- Valuation Tutor can be used in both undergraduate and graduate classes.
- It is designed to teach
- Financial Statement Analysis
- Valuation
- Corporate Financial Reporting
- Security Analysis
- It can also be used as a supplement in any course that covers financial statements, such as investments, corporate finance, financial management, and managerial accounting.
- It can be used in conjunction with an existing textbook or with the free online textbook
Six month software access for students is $24.95; instructors get complementary access
Teaching and learning with Valuation Tutor comes from accessing, analyzing and comparing companies using their financial statements and other relevant economic and financial data. The process is hands-on and takes an active learning approach: you learn by doing. The projects and case studies (listed under the textbook contents) show you how to use Valuation Tutor to teach different topics (listed below). In each case, we emphasize the integration between accounting and finance, the analysis of individual companies, and comparisons across companies.
A unique capability of Valuation Tutor is that anything you calculate can be compared across other companies, whether in the same sector or industry or for all stocks in our dataset. These comparisons, together with decile analysis, help students refine and develop their judgment across topics, ranging from common size analysis, cost-volume-profit analysis, financial ratios,
In addition, it can be used as a real world case/project supplement to a range of other accounting (management and financial) and finance (corporate, investments and derivative) courses. The projects provide step-by-step guidance in relation to the the following set of topics. As such they are immediately useful in both traditional and distant learning classroom environments.
Specific Teaching Topics
Common Size Analysis of Financial Statements: You can conduct a common size analysis relative to Sales, Total Assets, Invested Capital, Capital Employed, Shareholders’ Equity and Market Price. The exercises here apply common size analysis to financial statements in order to understand important linkages among the primary financial statements, at a sector or industry level, or relative to all companies in the dataset. The end result is to identify both positive and negative flags in the financial statements.
Cost-Volume-Profit Analysis: This topic includes, Contribution Margins, Break-Even Sales Revenue, Margin of Safety, Activity Analysis (Degree of Operating Leverage, Degree of Financial Leverage and Degree of Total Leverage) for publicly listed firms. Students gain important insights into the operating and financial risks of a firm.
Financial Ratio Analysis: This starts with the concept of fundamental growth and its relationship to the three major firm decisions (investment, financing and dividend decisions). It then proceeds to the DuPont and Extended DuPont decompositions. The decompositions are then further decomposed into Working Capital Analysis, Profitability Analysis and Risk Analysis using financial ratios.
Price Ratio Analysis: This starts with the concept of relative valuation and identifying over- or under-valued firms relative to competitors/industry and the market as a whole. The topic starts with bottom line measures such price to earnings (P/E), P/E to Growth, and then moves to top line measures such as price to Sales. In addition, price to cash flows and risk ratios such as price to book value are also covered. Cross sectional comparisons are made in the same way as in previous topics, using market decile analysis and industry/competitor analysis.
Separate Sub-Components of the Price Ratio Analysis Topic:
Earnings Quality Analysis including cash flow measures, income statement and balance sheet measures andAnalyzing Default Risk, credit ratings and Altman’s Z-Score.
Cost of Capital: This topic analyzes the cost of capital for publicly listed companies using CAPM, A default risk relative option’s based measure (MCPM), and the Weighted Average Cost of Capital for both CAPM and the default risk approaches.
Valuation: The Valuation Topics allow each of the major valuation models to be applied to the publicly listed companies in the databases. These models include the Dividend/Earnings, Free Cash Flow, Residual Income, Abnormal Earnings Growth and Merton’s Distressed Firm models.
