BF219: EQUITY SECURITIES

Course Description and Scope

The objective of this course is to provide students with a comprehensive coverage of the
principles and techniques in equity securities analysis. The course comprises three main subject
areas: asset valuation, fundamental equity analysis, and financial statement analysis. Asset
valuation presents the different approaches to valuing equity securities. Fundamental equity
analysis is multi-disciplinary in nature, encompassing subject areas of: macro-economic analysis,
industry analysis, and company analysis. Financial statement analysis focuses on identifying
drivers of value using information provided in the financial statements. Students learn techniques
for analyzing the statements of shareholders’ equity, income, cash flow, and balance sheet. Other
topics include: accounting measurement and valuation; analysis of growth, profitability and
sustainable earnings; and quality of current accounting.

Proposed Lecture Schedule

Week Instructor Topics Readings

Overview of Equity Securities & Markets, RB Ch 1, 3

1 EC
Fundamental Security Analysis

Valuation Principles & Practices, Aggregate RB Ch 11, 13

2 EC
Market Analysis

3 EC Economic Analysis and Industry Analysis RB Ch 12, 14

4 EC Earnings Forecast and Cash Flow Projections FF Ch 13

5 EC Company Analysis and Stock Selection RB Ch 11, 15

6 EC Analysis of Growth Companies RB Ch 11, 15

Introduction to the Financial Statements Pen Ch 2, pp. 26-39

7 JS Accounting Measurement Pen Ch 5, pp. 130-145
Business Activities and Financial Statements Pen Ch 7

8 RECESS

Analysis of Statement of Shareholders’ Equity Pen Ch 8

9 JS
Analysis of Balance Sheet and Income Statement Pen Ch 9

Analysis of Balance Sheet and Income Statement Pen Ch 9

10 JS
Analysis of Cash Flow Statement Pen Ch 10

11 JS Analysis of Profitability Pen Ch 11

12 JS Creating Accounting and Economic Value Pen Ch 17

13 JS Quality of Current Accounting Pen Ch 18

Note: EC – Edmund Choong; JS - Julia Sawicki
Basic Texts
RB Frank Reilly & Keith Brown (HG4521.R362 2003)
Investment Analysis and Portfolio Management, Harcourt Brace, 7th Edition

Penman Stephan H. Penman (HF5681.B2 P4134 2001)

Financial Statement Analysis & Security Valuation, McGraw-Hill International
Edition 2001

Supplementary References

FF Frank J. Fabozzi (HG4521.F121)

Investment Management, 2nd Edition, Prentice Hall, 1999.

MP Michael Porter (HD41.P847)

Competitive Strategy, Free Press

BS Benninga S. Z. & Sarig O.H. (1997), “Chapter 4: Building Pro-Forma Financial

Statements,” Corporate Finance: A Valuation Approach, McGraw Hill, p. 109.
[HG4028.V3 B376 1997].

Method of Instruction

Lectures : 2 hours per week

Tutorials : 2 hours per week

Course Assessment

Coursework 40%
Group Project 20%
Quiz 10%
Participation 10%

Final Examination 60%

100%

Lecturer Office Room No. DID E-mail Address

Mr. Edmund Choong B1A-34 6790-6118 acschoong@ntu.edu.sg
Dr. Julia Sawicki* B2B-65 6790-4669 ajsawicki@ntu.edu.sg

* Course Coordinator