Financial reporting provides a window into the operational and financial workings of a company. However, translating this information into actionable insights is anything but straightforward. It requires an understanding of Generally Accepted Accounting Principles (GAAP), the quality of financial information, and the adjustments and analyses required to accurately measure and evaluate profitability, exposures, growth prospects, and value.
The course starts with a review of financial reporting and then focuses on various modules of fundamental analysis, including performance evaluation, earnings quality, risk assessment, forecasting, and valuation. The final part of the course is devoted to a deeper dive into the reporting and analysis of selected line items from the financial statements (e.g., income taxes, leases, pension, business combinations).
To allow for dynamic progress, the class schedule is flexible:
Topic # of class meetings
Financial reporting 4-6
Ratio analysis 4-6
Relative valuation 1
Forecasting and DCF 3-4
Line-item analysis 8-10
While the course covers the theoretical underpinning of the various analyses, it focuses on implementation and practical uses. Many real-world examples will be analyzed, including using Excel tools that will be provided to the students.
The primary objective of the course is to acquire a deep understanding of accounting information and how to intelligently use it in making investment, credit, and similar resource allocation decisions. Such knowledge is required of executives, consultants, bankers, analysts, investment managers, and other users of financial information.
In a review conducted in 2011, the committee for evaluating elective courses concluded that “this is an excellent, carefully constructed course which provides students with valuable insights and lasting concepts.” In the same year, Professor Nissim won the “Dean’s Award for Teaching Excellence” for developing and teaching this course.
A recent email from a student (with permission, of course): “I just wanted to thank you again for the great semester … I loved my internship and I’ve already accepted my offer to return to …. Your class was the best preparation I had for investment banking. All of the normalizing adjustments and deep dives into line items really helped me succeed because several times during the internship I was called on to make considerable accounting adjustments to make companies more comparable for comparison and had I not taken Earnings Quality I would not have been as prepared to handle the assignments. I was better at my job because of your course so I really wanted to express my gratitude for all the time you took creating your presentations and answering questions.”
Ernst & Young Professor of Accounting & Finance
Professor Nissim earned his PhD in Accounting at the University of California, Berkeley, and joined Columbia Business School in 1997. He was granted tenure in 2005, and full professorship in 2007. He served as the Chair of the Accounting Division during the years 2006–2009 and 2014–2016.
Professor Nissim’s research is primarily in the areas of earnings quality, fundamental analysis, equity valuation, financial institutions...