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Unit of study_

ACCT6003: Fundamental Analysis for Equity Investment

Semester 2, 2022 [Normal day] - Camperdown/Darlington, Sydney

This unit develops a framework of fundamental analysis for equity investment in publicly traded companies. The first part of the unit deals with the analysis of financial statement information, complemented with other sources of information such as business strategy, industry prospects and key macroeconomic effects. Emphasis is on the analysis of earnings quality and accounting-based valuation methods. The second part of the unit applies fundamental analysis in the appraisal of equity investment, and the effect of credit evaluation and risk analysis, as well as the valuation for takeovers. The unit also covers the impact on equity valuation from inherent behavioural patterns in informing investment decisions.

Unit details and rules

Unit code ACCT6003
Academic unit Accounting
Credit points 6
Prohibitions
? 
None
Prerequisites
? 
ACCT5001 and FINC5001
Corequisites
? 
None
Assumed knowledge
? 

QBUS5001 or QBUS5002

Available to study abroad and exchange students

Yes

Teaching staff

Coordinator Demetris Christodoulou, demetris.christodoulou@sydney.edu.au
Type Description Weight Due Length
Assignment hurdle task Take-home final project
Take-home final project.
40% Formal exam period
Due date: 18 Nov 2022 at 23:00
3000 words
Outcomes assessed: LO1 LO2 LO3 LO4 LO5 LO6
Small continuous assessment hurdle task Weekly Assignments
Weekly Assignments
60% Multiple weeks Varied lengths
Outcomes assessed: LO1 LO6 LO5 LO4 LO3 LO2
hurdle task = hurdle task ?

Assessment summary

Weekly assignments: There are 10 individual weekly assignments worth 6 marks each, thus all adding to the total of 60 marks (out of 100). The due date for weekly assignment will be advised in class. All late submissions will receive 0 marks because the answer to each assignment will be revealed at the submission deadling. Any approved special considerations for faling to submit an assignment on time will result in transferring the marks of that assignment to the final take-home project. This is a hurdle task and you must achieve at least 45% to pass the course (i.e. 27 marks).


Final take-home project: Instead of a final exam, you will be assigned a final take-home project worth 40 marks (out of 100). You will be assigned a public company for which you will be asked to perform financial analysis as required. The details of the take-home project will be released in weeks 7-8. This is a hurdle task and you must achieve at least 45% to pass the course (i.e. 18 marks). The standard university policy for penalising late submissions applies in this assignment.

Assessment criteria

The University awards common result grades, set out in the Coursework Policy 2014 (Schedule 1).

As a general guide, a high distinction indicates work of an exceptional standard, a distinction a very high standard, a credit a good standard, and a pass an acceptable standard.

Result name

Mark range

Description

High distinction

85 - 100

Awarded when you demonstrate the learning outcomes for the unit at an exceptional standard, as defined by grade descriptors or exemplars outlined by your faculty or school. 

Distinction

75 - 84

Awarded when you demonstrate the learning outcomes for the unit at a very high standard, as defined by grade descriptors or exemplars outlined by your faculty or school.

Credit

65 - 74

Awarded when you demonstrate the learning outcomes for the unit at a good standard, as defined by grade descriptors or exemplars outlined by your faculty or school.

Pass

50 - 64

Awarded when you demonstrate the learning outcomes for the unit at an acceptable standard, as defined by grade descriptors or exemplars outlined by your faculty or school. 

Fail

0 - 49

When you don’t meet the learning outcomes of the unit to a satisfactory standard.

For more information see sydney.edu.au/students/guide-to-grades.

For more information see guide to grades.

Late submission

In accordance with University policy, these penalties apply when written work is submitted after 11:59pm on the due date:

  • Deduction of 5% of the maximum mark for each calendar day after the due date.
  • After ten calendar days late, a mark of zero will be awarded.

Academic integrity

The Current Student website  provides information on academic integrity and the resources available to all students. The University expects students and staff to act ethically and honestly and will treat all allegations of academic integrity breaches seriously.  

We use similarity detection software to detect potential instances of plagiarism or other forms of academic integrity breach. If such matches indicate evidence of plagiarism or other forms of academic integrity breaches, your teacher is required to report your work for further investigation.

You may only use artificial intelligence and writing assistance tools in assessment tasks if you are permitted to by your unit coordinator, and if you do use them, you must also acknowledge this in your work, either in a footnote or an acknowledgement section.

Studiosity is permitted for postgraduate units unless otherwise indicated by the unit coordinator. The use of this service must be acknowledged in your submission.

Simple extensions

If you encounter a problem submitting your work on time, you may be able to apply for an extension of five calendar days through a simple extension.  The application process will be different depending on the type of assessment and extensions cannot be granted for some assessment types like exams.

Special consideration

If exceptional circumstances mean you can’t complete an assessment, you need consideration for a longer period of time, or if you have essential commitments which impact your performance in an assessment, you may be eligible for special consideration or special arrangements.

Special consideration applications will not be affected by a simple extension application.

Using AI responsibly

Co-created with students, AI in Education includes lots of helpful examples of how students use generative AI tools to support their learning. It explains how generative AI works, the different tools available and how to use them responsibly and productively.

