ACCT 416 | Financial Reporting & Analysis
Syllabus – Fall, 2013
2 units
14106R Lecture 4:00-5:50pm Tuesday &, Thursday ACC 303
Professor: Thomas P. Ryan Email: thomasry@marshall.usc.edu
Office:
ACC 213
Phone:
Office Hours
Monday
Tues & Thurs
818 219 4285
1:30 to 3:30 pm
10:00 – 11:00 am
If these hours conflict with classes you are taking, please contact me.
Overview and Tie to USC Marshall School of Business Strategic Plan: The USC Marshall School of Business
“Strategic Vision for Marshall” states: “…..The USC Marshall School of Business aims to be a leader in educating
tomorrow’s global business leaders, creating knowledge of management and the business environment, and addressing
critical problems facing business and society, both locally and across the world.”
Consistent with the above, while the course will rest on a foundation of accumulation of knowledge of Financial
Reporting and Analysis, we will seek to avoid focus of learning solely from a “numbers and data” perspective.
Rather, students and professor together will jointly endeavor to consider career related implications; consider how
accounting data in conjunction with financial analysis and particularly for projections and valuation is used in
management and the business environment. Typical classes will include a segment focus on a specific accounting
and finance topic, and also a segment considering accounting related contemporary business news, political news
or career deliberations.
While the course syllabus identifies target subjects for focus, if and when relevant important current events occur,
or should relevant guest speakers become available, consistent with course objectives, changes to the course
organization and format may occur.
For example, discussion of financial analysis matters coincident with significant Initial Public Offerings,
Acquisitions or Divestitures may merit a change to the initial course plan.
Course Introduction and Objective
This course examines the role of financial statement analysis in the prediction of a firm's future financial performance.
The course is designed to provide (1) skills to analyze financial statements; (2) exposure to public sources of financial
information used in the capital markets; and (3) an appreciation for the usefulness and limitations of financial statement
analysis in specific decision contexts. The course will focus on fundamental analysis and forecasting. The course will
include limited depth use of analysis and forecasting in a valuation context.
Learning Objectives
By the time students finish this course, they should be able to:
demonstrate an understanding of typical decisions in which financial analysis plays a key role; the dependency of
the analysis on historic financial data filings for the analysis; and the pivotal role of financial analysis in the
projection of future performance as a key to relevant for decision making by in class discussion.
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demonstrate an understanding of the importance to financial analysis of filings required of publicly traded
companies, such as Forms 10-K, 10-Q, S-1, segment disclosure requirements; demonstrate familiarity with
subject matter included in filings, by active participation in class discussion and completing quiz materials
focusing on these matters
demonstrate an understanding of the limitations of financial analysis, recognize the impact of bias, discuss the
poor comparative track record of financial advisors relative to the overall market performance and the historic
pattern of relatively poor economic results relative to purchase prices paid from major acquisitions through class
discussion.
recognize and discuss the varying contexts in which in accounting data, in conjunction with financial analysis,
and particularly for projections and valuation, is used in management and the business environment: (Acquisition
deliberations, Disposition deliberations, Investment in initial public offerings, Assessment of the value of publicly
traded stocks as compared to trading price, Bankruptcy, Federal Tax reporting, Financial Statement reporting)
through in class discussions.
demonstrate an understanding of the intertwined nature of metric based analysis and considerations of the subject
company’s business strategy and economic drivers as a foundation of the overall analysis exercise through
classroom discussion, test materials, and work on group projects.
demonstrate an intermediate level understanding of ratio analysis of the subject company and benchmark
comparable companies by active participation in class discussion and completing both homework materials and
group project efforts including these matters
demonstrate familiarity with the theory underlying the selection of Benchmark Comparable Companies and the
use of either the Capital IQ, OSIRIS or Compustat databases to gather data as a beginning to the financial analysis
process, through active use of these databases for homework and team assignments.
recognize and discuss the methodologies and tools used in efforts to assess, and potentially make accounting
adjustments and changes to categorization of costs, between the benchmark companies and the subject company
being analyzed to assure consistency through in class discussion, and team assignments.
demonstrate knowledge of the process of using financial analysis as a foundation for forecasting as a key step to
the assessment of various insights leading to a conclusion of value through class discussion and team project
assignments.
demonstrate recognition of the differences in accounting metrics, and accounting related adjustments that may be
appropriate for financial analysis focus based on varying industry sectors, company life stage or purpose of
analysis, through discussion of team presentations and by completing quiz materials on these matters.
demonstrate a basic level of familiarity with the business valuation methodologies within the general three
categories: Earnings Approach / Discounted Cash Flow; Benchmark/Market Comparable Approach, and
Underlying Assets Approach through homework assignments and team assignments.
The course will include review of most chapters of the Palepu & Healy (PH) text “Business Analysis & Valuation using
Financial Statements.” For a majority of class sessions, students will be assigned readings constituting a portion of a
particular chapter of the text, or alternative materials that will be posted on blackboard. As described below, homework
assignments and quizzes will include material from the readings in preparation for class lecture on the topics.
A tentative schedule of the week by week activities and assignments for the class is included later in this document.
