ACCT6003: Semester 2, 2022

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Units ACCT6003 Semester 2 2022 [Normal day]

Unit of study_

ACCT6003: Fundamental Analysis for Equity Investment

Overview

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.

Details

Academic unit	Accounting
Unit code	ACCT6003
Unit name	Fundamental Analysis for Equity Investment
Session, year ?	Semester 2, 2022
Attendance mode	Normal day
Location	Remote
Credit points	6

Enrolment rules

Prohibitions ?	None
Prerequisites ?	ACCT5001 and FINC5001
Corequisites ?	None
Assumed knowledge ?	QBUS5001 or QBUS5002
Available to study abroad and exchange students	Yes

Teaching staff and contact details

Coordinator	Demetris Christodoulou, demetris.christodoulou@sydney.edu.au

Type	Description	Weight	Due	Length
Assignment	Take-home final project Take-home final project.	40%	Formal exam period Due date: 18 Nov 2022 at 23:00	3000 words
Outcomes assessed:
Small continuous assessment	Weekly Assignments Weekly Assignments	60%	Multiple weeks	Varied lengths
Outcomes assessed:
= hurdle task ?

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.

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.

Special consideration

If you experience short-term circumstances beyond your control, such as illness, injury or misadventure or if you have essential commitments which impact your preparation or performance in an assessment, you may be eligible for special consideration or special arrangements.

Academic integrity

The Current Student website provides information on academic honesty, academic dishonesty, 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 dishonesty or plagiarism seriously.

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

Weekly schedule

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

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.

Outcomes
Graduate qualities

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
Learning outcomes

Closing the loop

Changes in learning activities and prescribed textbook.

Additional information

More information can be found on Canvas.

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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.

Current students

Overview

Details

Enrolment rules

Teaching staff and contact details

Assessment

Assessment criteria

Late submission

Special consideration

Academic integrity

Weekly schedule

Attendance and class requirements

Study commitment

Required readings

Learning outcomes

Graduate qualities

Outcome map

Closing the loop

Additional information

Disclaimer

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