Financial Accounting Part 2

Course details

While their products and services may differ wildly, successful companies have at least one thing in common: they're savvy with a financial report. Financial statements and reports allow accounting and finance professionals to peer into the inner workings of their organization, pinpointing key areas of risk before they evolve into issues that steer the company off course. In this course—the second installment in the Financial Accounting series—accounting professors Jim and Kay Stice take a deeper dive into the world of financial accounting. Jim and Kay discuss financial ratio analysis, cash flow analysis, forecasting financial statements, business valuation, and more. To wrap up the course, they use the different models covered in the course to estimate the value of McDonalds.

Learning objectives
Determine the parts of an income statement.
Review the different parts of a statement of cash flows.
Analyze common-size financial statements.
Define ratio analysis.
Explain current ratio.
Distinguish the steps in the operating cycle.
Examine how to determine the day’s sales in inventory.
Explore how to calculate the average collection period.
Identify the fundamentals of analyzing cash flows.
Explore business valuation while examining the intersection of accounting and finance.

Concepts

0. Introduction

01 - Financial analysis, cash flow analysis, and valuation

1. Quick Review of Financial Statements

02 - Who uses financial statements
03 - Review of the balance sheet
04 - Review of the income statement
05 - Review of the statement of cash flows

2. Analyzing Financial Statements

06 - What is financial ratio analysis
07 - Comparing financial statements across time
08 - Comparing financial statements across companies
09 - Common-size financial statements

3. Ratio Analysis - DuPont Framework

10 - Gunpowder, the French Revolution, and the DuPont framework
11 - Ratio analysis
12 - Return on equity
13 - DuPont framework
14 - Current ratio
15 - Debt ratio
16 - Price-earnings ratio
17 - Real world - Apple vs. Google vs. Microsoft

4. Ratio Analysis - The Operating Cycle

18 - Nike, McDonald s, and the operating cycle
19 - The operating cycle
20 - Days sales in inventory
21 - Average collection period
22 - Days purchases in payable
23 - Real world - Procter & Gamble

5. The Statement of Cash Flows

24 - Jim Stice operating cash flow matrix and a wife named Kay
25 - Analyzing cash flows
26 - What does it tells us
27 - Cash flow patterns
28 - One method of analysis
29 - Two methods for presentation

6. Forecasting Financial Statements

30 - Forecasting the financial statements of Home Depot
31 - What causes financial statement amounts to change
32 - The initial assumptions
33 - Forecasted income statement
34 - Forecasted retained earnings
35 - Forecasted assets
36 - Forecasted liabilities and equity

7. Intro to Business Valuation

37 - The intersection of accounting and finance
38 - Value is based on expectations about the future
39 - Overview of the market approach - Using multiples
40 - Overview of the cost approach - Depreciated replacement cost
41 - Overview of the income approach - Discounted cash flow

8. Valuation - Using Multiples

42 - The Microsoft IPO
43 - Simple illustration - Valuation of 69 Blaine Avenue
44 - Earnings multiples
45 - Equity multiples
46 - Sales multiples
47 - Other multiples - The case of WhatsApp

9. Valuation - Free Cash Flows

48 - Buying the Hong Kong car
49 - Basic idea - Cash flows, timing, and risk
50 - Risk and interest rates
51 - Forecasting cash flows
52 - Simple discounted cash flow valuation example

10. Valuation - Comparing Models

53 - Brief McDonald's history
54 - McDonald's - The numbers
55 - McDonald's - Dividend-based valuation
56 - McDonald's - Earnings multiple
57 - McDonald's - Discounted cash flow valuation
58 - McDonald's - Lessons from a comparison of the models

Conclusion

59 - Next steps