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Summarized Overview of Course Activities
This is a 2 unit course to be completed in half semester. The objectives of the course and depth of the material to be
covered will reflect the 2 unit nature of the material. Students cannot be expected to complete the course with advanced
accounting financial analysis and valuation skills. However, they should anticipate being exposed the a broad range of
activities and concepts associated with accounting financial analysis and valuation and display a moderate level of
knowledge and skill based on this exposure. In summary, during the course, students will focus on activities that may
include the following areas:
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Be assigned a subject company, or a segment of the subject company as the subject of for study; develop an
understanding of why segments vs. overall companies might require study, and develop an understanding of the
differences and challenges in procedures for segments vs. entire companies
Be assigned a particular purpose / reason for the analysis and valuation; develop an overview understanding of
various types of valuations that may be needed; develop an appreciation of why one use / purpose for a valuation
may require different analysis than others.
Develop a general level of awareness and a fundamental level of skill associated with the three principle
approaches to valuation: Comparable Approach, Income Approach and Underlying Assets Approach
Develop a general understanding of subject company business and the potential importance of seeking to identify
factors influencing its economic health and viability
Gather data on the history of the business, including historical financial data for subject company being studied
Identify benchmark “comparable” public companies similar to the subject based on operating and financial
characteristics. Develop an initial assessment of the relative similarity of the comparable firms to the subject.
Identify the industry or market segment in which the subject competes as a foundation for assessing the history of,
and the future prospects of the subject.
Establish an understanding of the particular specialized procedures or analysis that may be mandated by the
particular “purpose / reason” for the study
Identify those specific analyses associated with the Comparable Approach, Income Approach and Underlying
Assets Approach to be used in the valuation of the subject company, and either “create” “modify” or “adopt” an
Excel based model to be used in the study
Consider the variables constituting value drivers and assumptions relevant to the Comparable Approach, Income
Approach and Underlying Assets Approach portions of the overall model.
Perform initial financial analysis based on the historical data from the subject company as the basis for initial
forecasts for future operations
Reassess the initial financial analysis based on historical data to consider non reoccurring events, non-operating
assets and other historical factors not representative of the future prospects for the subject
Reassess the revised financial analysis for the subject to take into account insights from the financial performance
of the benchmark comparable firms as considered to be relevant to the subject
Utilize the results of the financial analysis of the subject as a key foundation for the “comparable” assessment of
value of the subject as compared to the publicly traded entities.
Utilize the results of the financial analysis of the subject as a key foundation for the “income approach /
discounted cash flow approach” to value for the subject
Consider use of the Underlying Assets approach and perform procedures that may be appropriate.
Consider adjustments to the value that may be merited for items such as excess or deficient net working capital,
possible non-operating assets.
Consider the “weighting” of the evidence of value from the various sources to derive a conclusion base on
“reconciliation” of the value insights
State a study conclusion consistent with the defined purpose of the analysis for the particular subject.
Again, this course does not have the objective of leaving students with advanced accounting financial analysis and
valuation skills. The course will provide a broad but limited depth exposure to accounting financial analysis and
valuation.
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Required Materials
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Business Analysis and Valuation Using Financial Statements, 4th Edition (4E) by Palepu & Healy (PH). This is
the soft cover version of the text being and does not include case studies.
The course will include discussion of contemporary news events tied to the course subject matter. While not a
significant time commitment, students should plan to spend not less than 15 minutes before each class session
developing a cursory level awareness of current financial events through readings from sources such as the Wall
Street Journal, or through access typical financial websites such as Yahoo finance
Students are required to access and perform Excel related learning and quiz assignments on the McGraw Hill
Simnet site. Registration for this site is $25 and is done by each student individually using a credit card when
entering the site at https://usc.simnetonline.com
Materials on Blackboard, and homework materials submitted via Blackboard, are critically important to student success in
the course. Students very likely are familiar with Blackboard from prior study at USC. Self instruction related to
Blackboard is available at http://www.usc.edu/
Prerequisites:
1 from BUAD 215 or BUAD 306 and 1 from ACCT 370 or ACCT 370B or ACCT 415
Course Notes: Most lecture slides will be available through Blackboard.
Grading Summary:
Assignments
% of Grade
Homework
Quizzes
Final Exam
Team project
Professionalism and participation
20%
20%
20%
25%
10%
5%
100%
Simnet
Total
Note that the team project and the professionalism and participation portions of the grade total 40% of the overall grade.
Attendance at class is required to actively participate and successfully contribute in the learning objective in these areas.
Final grades represent how you perform in the class relative to other students. Your grade will not be based on a
mandated target, but on your performance. Historically, the average grade for this class is about 3.3 (i.e., B+). Three
items are considered when assigning final grades:
1. Your average weighted score as a percentage of the available points for all assignments (the points you receive
divided by the number of points possible).
2. The overall average percentage score within the class.
3. Your ranking among all students in the class
Undergraduate Program Learning Objectives
Below are the five Undergraduate Program Learning Objectives developed for the Undergraduate accounting program by
the USC Leventhal faculty and the level each is covered in this course:
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Objective 1-Technical Knowledge: Students will demonstrate technical proficiency in gathering financial data from
public sources, and utilizing that data in financial analysis to derive projections leading to valuation related decision
making. High
Objective 2-Research, Analysis and Critical Thinking: Students will demonstrate the ability to research, critically
analyze, synthesize, and evaluate information related to financial data and company strategy. High
Objective 3-Ethical Decision Making: Students will demonstrate an understanding of ethics, ethical behavior and ethical
decision making. Low
Objective 4-Communication: Students will demonstrate the ability to communicate ideas both orally and in writing in a
clear, organized and persuasive manner. Medium
Objective 5-Leadership, Collaboration and Professionalism: Students will demonstrate leadership skills and the ability to
work cooperatively and productively to accomplish established goals. Medium
ASSIGNMENTS AND GRADING DETAIL
Readings, Homework and Quizzes
The class is organized based on the premise that student comprehension and retention of knowledge are best achieved
when a five step process is used: 1) students allocate time in advance of lectures to read course materials, with either
homework assignments or quizzes completed prior to the class related to the homework reading, 2) in class lecture and
discussion, 3) access to class lecture slides on Blackboard by students after class, and 4) work on a team project basis,
and 5) testing via the final exam.
