Business School
ACCT5910 BUSINESS ANALYSIS AND VALUATION
Class 1: Introduction
Today’s roadmap
1. Introduction
2. Course outcomes, overview & expectations
3. Course assessment
Course Instructors
• Andrew JACKSON
Office: Quadrangle Building Room 3111 Tel: +612 9385 5909
Email: a.b.jackson@unsw.edu.au
Consultation Hour: Wednesday 9am – 10am
• Ryan PENG
Email: zihang.peng@unsw.edu.au
Consultation Hour: TBA
1. Introduction to forecasting
We have two classes of forecasters: those who don’t know, … and
those who don’t know they don’t know.
John Kenneth Galbraith
• Warren Buffett. 1988
To properly value a business, you should ideally take all the flows of money that will be distributed
between now and judgement day and discount them at an appropriate discount rate.
That’s what valuing businesses is all about. Part of the equation is how confident you can be
about those cash flows occurring.
Some businesses are easier to predict than others. We try to look at businesses that are
predictable.
Outcomes - Business Analysis and Valuation
By the end of the course, you should be able to analyse a business and
determine its intrinsic value. You will need to master a number of analytical skills
to do this:
Business strategy analysis
Accounting analysis
Financial analysis
Forecasting
Valuation
The effect of active 
and experiential 
learning
Source:
http://www.google.com.au/imgres?q=learning+pyramid+model&hl=en&biw=1680&bih=935&gbv=2&tbm=isch&tbnid=CcasAwl42ed0WM:&imgr
efurl=http://effective.leadershipdevelopment.edu.au/beware-learning-pyramid/active-learning/
Expectations – what we expect from you
1. Prepare
o Read Material
o Identify Issues
o Write notes for weekly questions or case study
2. Participate
o Take notes actively
o Contribute to your group
o Contribute in class
3. Follow through
o Practice Tools
o Resolve questions
o Review & Consult
• Your lecturer is your future client
Course assessment
Weekly quizzes (15% of your grade): You will be given a short quiz (maximum of 10 minutes to
complete) most weeks that will involve no more that 5 questions, usually relating course content to
current business events. Each quiz will be worth 3% and your best 5 quiz results will form 15% of
your grade.
Participation (10% of your grade): Participation marks will be awarded based on your weekly
hand-ins. There will be questions assigned for each class. You should submit your response through
the Turnitin link provided on the Course Moodle page, due at 12:30pm on Tuesday each week.
Feedback will be provided from attending class and participating in the discussion surrounding these
weekly questions.
Major project (40%of your grade): More details on next slide
Final exam (35% of your grade): a two hour examination. All material covered in the
course is examinable. Further details of the exam will be provided during the semester.
To be eligible for a passing grade in this course, you must:
(a) Achieve a composite mark of at least 50%.
Course Assessment – Continued.
Major project (40% of your grade):
 You will be conducting a full analysis of a listed company assigned to you. You will do this in groups of
4 or 5 students all of whom will be in the same seminar stream. You will be able to select groups and
your instructor will help allocate any students without a group.
 The individual component is worth 10% and is submitted at the end of week 4. The group report
is worth 25% of your grade & will be submitted at the end of week 9. Your group will also prepare a
video summary of your findings by Monday of week 10 and is worth 5% of your grade.
 Note: The project is inherently complicated and requires progressive efforts throughout the course.
Do NOT leave all the work to the last few days prior to the deadlines—you will not have enough time.
Each of you can expect to spend on average one (1) hour each week on the project. Late
submissions will not be accepted.
Group project
• You will be allocated into groups this week and finalised by next week, and provided
with your assigned company.
• Details of the major project requirement we will overview now.
• The project requirements are also on Moodle.
How the course will run
• Short videos and lecture notes will be posted prior to each seminar on Moodle. These
will cover basic lecture material, and outline what you should read before class
• You are (or will be) enrolled in a three-hour seminar each week. These will be
conducted ‘online’ through Zoom links posted on the Course Moodle page.
• Seminars might typically involve a short online interactive ‘lecture’ component and a
workshop component that follows the lecture. The workshop may be used to discuss
a case, review assigned problems or practice data analytic skills.
• The workshop component will often involve groupwork to allow you to practice your
financial analysis skills and techniques. We will then reconvene to discuss the
findings of the weekly task.
