1.0 Welcome and Introduction (It all begins with accounting)

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From the course by The University of Melbourne

The Language and Tools of Financial Analysis

687 оценки

The University of Melbourne

The Language and Tools of Financial Analysis

687 оценки

Course 1 of 5 in the Specialization Essentials of Corporate Finance

In this course, participants will learn the foundations of accounting principles and financial analysis, develop an understanding of the links between these, and the measurement of value creation at the firm level. This is the first course in a four-course Specialization on the Essentials of Corporate Financial Analysis and Decision-Making, created in partnership between the University of Melbourne and Bank of New York Mellon (BNY Mellon). View the MOOC promotional video here: http://tinyurl.com/jeoa83t

From the lesson

An Introduction to Accounting Principles: The Language of Capital Markets

This week we will define and explain the key financial statements produced by a company and reported to its shareholders. We will discuss the different core elements within those statements following basic accounting principles with the discussion framed in reference to excerpts from the actual financial statements produced by the US-listed food company Kellogg's.

1.0 Welcome and Introduction (It all begins with accounting)5:42

1.1 The Balance Sheet 1: Assets (What the company owns)6:55

1.2 The Balance Sheet 2: Liabilities (What the company owes)4:21

1.3 The Balance Sheet 3: Equity (What the owners own)7:29

1.4 The Profit and Loss Statement: Revenues (What the company earns)6:32

1.5 The Profit and Loss Statement: Expenses (What the company spends)5:44

Meet the Instructors

Paul Kofman
Dean, Faculty of Business and Economics
Sidney Myer Chair of Commerce
Sean Pinder
Associate Professor
Faculty of Business and Economics

Hello, I'm Paul Kofman, Dean of the Faculty of Business and

Economics at the University of Melbourne, and a professor of finance.

Sound corporate financial decision making starts with a firm grasp of the numbers.

CFO's and investors alike, rely on the veracity of the financial results,

recorded and reported by the firm.

Accounting provides you with the principles, rules and

ratios that establish the trust you need

to rely on those numbers in making business decisions.

This first course in a finance specialization series of four

uncovers the essentials of accounting information,

underpinning financial analysis.

You will learn how to apply that information in financial analysis

using discounted cash flow methodology

to arrive at fair valuation of the company.

In this first module,

we will be discussing an introduction to accounting principles.

We'll take a closer look at the financial statements of corporations and

at truly important items on the balance sheet and profit and loss statement.

Each course is self contained yet

integrated and connected within the specialization.

There are four modules per course, with quizzes and reflective assessment.

There will also be corporate check-ins and a capstone course

delivered by the University of Melbourne in partnership with BNY Mellon.

So let's motivate.

Let's motivate this first module.

A starting point is to understand corporate financial accounts and

reports, but the essentials only.

We will consider a representative corporation.

We will consider its business operations and financial decision making.

And our starting point is that financial decision making can only

be done correctly in a sound way through thorough financial analysis.

And that's where the accounting skills come in.

So who's interested in this kind of information?

Who's interested in the ultimate analysis?

It would be the owners of the corporation.

But it would also be the managers of those corporations.

So the corporation that we have chosen for analysis,

which you will see appear in many of our modules, is Kellogg's.

Kellogg's produces, as most of you would know, cereals.

It's a global corporation.

It has operations in most countries around the world.

It's large, it's been around for well over 100 years and

it is well established in its financial reporting.

So where does this reporting happen?

well it happens at the annual general meeting first and foremost.

The owners of the corporation are invited to attend a meeting hosted

by the managers of the corporation, where the managers report and

explain the financial standing of the corporation,

it's financial position.

But also it's most recent performance over the past year or so.

In addition to the numbers, the shareholders,

the owners are also presented with a narrative,

an explanation if you want, where the context of those numbers becomes clear.

In addition to that annual reporting,

the owners are also presented with regular updates.

Most corporations nowadays present quarterly earnings announcements,

quarterly updates on their financial position.

And if there are particular items of material value

to the owners in the corporation, they would have extraordinary communications.

Extraordinary communications, for example, if there is a restructuring or

if there is an opportunity to take over another company and

enlarge the business operations.

So at this annual general meeting, the numbers are presented.

But behind those numbers is a lot of financial analysis.

And that financial analysis gets reflected in the narrative.

But it is also further explained beyond the annual general meeting

by a series of financial analysts.

And we will come back to those financial analysts, what they do, why they do, and

how they do it in the next set of modules.

So the numbers that are presented are first and foremost the balance sheet, and

the profit and loss statement.

The balance sheet will tell the shareholders what

the financial position of the corporation is at a particular point in time.

And we will go into some detail explaining what these numbers actually mean.

The profit and loss statement will tell the owners, the shareholders of

the corporation, what the most recent performance of the firm has been.

So it will tell you whether the company has made a profit or

a loss in the most recent financial year.

So the objective of this course and specialization,

before we start delving into those numbers,

What we aim to achieve with this specialization is that you will

get an understanding of financial analysis and corporate decision making.

And we will give you the tools and

the skills that equip you to apply that knowledge in practice.

What this course, this particular course on accounting measures

will aim to contribute to the specialization, is that it

will give you a set of foundations, understanding the accounting principles,

and the subsequent financial analysis that can then be used in corporate financial

decision making.

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