There are sixteen class sessions in the eight weeks of this course. It is anticipated that there will be between four and six,
short 15 minute quizzes that will be given typically at the beginning of Tuesday classes during the first seven weeks of the
course. The lowest quiz grade will be deleted from the computation of the final course grade. For example, if five
quizzes actually are given and the student completes all five, the lowest grade will be deleted. If five quizzes are given
and the student is absent for one, the zero grade for the missed quiz will be deleted. If five quizzes are given and a
student misses two classes, the grades for the three completed quizzes will be added to the grade zero for the fourth quiz
in computing the overall quiz grade. In order to treat all students equally and fairly, it is likely that no “make up” quizzes
will be given.
It is anticipated that there will be between 3 and 5 homework assignments due at the beginning of class typically on
Thursdays during the first six weeks of the course. Students are expected to complete all homework assignments.
Homework assignments submitted after the beginning of the class when they are due will have credit reduced by 50%. At
the option of the professor, some or all homework assignments may be required to be submitted by Blackboard or through
an online capability tied to the text.
A significant portion of the course grade ties to the homework and quizzes. Given the dependency of the overall grade on
the relative weighting of each grade component, it is a mathematical fact that students may undermine their final overall
course grade if they fail to perform homework assignments or completing them late.
Per the above, it should be clear that students are expected to arrive at class having completed the reading, thus having a
basic familiarity with the materials. Decks used in class will be posted on Blackboard after class.
Final Exam
The final exam will emphasize material covered in lectures, discussions by guest speakers, class team presentations,
homework assignments, and the assigned readings in the text.
The final exam occurs after the team presentations by students and it is anticipated that subject matter from the team
presentations may be included in the final exam questions.
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Generally, the final exam will be broken into three portions: 1) Multiple choice questions with 70% to 80% or possibly
more of the point value, and 2) Questions where students will complete entries, analysis or computations with perhaps as
much as 20% to 30% of the point value .
Team Project
The team project will be 25% of the final grade. The team project has a primary theme of work by students to gather
relevant profile data on a company, perform financial analysis, develop projections and derive an estimate of value. An
excellent overview of the efforts expected of the team is reviewed in the “Summarized Overview of Course Activities”
section included earlier in this syllabus
The results of the team project will be evaluated in three ways: 1) completion of a company specific analysis “write up”
of no more than 8 pages maximum and no more than 6 pages of text, 2) Preparation evident in the oral “preliminary
update presentations” occurring a few weeks prior to the final project presentation; 3) the final oral team presentation of
the project analysis, and 4) by the ratings by fellow team members.
In addition to the financial analysis skills, the team project includes as an objective the advancement of skills associated
with working as a team, particularly seeking to advance skills where meetings do not occur in a face to face arrangement.
In the team project, student meetings through conference calls, and through use of online collaboration tools, is
encouraged.
Based on current enrollment, it is likely that there will be four to six teams in the class.
No later than the beginning of week 5, and perhaps earlier, a series of companies will be chosen for the group project
analysis, representing differing industry sectors, stages of development, or “purpose” of valuation assignment. It is
intended that these different categories reflect a potential variety of differing relevant value drivers, strategic
considerations, sources of data, financial metrics, and relevant methodologies to valuation.
We will be seeking three or four University of Southern California supporters with category specific financial analysis and
valuation expertise to act as guest lecturers and to participate tentatively in classes on Tuesday October 1 and Thursday
October 3. Participation by the guest lecturers may be either in person, or by internet based meeting. Each expert will be
tied to one or more of the particular companies that student teams are focusing on.
On each of the two dates, two or more student teams will provide a preliminary status update on their valuation efforts,
somewhat like a staff preliminary update to the Partner or Managing Director on a project. On those dates the experts
will likely make a presentation of their own to the overall class as well as providing some helpful feedback to the student
team working on the company valuation.
The final choice of the company categories and companies will depend upon final commitments from the guest lecturers
and will be finalized by the professor. Possible example categories: Publicly held companies: Entertainment and Media
valuation for Financial Statement Impairment purposes; Oil & Gas company valuation for 100% purchase; Mobile
Communication (for minority stock purchase deliberations); Privately held company: (possibly for Employee Stock
Ownership Plan ESOP) purposes. No later than week 5, teams will be assigned to each of the categories by the Professor
using random selection.
The final class team presentations are tentatively scheduled to occur October 10. Team presentations will be limited to no
less than 10 minutes, and no more than 15 minutes each. It is expected that each member of the team will participate in
the oral presentation. Each team member is obligated, to use their role as a team member, to assure that data presented and
statements made by fellow members are not factually incorrect. For example, while statement of opinions may vary, a
statement incorrectly identifying a revenue figure as net income would be factually incorrect.
