ACCOUNTING, BUSINESS ANALYSIS, AND VALUATION
Dr. K. K. Raman
Office: BUSI 202D
Office Hours: T: 11:00-12:15; W: 5:40-6:15 (Also by email or appointment)
Phone: 940.565.3089 (When leaving a message, please speak SLOWLY and CLEARLY.)
E-mail: Raman@unt.edu. (Be sure to state “ACCT5760” upfront in the subject line.
Do NOT send email to my WebCT address.)
1. Course Objectives:
The objective of ACCT 5760 is to examine how accounting reports can be used to evaluate the
current and future prospects of a business. Note that the course adopts a user perspective. The basic
idea is that a meaningful analysis of a firm’s financial statements is possible only after analyzing its
business model (strategy) as well as accounting policies.
In-depth cases will be used to study real firms in a wide range of industries. The cases will
examine various industries and specific competitive strategies within these industries; business risks
related to these strategies; how these business strategies/risks map to the choice of accounting policies,
and the resulting usefulness of accounting reports for financial performance measurement. In addition,
the course will engage students in prospective (forward-looking) analyses to illustrate how financial
statements are used for business valuations, and for related decisions such as credit analysis and the
evaluation of mergers and acquisitions.
The course is designed to build on your (students’) existing technical accounting knowledge, and
to broaden your analytical skills to include strategic business analyses and valuation. Put differently, it
is intended to help you (as a professional accountant) obtain a better understanding of the client’s
business model, risks, and success factors. These skills are necessary core competencies of today's
CPAs and business managers in the competitive global economy.
The course may seem daunting at first, but students should be able to find it all quite manageable
provided they stay flexible, tolerant, and patient.
2. Course Prerequisites:
ACCT 5110 or 5310, and 5120; students should take this course in the last year of their graduate
3. Text Materials:
1. Business Analysis & Valuation Using Financial Statements, 4th edition, by Palepu and
Healy (Thomson/South-Western, 2008). ISBN: 0-324-30286-X
2. Harvard Business (HB) Case (9-104-071): “Accounting Fraud at WorldCom” (see last page
of this syllabus for student purchase instructions from HB).
Course grades will be determined based on student performance on written cases due throughout
the semester, a mid-term and a final exam, participation in class, and peer evaluation.
Weekly Written Case Assignments (10 expected over semester) 300
Mid-term Exam 60
Final Exam 60
Class participation (student needs to participate and be in class
for entire class period to get participation credit) 30
Peer evaluation 20
TOTAL POINTS 470
The Weekly Written Case Assignments are team (group) assignments. Students self-select their
team members. Each team (consisting of no less than 3 and no more than 4 students per team) submits
a team report. Individual submissions will not be graded. Each team is required to work
independently, and all members of the team must work on each Question. The team reports are due at
the beginning of class. Late submissions will not be accepted. Grading of cases will focus on brevity
and the quality of student analysis. To receive credit you must answer the Questions that are assigned
for each case (not the ones in the book). Also see Section 8 “Written Case Assignments” below.
The two Exams (Mid-term and Final) will consist of a take-home case each. You will have a
week to work on the exam starting the week before the exam date. The exam is an individual (NOT
team) assignment. Your “exam” will be due 7:30PM on the day of the exam. Late submissions will
not be accepted. You can submit by email (but ONLY if you submit as a .pdf file). Alternatively, you
can come by and deliver a hard copy to me in my office. You can always submit early. For your
exam/report to be graded, be sure to follow the relevant instructions in Section 8 below (length, double
spacing, stapling, etc.). Grading will focus on brevity and the quality of analysis. Your graded mid-
term exam will be returned and reviewed in class. The instructor will then collect the exams and keep
them on file in his office. Note: You will receive a failing grade (F) in the course if, for any reason,
you fail/forget to return the exam at the end of the review.
Class participation counts towards the course grade. This will be a case-based discussion
course. Hence, class discussion is critical, and absences will impact your class participation grade
significantly. The student will have a responsibility to his/her colleagues to come to class prepared to
actively discuss the assigned case for the day. The classroom will be a collective “shared experience”
in which the quality of the experience will depend on the student’s participation.
