Prerequisites: Graduate Standing OR Masters status in the School of Business.
This course is designed to make you an effective reader and interpreter of financial statements. Most of you have put in considerable time learning how to prepare financial statements. But, the knowledge base and skill set you have developed to become an effective preparer are not the same as those that you need to become an effective reader. Ergo, this course. Being able to effectively read and interpret financial statements is a crucial part of becoming a successful businessperson. The reason for this is simple: Successful businesspeople attract investors; investors want a return on their invested capital; and, financial statements are the primary source of information about what this return has been and will be. With this in mind, we begin the course by learning how to calculate and interpret return on invested capital (i.e., ROIC), its components, and other key performance indicators (i.e., KPIs). Understanding how to calculate and interpret KPIs is important, however, KPIs are only as good as the accounting numbers underlying them. Hence, in the second part of the course, we focus on how to evaluate accounting quality and, if necessary, make accounting adjustments that improve the informativeness of the reported numbers and the KPIs that are based on these numbers.