Team presentations may elect to create, and are encouraged to use the option of creating a video of their presentation if
they have that preference. This approach may allow students to fine tune segments of the presentation, and self-critique
and amend it prior to the actual presentation date. This approach may allow individual students to focus on a segment,
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share that segment during the weeks leading up to the final presentation, and to make important edits along the way.
Assistance can be arranged related to the individual video segments, combining segments and editing is available thru
Marshall IT and particularly new software under the name YouSeeU may be helpful.
Alternatively your presentation may include several elements: verbal presentations, slides, video, or other props or effects
as considered effective by the teams. Assignments will be graded on the quality of content as well as the organization and
presentation of your analysis.
Again, just like in real life … the quality of your analysis (i.e., what you present) and how you present it are each an
important component of how you are evaluated. The content of the presentation, as well as the effectiveness of the
presentation will be considerations in the grading of the oral presentation. Business attire is recommended.
The guest lecturers by company category may participate in the evaluation of the team presentations for both their
specialist category and the other valuation areas, either in person, via internet meeting, or via review of DVD of the team
presentations.
Success in your careers will in part depend upon your ability to participate effectively at part of a team where the
interaction does not occur on a face to face basis. In business today, individual success depends on effective collaborative
interaction which occurs in via team conference calls, via internet meetings and perhaps through collaborative document
development or review via the internet. One of the team project objectives is to advance each student skills in these
collaborative areas. Furthermore, diminished use of face to face meetings, and increased use of these other tools increases
the chances for high levels of participation by all team members whose physical location may be dispersed on or off
campus during the semester.
Consistent with the themes above, the third portion of each individual’s team grade will depend on feedback from fellow
team members. One of the objectives here is to encourage full participation by each team member. A questionnaire form
will be due to be completed and submitted by each individual on the date of the team presentation. It is intended that the
evaluations will be submitted in a manner through Blackboard that will retain the confidentiality of submissions made by
one individual from the other individuals in the team being rated. The format of the questions and submissions may be
something along the following lines:
Please provide rating on a scale from
1 to 5 with 5 reflecting outstanding
performance and 1 reflecting very
poor performance
Names
Your name:
John
Attendance at team meetings
Quality of preparation for the
meetings
Quality of materials contributed to
team
Ability to participate and contribute
collaboratively via netmeetings,
conference calls, shared internet real
time document development, non
face to face settings
Overall contribution rating
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Mary
Jung
Evan
Simnet / Excel
Excel is the language of accounting and finance and it is hoped that this modest focus in this course will play a small role
in stimulating your interest in a regular program to expand your Excel knowledge.
Students are required to access and perform Excel related learning and quiz assignments on the McGraw Hill Simnet site.
Registration for this site is $25 and is done by each student individually using a credit card when entering the site at
https://usc.simnetonline.com
“Tryan Lesson 2” which will guide you through a series of roughly 30 Excel “tasks tied to important learning areas.”
There are "Let me try" and "Show me" menus within the Lesson. Its important to use the Lesson to understand how
Simnet works. That knowledge is important for success with the Exam.
Completion of the “Lesson” is not mandatory, but it will help you with the online exam. You must complete the exam
by the dates shown in the syllabus for your particular course or receive no credit. ACCT 416 has 45 questions. There is a
time limit for each exam. Students may take the exam twice and receive the highest score they achieve for use in grading.
Professionalism, Attendance, Participation, Guest Speakers
Professionalism and Attendance: Consistent with the themes touched on as part of the Marshall School Strategic plan,
we will seek to advance the level of students’ professionalism as part of the class. Similar to business settings of potential
careers, professional conduct is expected from all students in class. Professional conduct is expected from all students in
interactions with me on class related matters, both in class, and outside of class. Class related interaction occurring
outside of class hours may include for example: email, telephone, voicemail, or office hours.
In each circumstance that you need to be absent, you are expected to send an e-mail message to me prior to the start of
class. This is the minimum standard that you can expect to encounter in your career. Please note, while you may offer an
explanation, you do not need to tell me why you will be absent. Failure to notify by email that your will miss “our
meeting / class” may be viewed as unprofessional behavior.
Keep in mind that an e-mail in advance of class does not “excuse” your absence – it simply shows me that you are taking
an appropriate professional stance and responsibility for choosing to do something else during class time. Students with
more than two absences are likely to begin impact on their performance. Multiple absences, even when accompanied by
conscientious notification, may be viewed as unprofessional behavior.
If you miss a class session, you still need to come to the next class fully prepared. You may have access to PowerPoint
slides from the class if I have posted them on either Blackboard. Please contact a classmate before the next class
meeting. Ask them for announcements, lecture notes, readings, assignments, etc. If you discussed the missed class
session with a classmate, and you still feel you need further clarification or interpretation of the material covered, I will be
glad to help. Please don’t send me an e-mail asking me to tell you what you missed in class. Of course, if a major
illness or emergency arises, I will work with you to accommodate the situation. In many instances the class sessions may
be recorded. At my option, and at your email request, I may provide an email to the link of the recording.
Conceptually, a pattern of absence from class, a pattern of lateness, or lack of participation and/or inattention will
adversely affect your grade in the same way that such behavior would adversely affect your performance evaluations in a
career setting.