Your participation score will be graded as follows:
A: Ask good questions, make valuable observations, and answer questions effectively on an
ongoing basis. Very familiar with the material every class period.
B: Answer satisfactorily when called on and volunteer comments or questions regularly.
Fairly familiar with the material.
C: Participate infrequently in class discussions and questions/answers reflect inadequate
D: Very rarely participate infrequently in class discussions, and questions/answers reflect
little or no preparation. Sometimes arrives late to class after discussions have begun.
F: No contribution, negative contribution, or not in attendance. Seldom familiar with the
Peer evaluation will also be a significant component of the student’s grade. Teams will be self-
evaluating. At the end of the semester, they will complete the Group Member Evaluation form to rate
the contributions of each group member. Peer evaluation score will be based on two factors: (a) group
members’ evaluations of the student, and (b) the quality of the student’s evaluation of fellow members.
Some of the cases later in the semester will require financial statement analysis based on
accounting ratios, or residual (abnormal) net income analysis to derive a business valuation. Students
may find it helpful for some cases to track down historical or current financial information on
companies in the cases, or information about competitors. They can obtain historical financial
information on public companies directly from the company websites, or from the SEC’s Edgar
database http://www.sec.gov. Free Edgar http://www.freeedgar.com also allows easy access to SEC
filings. There are other websites where students can get current information on companies’ other
5. Conduct of Course/Class Organization:
Classes will be conducted using a combination of lecture/discussion format. When we cover
textbook material, the course will follow a traditional lecture format. When we cover case material, I plan
to lead the discussion but I do expect active class discussion. I will at times actively call on students.
Also, I may assign a team (group) to serve as discussion leader/facilitator for the class discussion of that
6. Important Dates to Remember:
Oct 3 - Last day to drop without being subject to a grade of WF. Signed drop slips may
be picked up from the Receptionist in the Accounting Dept. (COBA 215)
between 8 am and 5 pm weekdays. NOTE: AFTER TODAY, A STUDENT
WHO HAS NOT ATTAINED A 60% (OR BETTER) AVERAGE WILL
RECEIVE A “WF” (which has the same effect as an F for GPA purposes).
Oct 15 - Mid-Term Exam Due.
Oct 28 - Last day to drop.
Dec 10 - Final Exam Due
7. Make-Up Exams
NO make-up examinations will be given during the semester. A missed exam will count as a
zero (0) unless there is a documented (in writing), university accepted, excuse for missing the exam. If
at all possible, you should notify your instructor before a missed test. If you miss an exam with an
excused absence, the points will be added to the final exam, i.e., the final exam will be weighted more
heavily in calculating your course grade. In practical terms, this means that if you miss an exam with
an excused absence, your grade on the final exam will serve as the grade on the missed exam. There are
no make-ups for the Weekly Written Case Assignments.
8. Weekly Written Case Assignments
To receive credit you must answer the Questions that are assigned for each case (not the ones in
The Weekly Cases in this course are team (group) assignments. Students self-select their team
members. Each team (consisting of no less than 3 and no more than 4 students per team) submits a
team report. Individual submissions will not be graded. Each team is required to work
independently, and all members of the team must work on each Question.
Each team should hand in a tightly-written paper not to exceed 3 pages (plus an Appendix as
necessary). Use the Times New Roman 12 point font, double-spaced with standard 1-inch
margins. For each case, create a cover page with the case title and your names. Also, add a required
statement (at the end of your submission) signed by each team member attesting to the fact that “All
team members worked on each of the assigned Questions and contributed equally to the report.”
The paper should be well written and will be graded for both content and form. Questions must
be answered in complete sentences; bullet point answers are not acceptable.
Cases are due at the beginning of class on the date they are due (NO emails). There will be no
make-ups for cases not submitted on time.
