Outline

Overview

This unit of study develops a framework of fundamental analysis for equity investment. Fundamental analysis utilises publicly available information for estimating the intrinsic value of common stock using earnings-based valuation models. The aim is to discover investment opportunities of stocks that are not accurately valued by the market and take a long investment position. Fundamental analysis relies on the analysis of financial statement information, which must be reformulated with a strict focus on core operating performance. The financial information is complemented by data from the company's environment including its business strategy, competitive threats and macroeconomic factors. The unit of study places particular emphasis on developing a structural approach to financial ratio analysis, including the analysis of sales growth and abnormal operating return, as well as the analysis of earnings quality and reporting strategy. It also discusses the impact of behavioural biases on equity investment decisions. This unit prepares students for a successful career in equity investment analysis.

Unit details and rules

Academic unit	Accounting
Credit points	6
Prerequisites ?	ACCT5001 and (FINC5001 or BUSS5514)
Corequisites ?	None
Prohibitions ?	None
Assumed knowledge ?	QBUS5001 or QBUS5002
Available to study abroad and exchange students	Yes

Teaching staff

Coordinator	Demetris Christodoulou, demetris.christodoulou@sydney.edu.au

Assessment

The census date for this unit availability is 2 April 2024

Details
Criteria

Type	Description	Weight	Due	Length
Assignment	Take-home final project Take-home final project.	40%	Formal exam period Due date: 03 Jun 2024 at 23:59	3000 words
Outcomes assessed:
Small continuous assessment	Weekly Assignments Weekly Assignments	60%	Multiple weeks	Varied lengths
Outcomes assessed:
= hurdle task ?

Assessment summary

Weekly assignments: There are 10 individual weekly assignments worth 6 marks each, thus all adding to the total of 60 marks (out of 100). The due date for weekly assignment will be advised in class. All late submissions will receive 0 marks because the answer to each assignment will be revealed at the submission deadline. Any approved special considerations for failing to submit an assignment on time will result in transferring the marks of that assignment to the final take-home project.

This assessment is listed as HURDLE TASK. An assessment that is listed as HURDLE TASK means you must undertake the assessment and achieve a mark above a minimum standard. Students who fail to achieve this minimum standard in this assessment, even when their aggregate mark for the entire unit is above 50%, will be given a Fail grade for the unit. As a result the student's academic transcript will show a fail grade and the actual mark achieved if between 0-49 and a fail grade and a capped moderated mark of 49 for all other marks. The hurdle mark for this assessment is 45% (i.e. 27 marks).

Final take-home project: Instead of a final exam, you will be assigned a final take-home project worth 40 marks (out of 100). You will be assigned a public company for which you will perform financial analysis as required. The details of the take-home project will be released in weeks 7-8. Simple extensions do not apply because the final take home project is in lieu of a final exam. If you receive a approved special consideration for extending the time of submission then the final project will be substituted with an oral exam.

Assessment criteria

The University awards common result grades, set out in the Coursework Policy 2014 (Schedule 1).

As a general guide, a high distinction indicates work of an exceptional standard, a distinction a very high standard, a credit a good standard, and a pass an acceptable standard.

Result name	Mark range	Description
High distinction	85 - 100	Awarded when you demonstrate the learning outcomes for the unit at an exceptional standard, as defined by grade descriptors or exemplars outlined by your faculty or school.
Distinction	75 - 84	Awarded when you demonstrate the learning outcomes for the unit at a very high standard, as defined by grade descriptors or exemplars outlined by your faculty or school.
Credit	65 - 74	Awarded when you demonstrate the learning outcomes for the unit at a good standard, as defined by grade descriptors or exemplars outlined by your faculty or school.
Pass	50 - 64	Awarded when you demonstrate the learning outcomes for the unit at an acceptable standard, as defined by grade descriptors or exemplars outlined by your faculty or school.
Fail	0 - 49	When you don’t meet the learning outcomes of the unit to a satisfactory standard.

For more information see guide to grades.

Late submission

In accordance with University policy, these penalties apply when written work is submitted after 11:59pm on the due date:

Deduction of 5% of the maximum mark for each calendar day after the due date.
After ten calendar days late, a mark of zero will be awarded.

This unit has an exception to the standard University policy or supplementary information has been provided by the unit coordinator. This information is displayed below:

The standard university policy for penalising late submissions applies in this assignment.

Academic integrity

The Current Student website provides information on academic integrity and the resources available to all students. The University expects students and staff to act ethically and honestly and will treat all allegations of academic integrity breaches seriously.

We use similarity detection software to detect potential instances of plagiarism or other forms of academic integrity breach. If such matches indicate evidence of plagiarism or other forms of academic integrity breaches, your teacher is required to report your work for further investigation.

Use of generative artificial intelligence (AI) and automated writing tools

You may only use generative AI and automated writing tools in assessment tasks if you are permitted to by your unit coordinator. If you do use these tools, you must acknowledge this in your work, either in a footnote or an acknowledgement section. The assessment instructions or unit outline will give guidance of the types of tools that are permitted and how the tools should be used.

Your final submitted work must be your own, original work. You must acknowledge any use of generative AI tools that have been used in the assessment, and any material that forms part of your submission must be appropriately referenced. For guidance on how to acknowledge the use of AI, please refer to the AI in Education Canvas site.

The unapproved use of these tools or unacknowledged use will be considered a breach of the Academic Integrity Policy and penalties may apply.

