AEM 4330 - Valuation Principles

Spring (weeks 8-14). 1.5 credits. Student option grading.

Prerequisite: AEM 2240.

D. Ng.

This course is about the analysis of financial information for making decisions to invest in businesses. The primary focus is equity (share) valuation. Various valuation models will be examined in detail and applied in cases and projects involving listed companies. First, the issue of market efficiency will be explored. Second, important quantitative stock selection methods will be examined. Third, discounted cash flow models will be examined. This include models of shareholder value, the analysis of profitability, growth and valuation generation in a firm, forecasting earnings and cash flows, pro-forma analysis for strategy and planning, analysis of risk, and the determination of price/earnings and market-to-book ratios. Advanced topics on valuation including valuation by multiples and earnings management will then be discussed.

Outcome 1: Students will understand the basics of market efficiency, stock screening, and the relevance of cash-flows, dividends, earnings, and book values.

Outcome 2: Students will calculate equity values using information extracted from financial statements.

Outcome 3: Students will understand some of the most important quantitative techniques and well-known profitable strategies in equity markets.

Outcome 4: Students will interpret how ratio analysis helps in valuation.

Outcome 5: Students will assess what determines a firm’s P/E and price-to-book ratio.

Print this Page