Cases will be graded based on your analysis and discussion. Also, you should try to integrate
the information you learnt in the text material into your case analysis and answers to questions at the
end of the Case. As you read a Case, please remember that “Frustration stemming from incomplete
information is a real-world phenomenon that students will face repeatedly in their professional careers.
In fact, learning to accept or cope with such frustration can be a beneficial outcome of using real-world
cases in accounting.” Students should avoid becoming impatient with the lack of a single definite
Begin your write-up by directly answering the Question(s) in the case, i.e. do not write an
introductory essay. Then, move on to your analysis, support, etc. in a separate paragraph as part of
the same answer. More detailed information can be provided in an Appendix. Note that you will lose
points for spelling errors, typos, incomplete sentences, etc. Hence, please proofread and edit your
paper carefully before you submit. Do NOT repeat the questions in your paper.
The key to earning a good grade on this assignment is to directly answer the question(s) in the
case and write well, i.e., be clear in your own mind as to what it is that you want to say and express
those ideas clearly in short and simple sentences.
Please type double-spaced (2 points). The answer to each question should be in a separate
paragraph. Also, the answer to each Question should be numbered up-front (e.g., 1,2,3, etc.). Parts of
a Question should also be numbered up-front (e.g., 1a, 1b, 1c etc.). Amounts should identify the unit
of measurement (e.g., $) and have commas as appropriate, e.g., $123,456,789 (2 points).
To receive credit, you must (1) directly answer the assigned Questions and provide support for
your answer, and (2) write well. Also, the entire submission (including the Appendix, if any) must be
stapled (2 points). E-mail and fax submissions are NOT acceptable and will not be graded. Be sure to
number the pages of your report.
9. Important Information:
a. Please comply with all the instructions for the various submissions. Do NOT slip
assignments under my office door: they will end up in the trash and receive no credit.
b. Grades should be posted on WebCT within 7 days of the assignment due date.
c. For information relating to UNT closings due to bad weather, call the UNT Police Department
at 940-565-3000 or check the unt.edu website.
d. All cell phones and pagers should be turned off and stored during class, exams, etc.
e. A lot of what we call a “college education” basically consists of learning how to learn, i.e.,
how to concentrate for progressively longer times, how to postpone gratification, how to teach yourself.
Most of what you will learn in later life, you will teach yourself.
10. STATEMENT ON CLASSROOM BEHAVIOR
Civility in the classroom is a prerequisite for a good learning environment. Civility also extends
to the student/student relationship. Thus, students must recognize each student’s right to a classroom
environment conducive to learning.
To assure a civil learning environment, students must observe certain rules. These rules
1. Arrive on time for all classes.
2. Stay in their seats during the entire class.
3. Refrain from talking to other students during class.
4. Refrain from using all tobacco products or consuming food during class.
5. Turn off all cellphones, pagers, and other electronic devices (including laptops) during
6. Refrain from sleeping or reading magazines, newspapers, assignments from other classes,
and other material that might distract their classmates.
The instructor will enforce these rules. Student failure to adhere to these rules may result in the
student’s removal from the class.
11. ACADEMIC DISHONESTY
The UNT Code of Student Conduct and Discipline provides penalties for misconduct by students,
including academic dishonesty. Academic dishonesty includes cheating and plagiarism. The term
"cheating" includes, but is not limited to, (1) use of any unauthorized assistance in taking quizzes,
tests or examinations; (2) dependence upon the aid of sources beyond those authorized by the
instructor in writing papers, preparing reports, solving problems, or carrying out other
assignments; or (3) the acquisition, without permission, of tests or other academic material
belonging to a faculty member or staff of the university. The term "plagiarism" includes, but is
not limited to, the use, by paraphrase or direct quotation, of the published or unpublished work of
another person without full and clear acknowledgment. It also includes the unacknowledged use
of materials prepared by another person or agency engaged in the selling of term papers or other
academic materials. (Source: Code of Conduct and Discipline at the University of North Texas.)
