• value / worth versus price,
• offered / listed price versus transaction price,
• practice questions on sharing of income and losses between partners,
• when business valuation used
• basic finance and capital markets concepts,
• business, operating, and finance risks,
• transaction cost theory,
• information asymmetry and lemon problem,
• Theory of Agency,
• conflict of interest and agency problem,
• overview of capital markets and money flow,
• financial intermediaries, information intermediaries, transaction facilitators,
• role of accounting information within the capital market system, and
• use of financial statements for business analysis.

• competitive advantage,
• sustainability,
• business analysis using various models including
• PESTEL,
• Porter's Five Forces,
• SWOT,
• Porter's firm and industry Value Chain analysis,
• product life cycle analysis,
• BCG matrix for product portfolio planning,
• Ansoff matrix for organic growth strategies, and
• acquisition alternatives.

• review of requirements for assignment,
• overview of sections for assignment,
• description of entrepreneur, partnership, private limited company, and public limited company,
• valuation for what purpose and for whom,
• review of business analysis models like PESTEL, five forces, etc,
• chapter 3 accrual accounting converting to cash flow for valuation,
• the need to use GAAP,
• the need to use auditor as information facilitator,
• reasons for management flexibility in financial reporting,
• potential red flags for conflict of interest situations,
• conservative accounting no equal to good accounting, and
• not all unusual activity are questionable.

• six steps for accounting analysis,
• three reasons for distortions,
• recasting the financial information into a simplier and more standardized format,
• definition of assets and liabilities,
• why overstate assets, understate assets, understate liabilities,
• how to overstate assets, understate assets, understate liabilities, and distort equity.

• review of overstated assets and journal entries to adjust,
• review of understated liabilities and journal entries to adjust,
• reasons and how to understat assets and journal entries to adjust, and
• financial ratio analysis for company analysis.

• review of ratios and their use,
• profitability ratios discussion,
• calculation of gross profit margin, net profit margin, NOPAT margin, ROA, ROE,
• leverage ratios discussion,
• calculation of debt to equity, debt to total cap, interest coverage ratio,
• liquidity ratios discussion,
• calculation of current ratio and quick ratio,
• working capital activities ratios discussion,
• calculation of A/R, inventory, and A/P turnover times and turnover days,
• market ratios discussion,
• calculation of payout ratio, and
• midterm scope review.

• review of midterm issues,
• information asymmetry vs agency theory,
• agency problem vs lemon problem
• definition of cost leadership and differentiation under Porter's generic strategy,
• outline of the course up to this point,
• our planned progress for the assignment going forward,
• our planned progress for the remainder of the course,
• transaction cost theory,
• efficient market theory,
• risk and return, and
• CAPM and assumptions.

• projection progression,
• use of ratios for analysis,
• use of cash flow statement for analysis,
• free cash flow to firm,
• free cash flow to equity,
• calculation of WACC for the assignment,
• review of excel provided for valuation,
• enterprise value, debt value, equity value,
• valuation of equity value in Appendix B,
• valuation of asset value in Appendix D, and
• multiple approach to valuation.

• review of macro level, industry level, and firm level analysis for assignment and projection,
• review of multiple approaches included PE, PSales, and PBook,
• how to determine and adjust for the multiple,
• time value of money review of various kinds of cash flow pattern,
• dividend discount approach, and
• introduction to discounted cash flow approach.

• review of assignment requirements,
• introduction to discounted cash flow approach,
• discounted cash flow approach to value equity using FCFE,
• discounted cash flow approach to value firm using FCFF,
• introduction to abnormal earnings approach,
• abnormal earnings approach to value equity using net income, and
• abnormal earnings approach to value firm using NOPAT.

• introduction to mergers and acquisitions,
• determining the benefits of mergers and acquisitions,
• determining the cost for the purchase (or maximum offer price) with compariable premium paid, forward PE multiples, and abnormal earnings approaches,
• using of cash or shares or combination to pay for the acquisition,
• potential problem of leverage too high if debt is used to finance the cash purchase,
• information asymmetry and dilution issues if new shares issed to finance the acquisition,
• potential capital tax tax to be paid by the target company's shareholders if cash is paid,
• potential transaction cost to sell the shares if the target company's shareholders prefer to have cash,
• probability of success for the acquisition,
• review of the valuation process for the assignment, and
• a step by step go through of the valuation process for the assignment.

• more details of final exam logistics,
• final exam review,
• financial statement analysis,
• multiple approach to valuation,
• dividends discount approach to valuation,
• discounted cash flow approach to value equity and firm value, and
• abnormal earnings approach to value equity and firm value.

For this course, a general purpose non-financial calcuator can be used. Students who do not have ready access to a financial calculator should be able to perform all the required analysis and calculations using a general purpose non-financial calculator for the tutorials, assignments, mid-term test, and final examination.

You can also use a non-programmable financial calculator for the tutorials, assignment, mid-term test, and final examination. Common financial calculators are HP12c and TI BAII PLUS. User manual in simplified chinese and a tutorial for the HP12c can be found here and a simple tutorial for the HP12c can be found here. User manual for the TI BAII can be found here.

Regardless of the types of calculators used for this course, students are responsible for their own equipment and they cannot be shared in a quiz, test, or examination situation. As a result, students MUST bring their own calculators to each class. In addition, each student must be proficient in the use of their own equipment.

Electronic translators CANNOT be used for quiz, test, or examination situations, but they can be used during class (only with volume off) and your own study time.

There are specific terms that apply to accounting and finance, and there are various online sources that can help students understand these terms.

Download and print for reference:

• Hong Kong Exchange glossary of terms (English to Chinese)
• 88translation.com finance dictionary (Chinese to English, English to Chinese)

Online finance dictionaries:

• Reuters Chinese to English and English to Chinese finance dictionary
• Goldman Sachs English to Chinese finance dictionary
• Goldman Sachs Chinese to English finance dictionary
• Morgan Stanley English to Chinese finance dictionary

Other unverified sources of financial references:

• Finance Street - a finance related site prepared by the government
• Financial glossary of terms
• List of dictionaries