WK Topic Learning activity Learning outcomes
Week 01 Introduction to valuation and business strategy analysis Lecture (2 hr)  
Week 02 Using financial statements in valuation Lecture (2 hr)  
Week 2 workshop Workshop (1 hr)  
Week 03 Accounting analysis and earnings management Lecture (2 hr)  
Week 3 workshop Workshop (1 hr)  
Week 04 Principles of valuation models and cash-based valuation Lecture (2 hr)  
Week 4 workshop Workshop (1 hr)  
Week 05 Earnings-based valuation Lecture (2 hr)  
Week 5 workshop Workshop (1 hr)  
Week 06 Gaining value from fundamental analysis Lecture (2 hr)  
Week 6 workshop Workshop (1 hr)  
Week 07 How firms generate value Lecture (2 hr)  
Week 7 workshop Workshop (1 hr)  
Week 08 Reformulation of financial statements Lecture (2 hr)  
Week 8 workshop Workshop (1 hr)  
Week 09 Analysis of profitability Lecture (2 hr)  
Week 9 workshop Workshop (1 hr)  
Week 10 Prospective analysis of earnings growth Lecture (2 hr)  
Week 10 workshop Workshop (1 hr)  
Week 11 Credit analysis and distress Lecture (2 hr)  
Week 11 workshop Workshop (1 hr)  
Week 12 Financial policy Lecture (2 hr)  
Week 12 workshop Workshop (1 hr)  
Week 13 The behavioural side of financial analysts Lecture (2 hr)  
Week 13 workshop Workshop (1 hr)  

Attendance and class requirements

Lecture recordings: All lectures are recorded and will be available on Canvas for student use. Please note the Business School does not own the system and cannot guarantee that the system will operate or that every class will be recorded. Students should ensure they attend and participate in all classes.

Study commitment

Typically, there is a minimum expectation of 1.5-2 hours of student effort per week per credit point for units of study offered over a full semester. For a 6 credit point unit, this equates to roughly 120-150 hours of student effort in total.

Required readings

Prescribed textbook (optional purchase)

Penman, Stephen (2012), Financial Statement Analysis and Security Valuation, 5th Edition, McGraw-Hill.
 

Additional useful references

Palepu, K. G., Healy, P. M., and Peek, E. (2019), Business analysis and valuation: IFRS edition. 5th Edition, Cengage learning.

Contemporary Accounting – A Strategic Focus (10th ed) 2020. Phil Hancokc, Peter Robinson, Mike Bazley

Learning outcomes are what students know, understand and are able to do on completion of a unit of study. They are aligned with the University's graduate qualities and are assessed as part of the curriculum.

At the completion of this unit, you should be able to:

  • LO1. Learn to identify and analyse the key drivers of value creation within a business.
  • LO2. Evaluate and analyse the information presented in annual reports and financial statement as produced by financial accounting.
  • LO3. Develop an in-depth understanding of equity valuation models and approaches to estimating intrinsic equity prices for investment appraisal.
  • LO4. Apply financial analysis to analyse creditworthiness, liquidity and solvency.
  • LO5. Understand the impact of key behavioural biases when acting as a sell-side financial analyst.
  • LO6. Produce professional investment valuation reports, apply qualitative judgment that is informed by quantitative analysis, and communicate investment recommendations.

Graduate qualities

The graduate qualities are the qualities and skills that all University of Sydney graduates must demonstrate on successful completion of an award course. As a future Sydney graduate, the set of qualities have been designed to equip you for the contemporary world.

GQ1 Depth of disciplinary expertise

Deep disciplinary expertise is the ability to integrate and rigorously apply knowledge, understanding and skills of a recognised discipline defined by scholarly activity, as well as familiarity with evolving practice of the discipline.

GQ2 Critical thinking and problem solving

Critical thinking and problem solving are the questioning of ideas, evidence and assumptions in order to propose and evaluate hypotheses or alternative arguments before formulating a conclusion or a solution to an identified problem.

GQ3 Oral and written communication

Effective communication, in both oral and written form, is the clear exchange of meaning in a manner that is appropriate to audience and context.

GQ4 Information and digital literacy

Information and digital literacy is the ability to locate, interpret, evaluate, manage, adapt, integrate, create and convey information using appropriate resources, tools and strategies.

GQ5 Inventiveness

Generating novel ideas and solutions.

GQ6 Cultural competence

Cultural Competence is the ability to actively, ethically, respectfully, and successfully engage across and between cultures. In the Australian context, this includes and celebrates Aboriginal and Torres Strait Islander cultures, knowledge systems, and a mature understanding of contemporary issues.

GQ7 Interdisciplinary effectiveness

Interdisciplinary effectiveness is the integration and synthesis of multiple viewpoints and practices, working effectively across disciplinary boundaries.

GQ8 Integrated professional, ethical, and personal identity

An integrated professional, ethical and personal identity is understanding the interaction between one’s personal and professional selves in an ethical context.

GQ9 Influence

Engaging others in a process, idea or vision.

Outcome map

Learning outcomes Graduate qualities
GQ1 GQ2 GQ3 GQ4 GQ5 GQ6 GQ7 GQ8 GQ9

This section outlines changes made to this unit following staff and student reviews.

Changes in learning activities and prescribed textbook.

Disclaimer

The University reserves the right to amend units of study or no longer offer certain units, including where there are low enrolment numbers.

To help you understand common terms that we use at the University, we offer an online glossary.