Strategic Financial Analysis
INSTRUCTOR: J. Dan Lehmann, Ph.D. Cell 612 803 9210
OFFICE HOURS: By appointment at Minneapolis Center or St. Paul campus + one hour before class
CLASSES MEET:Tuesday (M27), Thursday (S28); 5:45 P.M. to 9:45 P.M. – Jan. 15 to Jan 31, 2013
Hamline University, Minneapolis (Tue) and St. Paul campus (Thu)
MATERIALS: Readings provided in the custom text for Module 4 and in Blackboard.
Microsoft Excel (required)
Strategic Financial Analysis is designed to sharpen analytical skills in the context of evaluating strategy performance. This course presents key financial analysis methods, develops skills in understanding the business behind the financial data, and teaches strategy target setting based upon financial analysis and business drivers. The course combines reading in strategy analysis, benchmarking, and balanced scorecard with exercises in financial analysis, financial model building, and company valuation. The combination of readings and exercises provides students with both theory and hands-on practice to analyze and support strategic decisions.
Value creation and competent financial analysis are central to good management and firm success. The goals of this course are to answer the following questions: 1) Is our strategy working? 2) What are the sources of problems, if they exist? 3) What corrective actions and targets should be established to get back on track? Specifically the key learning objectives are:
1. Learn financial analysis skills
2. Learn to evaluate company performance
3. Identify and understand the business drivers behind the financial metrics 4. Identify performance weaknesses and their causes
5. Learn benchmarking techniques to set and evaluate performance metrics 6. Identify performance metrics that lead to value creation 7. Learn model building and valuing an acquisition target (as one corrective action alternative)
The class will be taught through lecture, discussion and exercises. In-class exercises are planned along with individual exercises.
Course Requirements and Grading
Financial ratio exercise (in excel) 50 points
One-page paper – Costco Warehouse Corporation (A) 50 points
Merger paper – Making a merger decision200 points
Class participation 50 points
Grading: A ≥ 90%, B 80-89%, C 70-79%, C- <70%; “+” or “-” awarded at grade-range ends
Description of Requirements
1. Financial ratio exercise: Based upon Costco’s current financial data (provided in Blackboard (Bb) in excel) standard financial ratios and metrics will be calculated, printed-out, and brought to the first session. For this exercise the ratio calculation in chapter 4 of the Module 4 custom text (pages 102-103) are to be used. The file name is “Financial Ratio Exercise spring 2013” and is in Bb, session 1. 2. One-page paper: This paper is a financial analysis exercise. The goal is to practice aspects of financial analysis on Costco Wholesale Corporation (A) in order to assist Ms. Torres in making an investment decision. While many of the financial calculations are provided in the case write-up, some are left for the student; these will be presented in class. The assignment is outlined in the .ppt deck for session 1. This paper is due at session 2. 3. Merger paper: Following an in-class exercise of company valuation, students will use these data and additional data and concepts to analyze a potential acquisition. The student will evaluate the acquisition, identify the merger’s rationale, and establish targets to ensure that the...