Please note the guidance provided in the section of this syllabus focusing on “technology policy” for insights related to
activities which may be viewed as non professional
Participation: Class will be conducted in a manner similar to how participation is expected and treated in a career
business environment. In your careers you will be expected to be paying attention and actively participating. Similarly,
students are expected to actively participate in class. Class sessions will be conducted in a manner where I interweave
questions to individual students with lecture on the material. Failure to provide a cogent response to any particular
question will not be viewed as poor performance. However, if a student displays a pattern of not recognizing what
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question is being asked of them, or exhibits a lack of knowledge or lack of recognition of topical points made a few
moments earlier in the lecture, that may be viewed as not actively participating in the class. The same would be expected
in a career environment.
In your careers, multitasking will be required to be effective. You will need to be able to intermittently stay connected
with email and texts while attending meetings. On the other hand, if email and texts undermine your effective
participation in meetings, your career will suffer. Similarly, students may occasionally check computers and cell phones
during class. However, if the professor observes a pattern of a student excessively focusing on computer based activities
and thus not able to answer questions or appropriately participate, that may be viewed as unprofessional.
One of the objectives of the class involves tying the subject of accounting to students’ prospective career paths. To
facilitate meeting that objective and to advance students deliberation on this connection we will be discussing
contemporaneous news events involving accounting as a regular part of each class.
Reading of online or hard copy finance oriented sites, such as the Wall Street Journal, for not less than 10 or 15 minutes
prior to the class sessions, is expected of each student for each class. Classes may include an inquiry by the Professor
addressed to students chosen at random seeking insights about current events potentially relevant to the class. Outside
readings by students provide a foundation of knowledge of current events, and the resulting ability to participate in class
dialogue, is an important part of the learning process for this course material. Perhaps as important, developing a habit of
this type of reading, and developing an area of personal business interest, is important to each student’s career.
Fellow Students in Course and the USC Family: The experience as part of the Marshall School of Business is not
simply learning about facts, procedures and analysis. You are expected to get to know your fellow students in the class.
Many students will have travelled thousands of miles to attend USC and this class with you. From a purely self centered,
hardnosed economic perspective, it is not unlikely that your future careers could be positively impacted by that fact that
one or more of the students in this course may be in positions of great authority and responsibility 20 years from now.
Name “Tents”: I will provide “name tents” and marking pens on the first day of class. There is a possibility that you
names will have already been printed on these tents. If there is a first name that you prefer to use, please show it on the
name tent. If student names are not pre-printed on the tents, use these materials to write the first name and last name that
you wish to be called by in very large block letters.
The “name tents,” will be used for all class sessions. These will facilitate ability to call on students by name, assess
participation, and should advance the ability of students to get to know one another. Naturally, it is the responsibility of
students to keep the name tent in a visible location in front of them, so that I, and other students, can facilitate student
participation. There are over 150 students in my 4 classes this semester. While I aspire to remember each person’s
name, please help me by stating your name and class session when we happen to meet.
The name tents will also be used to facilitate recording attendance, and they must be returned to me at the end of each
class. I will bring tents back to the next class for your use again. It is your obligation to pick up the name tent while in
attendance to have your attendance recorded. It is your obligation to return the name tent before your departure from
class to enable proper recording of your attendance. After the first class or two there will be no “verbal roll call” but
attendance records will be gathered.
MARSHALL GUIDELINES
Add/Drop Process
In compliance with USC and Marshall’s policies classes are open enrollment (R-clearance) through the first week of class.
All classes are closed (switched to D-clearance) at the end of the first week. This policy minimizes the complexity of the
registration process for students by standardizing across classes. I can drop you from my class if you don’t attend the first
two sessions. Please note: If you decide to drop, or if you choose not to attend the first two session and are dropped, you
risk being not being able to add to another section this semester, since they might reach capacity. You can only add a class
after the first week of classes if you receive approval from the instructor. For further details see
http://www.usc.edu/dept/publications/cat2011/academic/policies.html
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If you are absent five or more times prior to September 30, you should assume that it may be appropriate for you to
withdraw by that date. These policies maintain professionalism and ensure a system that is fair to all students.
Marshall Grading Guidelines
Course Grading Policy: Marshall’s target mean GPA is 3.0 for required classes and 3.3 for electives. The mean target for
graduate classes is 3.3. Assignment/Exam Grading Policy: the instructor determines what qualifies as an accurate grade
on an assignment, exam, or other deliverable, and the instructor’s evaluation of the performance of each individual student
is the final basis for assigning grades for the course. Final exams and all other graded work which affected the course
grade will be retained for one year after the end of the course if the graded work has not been returned to the student; i.e.,
if I returned a graded paper to you, it is your responsibility to file it, not mine.
Technology Policy
One objective of the technology policy in this course is to aid in your selection of personal technology usage patterns that
will be effective in your chosen career after departure from USC. In your career, effective choices involve the
application of “timing and level” of technology usage. Similar to the “public” classroom setting, your use of technology
in public areas in your career may impact your “personal brand / business reputation.” Finally, your technology usage in
work and scholastic settings may impact the effectiveness of those around you.
In your future career environment you will likely experience significant demands on your time and attention. In many
environments it is not unusual to receive 60 or more business emails per day, 20 or more business voicemails, and large
volumes of business associated text type messages. To be effective, an individual must strike a balance between
remaining connected to these messages, while concurrently remaining focused on tasks, analysis, meetings, phone calls,
worthy of and requiring devoted attention.
