regular class period.
There are only 3 quizzes/exams in this course so plan accordingly. I am reluctant
to give make ups for any reason unless evidence of an emergency is provided. I
have scheduled quizzes well in advance so that you can manage your schedule.
While I appreciate that site visits and interviews are important, they are not
considered emergencies.
Academic Integrity
Students should review CMU’s Academic Integrity Guidelines at
http://gollum.mac.cc.cmu.edu/univ_policy/documents/Cheating.html. I have a
very low threshold of tolerance for dishonesty. If you are caught plagiarizing or
cheating in any way you run the risk of failing the course.
Companies not Eligible for Analysis Fall 2002
Accenture
Adobe
AMS
Apple(aapl)
Applied Materials (AMAT).
banana republic
Borland
Business Objects
Cerner
Checkpoint Software
Coca Cola
Colegate Palmolive
Computer Associates
Doubleclick
EDS
E-Piphany
Exxon Mobile
Freemarkets
Gateway
GE
Heinz
Home Depot
Interwoven
Intuit
Johnson & Johnson
Lockheed Martin
LSI Logistics
Lucent
MacroMedia
Marriott
Mercury Interactive
MRO
NOKIA
Nortel
Nvidia
Palm
Pixar
Playboy
Qualcomm
ROSS Systems Inc
SBC Communications
SouthWest Airline
Sybase
Symmantec
Target
Unisys
UPS
Veritas
Vitria
Wendy's
Xerox
Yahoo
Schedule
The Schedule can be found on the course website’s splash page.