Business Analysis and Valuation Using Financial Statements, Text and Cases

by Palepu, Krishna G.; Healy, Paul M.; Bernard, Victor L

• ISBN13: 9780324118940
• ISBN10: 0324118945
• Edition: 3rd
• Format: Hardcover
• Copyright: 2003-07-31
• Publisher: South-Western College Pub

Summary

Financial statements are the basis for a wide range of business analysis. Managers, securities analysts, bankers and consultants all use them to make business decisions. There is strong demand among business students for course materials that provide a framework for using financial statement data in a variety of business analysis and valuation contexts.

Table of Contents

Part 1 FRAMEWORK
A Framework for Business Analysis and Valuation Using Financial Statements	1	(1)
The Role of Financial Reporting in Capital Markets	2	(1)
From Business Activities to Financial Statements	3	(3)
From Financial Statements to Business Analysis	6	(3)
Summary	9	(1)
Discussion Questions	9	(1)
Case: The Role of Capital Market Intermediaries in the Dot-Com Crash of 2000	10
Part 2 BUSINESS ANALYSIS AND VALUATION TOOLS
Strategy Analysis	1	(1)
Industry Analysis	1	(4)
Applying Industry Analysis: The Personal Computer Industry	5	(2)
Competitive Strategy Analysis	7	(4)
Corporate Strategy Analysis	11	(3)
Summary	14	(1)
Discussion Questions	15	(3)
Case: America Online, Inc.	18
Overview of Accounting Analysis	1	(1)
The Institutional Framework for Financial Reporting	1	(3)
Factors Influencing Accounting Quality	4	(2)
Steps in Doing Accounting Analysis	6	(5)
Accounting Analysis Pitfalls	11	(1)
Value of Accounting Data and Accounting Analysis	12	(1)
Summary	13	(1)
Discussion Questions	14	(3)
Case: Harnischfeger Corporation	17
Implementing Accounting Analysis	1	(1)
Recasting Financial Statements	1	(4)
Asset Distortions	5	(2)
Overstated Assets	7	(5)
Understated Assets	12	(9)
Liability Distortions	21	(9)
Equity Distortions	30	(3)
Summary	33	(1)
Discussion Questions	33	(8)
Appendix: Recasting Financial Statements Into Standardized Templates	41	(5)
Case: Pre-Paid Legal Services, Inc.	46
Financial Analysis	1	(1)
Ratio Analysis	1	(21)
Cash Flow Analysis	22	(5)
Summary	27	(1)
Discussion Questions	28	(2)
Appendix: Part A: Nordstrom, Inc. Financial Statements	30	(7)
Appendix: Part B: The TJX Companies, Inc. Financial Statements	37	(7)
Case: The Home Depot, Inc.	44
Prospective Analysis: Forecasting	1	(1)
Relation of Forecasting to Other Analyses	1	(1)
The Techniques of Forecasting	1	(6)
Making Forecasts	7	(3)
Sensitivity Analysis	10	(2)
Summary	12	(1)
Discussion Questions	13	(2)
Appendix: The Behavior of Components of ROE	15	(2)
Case: Krispy Kreme Doughnuts	17
Prospective Analysis: Valuation Theory and Concepts	1	(1)
Defining Value for Shareholders	2	(1)
The Discounted Abnormal Earnings Valuation Method	3	(2)
Valuation Using Price Multiples	5	(5)
Shortcut Forms of Earnings-Based Valuation	10	(2)
The Discounted Cash Flow Model	12	(2)
Comparing Valuation Methods	14	(2)
Summary	16	(1)
Discussion Questions	17	(3)
Appendix: Reconciling the Discounted Dividends and Discounted Abnormal Earnings Models	20	(1)
Case: Valuation Ratios in the Airline Industry	21
Prospective Analysis: Valuation Implementation	1	(1)
Detailed Forecasts of Performance	1	(1)
Computing a Discount Rate	2	(5)
Terminal Values	7	(4)
Computing Estimated Values	11	(5)
Summary	16	(1)
Discussion Questions	16	(3)
Case: Home Depot, Inc. in the New Millennium	19
Part 3 BUSINESS ANALYSIS AND VALUATION APPLICATIONS
Equity Security Analysis	1	(1)
Investor Objectives	1	(1)
Equity Security Analysis and Market Efficiency	2	(2)
Approaches to Fund Management and Securities Analysis	4	(2)
The Process of a Comprehensive Security Analysis	6	(4)
Performance of Security Analysts and Fund Managers	10	(2)
Summary	12	(1)
Discussion Questions	13	(4)
Case: United Parcel Service's IPO	17
Credit Analysis and Distress Prediction	1	(1)
The Market for Credit	2	(1)
The Credit Analysis Process	3	(6)
Financial Statement Analysis and Public Debt	9	(4)
Prediction of Distress and Turnaround	13	(2)
Summary	15	(1)
Discussion Questions	15	(3)
Case: Amazon.com in the Year 2000	18
Mergers and Acquisitions	1	(1)
Motivation for Merger or Acquisition	1	(4)
Acquisition Pricing	5	(5)
Acquisition Financing	10	(4)
Acquisition Outcome	14	(1)
Summary	15	(1)
Discussion Questions	16	(2)
Case: Schneider and Square D	18
Corporate Financing Policies	1	(1)
Factors That Determine Firms' Debt Policies	1	(1)
The Optimal Long-Term Mix of Debt and Equity	2	(5)
The Financing of New Projects	7	(2)
Factors That Determine Dividend Policies	9	(4)
Summary	13	(1)
Discussion Questions	14	(2)
Case: CUC International, Inc. (A)	16
Communication and Governance	1	(334)
Governance Overview	2	(2)
Management Communication with Investors	4	(2)
Communication Through Financial Reporting	6	(3)
Other Forms of Communicating with Investors	9	(3)
Auditor Analysis	12	(5)
Audit Committee Reviews	17	(1)
Summary	18	(1)
Discussion Questions	19	(4)
Case: Computer Associates International, Inc.: Governance and Investor Communication Challenge	23
Part 4 ADDITIONAL CASES
Anacomp, Inc.	1	(24)
Arch Communications Group Inc.	25	(30)
Boston Chicken, Inc.	55	(18)
Brierley Investments Limited	73	(20)
The City of New York	93	(18)
Comdisco, Inc. (A)	111	(26)
Comdisco, Inc. (B)	137	(30)
Korea Stock Exchange 1998	167	(18)
Manufactured Homes, Inc.	185	(30)
Maxwell Shoe Company, Inc.	215	(6)
The Murray Ohio Manufacturing Company	221	(24)
Oracle Systems Corporation	245	(12)
Sensormatic Electronics Corporation-1995	257	(30)
Thermo Electron Corporation	287	(18)
The Upjohn Company: The Upjohn-Pharmacia Merger	305	(30)
Index	335	(12)
Author Index	347