To be effective in your future careers you will need to be able to “tactfully” “balance” the challenge of “remaining
connected” to technology, while also devoting high quality focus and attention to matters you are handling via meetings,
phone calls and analysis through the day.
Consistent with this general background, I will initially permit all students use laptops, and other devices, including
Internet access during lectures. No such devices will be allowed during examinations. Each student is expected to utilize
this freedom in a manner that is compatible with the concepts above and consistent with a future career environment.
The following insights may be relevant in defining some general boundaries.
Unacceptable actions during class at any time: playing video games; shopping online.
Acceptable actions: Very occasional checking of texts and / or emails in a discrete manner and very brief limited
replies i.e. perhaps twice in a two hour class. Loading the PowerPoint or Word documents tied to class
presentations and taking notes on your computer during class is an excellent use of technology. Occasional
searching of the internet for content relevant to that day’s lecture is acceptable and may add value for all in the
course. Discrete occasional course related communication with fellow team members for planning of assignments
is acceptable.
Statement for Students with Disabilities
Any student requesting academic accommodations based on a disability is required to register with Disability Services
and Programs (DSP) each semester. A letter of verification for approved accommodations can be obtained from DSP.
Please be sure the letter is delivered to me (or to your TA) as early in the semester as possible. DSP is located in STU 301
and is open 8:30 a.m.–5:00 p.m., Monday through Friday. The phone number for DSP is (213) 740-0776. For more
information visit www.usc.edu/disability .
Statement on Academic Integrity
Students enrolled in any class offered by the Leventhal School of Accounting are expected to uphold and adhere to the
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standards of academic integrity established by the Leventhal School of Accounting Student Honor Code. Students are
responsible for obtaining, reading, and understanding the Honor Code System handbook. Students who are found to have
violated the Code will be subject to disciplinary action as described in the handbook. For more specific information,
please refer to the Student Honor Code System handbook, available in class or from the receptionist in ACC 101.
No recording and copyright notice. No student may record any lecture, class discussion or meeting with me without my
prior express written permission. The word “record” or the act of recording includes, but is not limited to, any and all
means by which sound or visual images can be stored, duplicated or retransmitted whether by an electro-mechanical,
analog, digital, wire, electronic or other device or any other means of signal encoding. I reserve all rights, including
copyright, to my lectures, course syllabi and related materials, including summaries, PowerPoints, prior exams, answer
keys, and all supplementary course materials available to the students enrolled in my class whether posted on Blackboard
or otherwise. They may not be reproduced, distributed, copied, or disseminated in any media or in any form, including
but not limited to all course note-sharing websites. Exceptions are made for students who have made prior arrangements
with DSP and me.
Emergency Preparedness/Course Continuity
In case of a declared emergency if travel to campus is not feasible, USC executive leadership will announce an electronic
way for instructors to teach students in their residence halls or homes using a combination of Blackboard,
teleconferencing, and other technologies.
Evaluation of Your Work
You may regard each of your submissions as an “exam” in which you apply what you’ve learned according to the
assignment. I will do my best to make my expectations for the various assignments clear and to evaluate them as fairly
and objectively as I can. If you feel that an error has occurred in the grading of any assignment, you may, within one week
of the date the assignment is returned to you, write me a email memo in which you request that I re-evaluate the
assignment. Explain fully and carefully why you think the assignment should be re-graded. Be aware that the reevaluation process can result in three types of grade adjustments: positive, none, or negative. Grades for assignments and
exams will be considered final if no email request for a change has been received by me within the one week time period.
COURSE READINGS/CLASS SESSIONS
ACCT 416
Tuesday, August 27, 2013
Daily activities, Tasks, Readings, Due Dates:
Week
1
Introduction and Course organization. Detail of Course Grading. Tie to career
environment, critical thinking and personal strategy. Background context to the
course: What students can expect from use of the tools developed in this
course. Varying contexts into which financial analysis is used. Dual Importance of
Strategy Assessment and Accounting based Financial Analysis.
11
Comment
Thursday, August 29, 2013
Monday, September 02,
2013
Tuesday, September 03,
2013
Homework 1 due. Readings: PH Chapter 1, A Framework for Business Analysis
and Valuation Using Financial Statements (10 pages) and PH Chapter 2, Strategy
Analysis (17 pages); Check Blackboard for "Internal Revenue Service Revenue
Ruling 59-60" (6 pages). Particular focus on Sec 3 "Approach to Valuation" and
Sec 4 "Factors to Consider" Lecture: Discussion of the intertwined nature of
metric based analysis and considerations of the subject company’s business
strategy and economic drivers as a foundation of for the financial analysis
exercise. Discussion of key public filings required of publicly traded companies
such as Forms 10-K, 10-Q, S-1 and segment disclosure requirements, as well as
the subject matter contents included these filings. Beginning of discussion of
accounting data used in metric based financial analysis.
Labor Day University Holiday
Week
2
Thursday, September 05,
2013
Tuesday, September 10,
2013
Wednesday, September 11,
2013
Homework:
Series of
questions:
Revenue
Ruling 59-60,
Chapter 1 of
text (10
pages) , and
on the
contents of
the syllabus
related to
course
organization
and grading
Week
3
Last day to add. Last day to drop without W. Quiz 1 Readings PH Chapter 3,
Quiz
Overview of Accounting Analysis. Example, Professional Society Standards:
Review of American Society of Appraisers Standards BVS-II Financial Statement
Adjustments
http://www.appraisers.org/Libraries/BV_Discipline/2009_BV_Standards.sflb.ashx
Selection of Benchmark Comparable Companies and Ratio Analysis : Selection of
benchmark comparable companies, development and comparison of financial
ratios, accounting factors necessary to consider in assessing the conclusions to
be drawn from these ratios analysis.