• Each class you will also complete a short quiz that tests your understanding of the
course material
How the course will run – continued.
• The use of the three-hour online period may evolve as you, and your instructors,
determine what works best for your learning!
• Each instructor will let their seminar know about their availability for online
consultation in the first seminar, and this will also be posted on Moodle.
Course Materials
•Videos, lecture notes, & additional readings will be posted each
week on Moodle. You are expected to watch the videos and
read the notes & readings prior to your assigned seminar. We
will also provide you with information about the ‘in-class’ activity
which will typically involve practical applications of data analytics
tasks.
•We will be following the structure in the Palepu et al textbook
“Business Analysis and Financial Statements” – Asia Pacific
edition (3rd edition).
•There is a (free) ebook available for the 2nd edition via the
UNSW library. The UNSW bookstore also has a digital version
available (https://unswbookshop.vitalsource.com/products/-
v9780170365710) as well as physical copies of the 3rd edition).
Contexts for business analysis and valuation
• Investor – retail or institutional
• Security Analyst
• Credit analyst
• Manager
• Consultant
Information is the key to business analysis & valuation -
there are many sources of information
Financial statements
Company websites
Media
Analyst reports
Industry experience
• An account has been requested
for all students enrolled in this
course.
• The processing time for this
should mean that you should
expect an email from FactSet in
February.
• Email address used is
zID@unsw.edu.au
• Accessing account
FactSet Database
• FactSet Database – update on more details in reference to using this database
coming seminars.
• It is envisaged that this data base will be only one your sources of information for in
class exercises and information on your major project allocated company and it’s
competitors.
• Remember this is only ONE source of information, and predominantly historical
information.
Financial Statements
• Financial statements measure and summarize the economic
consequences of business activities.
• Accounting systems facilitate information quality, due to:
– the role of accrual accounting.
– the need for generally accepted accounting principles (GAAP).
– auditing and the quality of financial information

Course structure
• We will be using Tesla (NASDAQ: TSLA) as an ongoing ‘live’ case study for much of
the course
Consider the following:
• Where would you find information about Tesla?
• What does Tesla do?
• How does Tesla make money?
• What are the key accounting issues for Tesla?
• There will be a separate section for Tesla material up on Moodle
• Tip: visit their online site.
Tesla – task before class
• Using the FactSet database, see if you can find Tesla’s financial statement data.
• Get the latest annual report for Tesla, and check the same information. Do the
numbers for key items (e.g., Total Assets, Net Income, Sales) match?
Tesla group work research
• Explore FACTSET, and use the following questions to guide your search:
• Calculate the Herfindahl-Hirschman Index (HHI) of Tesla’s revenue exposure by segment.
[Google what HHI is!]
• How did Tesla’s stock price performance compare with Ford Motor Company (NYSE: F) and
General Motors (NYSE: GM)?
• What is the average analyst consensus EPS forecast for the forthcoming fiscal year?
• Who are the top 5 shareholders of Tesla?
• How have supply chains impacted on Tesla?
• How many years has Tesla CEO served in the company? How many shares does he/she
own?
TEN QUESTIONS EVERY INVESTOR SHOULD ASK
1. How does the company make money?
2. Are sales real?
3. How is the company doing relative to its competitors?
4. How does the broader economy affect things?
5. What could hurt the company over the next few years?
6. Is management sweeping expenses under the carpet?
7. Is the company living within its means?
8. Who is running the show?
9. What is the company really worth?
10. Do I really need to own this stock?
Source: https://moodle.telt.unsw.edu.au/pluginfile.php/2360558/mod_resource/content/0/Ten%20questions%20every%20investor%20should%20ask.pdf
SNAPCHAT
• File for IPO on February 2, 2017
– https://www.sec.gov/Archives/edgar/data/1564408/0001193125170
29199/d270216ds1.htm
• What do the financial statements tell us?
• Answer the ten questions investors should ask?
• Industry thoughts?
• Built on hype?
Summary
• We will learn how to analyse a business and determine its intrinsic
value
• This course is useful, but challenging
• Your homework:
– Review Chapter 1, read Chapter 2
• Form groups for major project by end of class 2
• Start work on the Major Project – 9 weeks goes by quickly.