Penalties: If you engage in academic dishonesty related to this class, you will receive a
failing grade on the test or assignment, and a failing grade in the course. In addition, the
case will be referred to the Dean of Students for appropriate disciplinary action at the
University level. Students are also expected to report any suspected cheating; failure to do so
is considered equivalent to cheating.
12. AMERICANS WITH DISABILITIES ACT
The Department of Accounting, in cooperation with the Office of Disability Accommodations,
complies with the Americans with Disabilities Act in making reasonable accommodations for
qualified students with disabilities.
If you have an established disability as defined in the Americans with disabilities Act and would
like to request accommodations, please present your written accommodation request by the end of
the second week of classes.
Week 1 Introduction/Course Overview (Ch. 1)
Week 2 Discussion Case Due: Dot-com Crash of 2000 (Ch. 1: pp. 12-36).
Strategy Analysis (Ch. 2) [Read: Porter, “The five competitive forces that shape strategy,”
HBR, January 2008, on WebCT]
Week 3 Discussion Case Due: Manufactured Homes Inc. (pp. 255-285).
Accounting Analysis (Ch. 3)
Week 4 Discussion Case Due: Harnischfeger Corp. (Ch. 3: pp. 20-44).
Accounting Analysis (Ch. 4)
Week 5 Discussion Case Due: Boston Chicken (pp. 51-67 in textbook).
Financial Analysis (Ch. 5) [Read: Graham, et al., “Value destruction and financial reporting
decisions,” FAJ, Nov/Dec 2006, on WebCT]
Week 6 Discussion Case Due: Accounting Fraud at WorldCom (purchase from HB, see p.1
of this syllabus).
Financial Analysis (Ch. 5)
Week 7 Discussion Case Due: A Comparative Analysis of Walmart, Carrefour, and Target
Week 8 Mid-term (October 15)
Week 9 Prospective Analysis: Forecasting (Ch. 6)
Prospective Analysis: Valuation Theory (Ch. 7)
(Checkout BAV tool: downloadable from website for textbook).
Week 10 Discussion Case Due: Valuation Ratios in the Restaurant Industry (Ch. 7: pp. 23-29)
Prospective Analysis: Valuation Implementation (Ch. 8)
Week 11 Discussion Case Due: Circuit Industries (Case and Excel spreadsheet.xls On webCT)
Equity Security Analysis: (Ch. 9)
Week 12 Open
Week 13 Discussion Case Due: United Parcel Service’s IPO (Ch. 5: pp. 43-69)
Communication and Governance (Ch. 12)
Week 14 Open
Week 15 Discussion Case Due: Financial Rep. Problems at Molex, Inc. (Ch. 12: pp. 24-37)
Mergers and Acquisitions (Ch. 11)
*** NOTE: Assignments are tentative and subject to change
How to obtain your grades from WebCT
A. To get your Student Login ID (Username) and Password:
1. Open either Internet Explorer or Netscape web browser and go to the web page
2. Click on COBA WebCT.
3. At the BOTTOM of the web page, click on the option
“Student Guide to WebCT.”
4. Click on the option “ID and Password Information.”
5. The Username for WebCT is your EUID (Enterprise User ID). To get your EUID, Click on “this
6. Enter your Student Identification Number (usually your social security number) and Birth data as
shown on the screen.
7. Click SUBMIT QUERY
8. The system will come back to you with your EUID (Username).
9. Your initial password is your UNT Student ID number.
B. To check your test scores or end-of-semester course grade:
1. Open either Internet Explorer or Netscape web browser and go to the web page
http://webct.unt.edu/ (NOTE: This is not the COBA website.)
2. Click on “Log on to my WebCT.”
3. You will get a dialog box asking for Username (your EUID) and Password. Enter the information
(in lower case) and click “ok.”
4. Click on “ACCT 5760.”
5. Click on the “Grades” icon to check your test scores and grade.
NOTE: WebCT should be used to check grades only. Please do NOT use WebCT for e-mail. If
you have problems logging on to WebCT, contact the Computing IT Center Help Desk at
940.565.2324 (ISB 119). We reserve the right to correct any clerical errors on WebCT.