Homework 2 due. Reading PH Chapter 4, Implementing Accounting Analysis.
Use of either the Capital IQ, OSIRIS or Compustat databases to obtain data on
benchmark comparable companies. Methodologies and tools used in efforts to
assess, and potentially make changes to categorization of costs, between the
benchmark companies and the subject company being analyzed to assure
consistency.
Homework
Quiz 2. Reading: PH Chapter 5, Financial Analysis. Also Deck to be placed on
Blackboard ... Excerpts from EY valuation materials: Three Approaches to
Valuation as per "Fair_value_advanced_section_5_slides Performing
ValAnalysis.ppt." Business Analysis and Valuation models: Review of primary
business valuation models within the general three categories: DCF,
Benchmark/Comparable, and Underlying Assets
Quiz
9/11/13 LSOA: Resumes Due for Resume Book
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Thursday, September 12,
2013
Tuesday, September 17,
2013
Week
4
Thursday, September 19,
2013
Tuesday, September 24,
2013
Homework 3 due. Readings on Blackbard ..Excerpts from EY Slide Deck: DCF
WACC, CAPM as per "Fair_value_advanced_section_3_slides Valuation
Framework and models.ppt." Continued Discussion of Business Analysis and
Valuation models: Review of primary business valuation models within the
general three categories: DCF, Benchmark/Comparable, and Underlying Assets.
Presentation by Ben Billings re Capital IQ and Compustat
Use of the EY
materials in
homework
assignment
Homework 4 . Chapter 6, Prospective Analysis: Forecasting Excerpts from EY
Slide Deck Section 6: Valuation process: complete reconciliation and conclude on
opinion of value. Accounting Adjustments: Checklist, and Relative Importance,
Adjustments to the Subject Company and Benchmark Companies. Final choices
to be made of the companies to be used in the group projects. Each team to be
assigned to a specific category of company through random drawing process.
Possible InClass
Exercise:
Comparable
Companies Valuation
Assessment
Quiz, Possible
focus on
Comparable
Companies,
excerpts from
EY materials
Quiz 3 Reading: Chapter 7, Prospective Analysis: Valuation Theory and
Concepts. Differences in accounting metrics, and accounting related
adjustments that may be appropriate for financial analysis based on varying
industry sectors, company life stage or purpose of analysis. Presentation of Excel
model used in valuation in allocation of purchase price context.
Week
5
No Quiz 4 this class: Chapter 8, Prospective Analysis: Valuation Implementation
Lecture: Projection of the Income Statement, Cash Flows and Balance Sheet.
USC "Meet the Firms" California Science Center (Accounting Society) Meet the
Firms, California Science Center Tuesday, September 24, 6pm-9pm
Possible Excel lecture Also, note: Students required to complete enrollment in
the Simnet Excel online course by this date and complete the 1 question "trial
/example" quiz online
Thursday, September 26,
2013
Monday, September 30,
2013
Note: 10/1 initial phase delivery on team project valuation. Reading: Chapter 9,
Equity Security Analysis. Beginning of student teams’ work on “outside of class”
specific companies by industry sector
September 30: Last day to drop with a "W"
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Quiz Possible
Individual
Project
questions
Tuesday, October 01, 2013
Week
6
Thursday, October 03, 2013
Tuesday, October 08, 2013
Thursday, October 10, 2013
Tuesday, October 15, 2013
Possible Quiz (4) 5. Reading to be assigned and focusing on accounting and
valuation metrics of particular relevance by industry sector. Four Industry
Sectors Focus on October 1 and October 3. Two guest lectures of approximately
40 minutes each during these classes and focusing on financial analysis and
valuation by company category consistent with the team assignments. Guests to
participate either in person or via internet meeting. The final choice of the
company categories and companies will depend upon final commitments from
the guest lecturers and assessment by the professor. After guest lecturers and in
remaining class time, student teams to work on their specific companies and
including visits to the teams by the Professor. Participation by guest lecturers
Possible Jon Wimbish, Oil & Gas, Mike Tully EY, Mobile Communication , Jeff
Karbell Houlihan ESOP; JD Tengberg , Deloitte, Entertainment
Quiz: Possible
Group
Project:
Industry &
Company
Fundamental
Analysis
Continuation of same approach as used for the class on 10/1 but focusing on two
new companies. Reading to be assigned and focusing on accounting and
valuation metrics of particular relevance by industry sector. Continuation of Five
Industry Sectors Focus October 1 and October 3. Remaining presentations from
original group of four guest lectures. Approximately 40 minutes each during
these classes and focusing on financial analysis and valuation by company
category consistent with the team assignments. Guests to participate either in
person or via internet meeting. The final choice of the company categories and
companies will depend upon final commitments from the guest lecturers and
assessment by the professor. Possible homework due
Week
7
Quiz 6. Readings posted on Blackboard. In Class Valuation efforts by teams with
Professor moving from team to team: Market Comparable, DCF and Underlying
Assets Also, note: This is the due date for completion of the Simnet Excel
online exam for ACCT 416
Final Team presentations.
The final exam schedule for ACCT 416 is: Tuesday, October 15, In
Class
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Quiz: Possible
Individual
Project:
Fundamental
Analysis &
Forecasting
This Course Requires that Students Demonstrate the “Basic Topic” and “Intermediate Topic” Excel Skills shown
on the list below through the Simnet Excel program reviewed above.
For informational purposes, the listing below also includes the “Advanced Topics” Excel skills which are not a
requirement of this course but are generally identified as being important by employers considering hire of
Graduating Seniors
Basic Topics












Basics
Using Absolute and Relative addressing
Basic formulas
Simple functions, Linking Formulas
Absolute Addressing
Present Value (PV)
Internal Rate of Return (IRR) – Excel Formula
NPV – Excel Formula
Cell Protection
Cell Formatting
Cell Management
Label and Ranges
Intermediate topics









Importing Data
SUM and IF Functions
Working w / Dates
Array Formulas
Statistical Functions
Cell Formatting
Count Functions
Sorting and Auto Filter
Charts using Excel and JMP (Many types of Charts will be discussed here).
Advanced topics: Note that these are Excel skills which are not a requirement of this course but are generally
identified as being important by employers considering hire of Graduating Seniors









AutoFilter and Advanced Filter
Consolidating Worksheets, Grouping Worksheets
VLookup
Nesting Functions
Pivot Table
Range Name and Database in Excel
Subtotal
Micro charts (Excel Add-on)
Statistical Tool – Regression Analysis
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LEVENTHAL SCHOOL OF ACCOUNTING
GRADING AND ACADEMIC STANDARDS
FOR UNDERGRADUATE STUDENTS
The Leventhal School of Accounting adheres strictly to the grading standards of the University and the
Marshall School of Business. Additionally, the Leventhal School of Accounting has supplemented those
guidelines with certain others. For students' convenience, and to prevent misunderstanding, these additional
guidelines are summarized below.
GRADING GUIDELINES
The following grades are used: A - excellent; B - good; C - fair; D - minimum passing; F - failure. The grade of
F is awarded for failing work at the end of the semester. The assignment of minuses and pluses when earned
is required.
The grade of W (Withdraw) is assigned if the student officially withdraws after the third week but before the end
of the twelfth week of the semester. No withdrawals will be permitted after the end of the twelfth week except
by student petition to the University's Committee on Academic Policies and Procedures.
Students may elect to audit courses during the first three weeks of the semester. A course taken for audit (V)
will be assessed at the current tuition rate. A course taken for audit (V) will not receive credit and will not
appear on the USC transcript or grade report. Under no circumstances will the University allow a change in
the registration status of a course from letter grade or credit to audit (V) or vice versa after the third week of a
given semester.
The grade of IN (Incomplete, i.e., work not completed because of documented illness or some other
emergency occurring after the twelfth week of the semester) is reserved for those highly unusual cases where,
due to circumstances judged fit by the Dean of the Leventhal School of Accounting, the student is unable to
complete a specified single item of the course requirements by the time final grades are submitted.
IN grades can be removed only by the student completing the missing requirements of the course to the
satisfaction of the instructor.
Marks of IN in courses numbered below 500 must be removed by the end of the semester following the one in
which the mark of IN was assigned. If not removed within the specified time limit, marks of IN automatically
become marks of IX (expired incomplete), with the exception of thesis and dissertation, and compute in the
GPA as an F. A student may remove the IN only by completing the work not finished as a result of illness or
emergency. It is not possible to remove an incomplete by re-registering for the course. Previously graded
work may not be repeated for credit.
OTHER ACADEMIC GUIDELINES
1.
The ability of students to write clearly and concisely is a necessary prerequisite to
success in accounting work. Accordingly, students will be required to demonstrate
writing capability in all accounting courses. This may be accomplished primarily through the inclusion
of essay-type questions on course examinations.
2.
No unregistered students are permitted to attend accounting classes regularly.
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Important Dates: Fall 2013
Last Day to Register/Add without Late Fee
Friday, August 23
First Day of Class, Regular Session and Session 431
LSOA ALL SCHOOL PICNIC (students, faculty, staff)
Labor Day, University Holiday
Last Day to Add or Drop without a "W" (1st Half
Session 431)
Last Day to Add or Drop without a "W" (Regular Session)
Resumes Due for Resume Book
Meet the Firms, California Science Center
Last Day to Drop with “W” for ACCT courses (1st
Half Sess. 431)
Evening Football Game
Final Exams for ACCT courses (Session 431)
First Day of Class, Session 442
Last Day to Add/Drop without"W" for ACCT
courses
(2nd Half Session 442)
Summer Internship Interviews
Last Day to Drop with a "W", Regular Session Courses
Last Day to Drop with “W” for ACCT courses
(2nd Half Session 442)
Thanksgiving Break
Last Class Meeting
Final Examinations
Winter Recess
Monday, August 26
Friday, August 30, Noon
Monday, September 2
Tuesday , September 3
Friday, September 13
Wednesday, September 11, 11:59pm
Tuesday, September 24, 6pm-9pm
Monday, September 30
Thursday, October 10
Monday-Friday, October 14-18
Monday, October 21
Monday, October 28
Week of November 11
Friday, November 15
Monday, November 25
Wednesday-Friday, November 27-29
Friday, December 6
December 11 – December 18
Thurs., December 19 - Sun., January 12
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