Studiosity is permitted unless otherwise indicated by the unit coordinator. The use of this service must be acknowledged in your submission as detailed on the Learning Hub’s Canvas page.

Outside assessment tasks, generative AI tools may be used to support your learning. The AI in Education Canvas site contains a number of productive ways that students are using AI to improve their learning.

Learning support

Simple extensions

If you encounter a problem submitting your work on time, you may be able to apply for an extension of five calendar days through a simple extension.  The application process will be different depending on the type of assessment and extensions cannot be granted for some assessment types like exams.

Special consideration

If exceptional circumstances mean you can’t complete an assessment, you need consideration for a longer period of time, or if you have essential commitments which impact your performance in an assessment, you may be eligible for special consideration or special arrangements.

Special consideration applications will not be affected by a simple extension application.

Using AI responsibly

Co-created with students, AI in Education includes lots of helpful examples of how students use generative AI tools to support their learning. It explains how generative AI works, the different tools available and how to use them responsibly and productively.

Support for students

The Support for Students Policy 2023 reflects the University’s commitment to supporting students in their academic journey and making the University safe for students. It is important that you read and understand this policy so that you are familiar with the range of support services available to you and understand how to engage with them.

The University uses email as its primary source of communication with students who need support under the Support for Students Policy 2023. Make sure you check your University email regularly and respond to any communications received from the University.

Learning resources and detailed information about weekly assessment and learning activities can be accessed via Canvas. It is essential that you visit your unit of study Canvas site to ensure you are up to date with all of your tasks.

If you are having difficulties completing your studies, or are feeling unsure about your progress, we are here to help. You can access the support services offered by the University at any time:

Support and Services (including health and wellbeing services, financial support and learning support)
Course planning and administration
Meet with an Academic Adviser

Weekly schedule

WK	Topic	Learning activity
Week 01	Introduction to valuation and business strategy analysis	Lecture (2 hr)
Week 02	Using financial statements in valuation	Lecture (2 hr)
Week 02	Week 2 workshop	Workshop (1 hr)
Week 03	Accounting analysis and earnings management	Lecture (2 hr)
Week 03	Week 3 workshop	Workshop (1 hr)
Week 04	Principles of valuation models and cash-based valuation	Lecture (2 hr)
Week 04	Week 4 workshop	Workshop (1 hr)
Week 05	Earnings-based valuation	Lecture (2 hr)
Week 05	Week 5 workshop	Workshop (1 hr)
Week 06	Gaining value from fundamental analysis	Lecture (2 hr)
Week 06	Week 6 workshop	Workshop (1 hr)
Week 07	How firms generate value	Lecture (2 hr)
Week 07	Week 7 workshop	Workshop (1 hr)
Week 08	Reformulation of financial statements	Lecture (2 hr)
Week 08	Week 8 workshop	Workshop (1 hr)
Week 09	Analysis of profitability	Lecture (2 hr)
Week 09	Week 9 workshop	Workshop (1 hr)
Week 10	Prospective analysis of earnings growth	Lecture (2 hr)
Week 10	Week 10 workshop	Workshop (1 hr)
Week 11	Credit analysis and distress	Lecture (2 hr)
Week 11	Week 11 workshop	Workshop (1 hr)
Week 12	Financial policy	Lecture (2 hr)
Week 12	Week 12 workshop	Workshop (1 hr)
Week 13	Behavioural aspects	Lecture (2 hr)
Week 13	Week 13 workshop	Workshop (1 hr)

Attendance and class requirements

Lecture recordings: All lectures are recorded and will be available on Canvas for student use. Please note the Business School does not own the system and cannot guarantee that the system will operate or that every class will be recorded. Students should ensure they attend and participate in all classes.

Study commitment

Typically, there is a minimum expectation of 1.5-2 hours of student effort per week per credit point for units of study offered over a full semester. For a 6 credit point unit, this equates to roughly 120-150 hours of student effort in total.

Required readings

Prescribed textbook (optional purchase)

Penman, Stephen (2012), Financial Statement Analysis and Security Valuation, 5th Edition, McGraw-Hill.

Additional useful references

Palepu, K. G., Healy, P. M., and Peek, E. (2019), Business analysis and valuation: IFRS edition. 5th Edition, Cengage learning.

Contemporary Accounting – A Strategic Focus (10th ed) 2020. Phil Hancokc, Peter Robinson, Mike Bazley

Learning outcomes

Learning outcomes are what students know, understand and are able to do on completion of a unit of study. They are aligned with the University's graduate qualities and are assessed as part of the curriculum.

Outcomes
Graduate qualities

At the completion of this unit, you should be able to:

LO1. Learn to identify and analyse the key drivers of value creation within a business.
LO2. Evaluate and analyse the information presented in annual reports and financial statement as produced by financial accounting.
LO3. Develop an in-depth understanding of equity valuation models and approaches to estimating intrinsic equity prices for investment appraisal.
LO4. Apply financial analysis to analyse creditworthiness, liquidity and solvency.
LO5. Understand the impact of key behavioural biases when acting as a sell-side financial analyst.
LO6. Produce professional investment valuation reports, apply qualitative judgment that is informed by quantitative analysis, and communicate investment recommendations.

Graduate qualities

The graduate qualities are the qualities and skills that all University of Sydney graduates must demonstrate on successful completion of an award course. As a future Sydney graduate, the set of qualities have been designed to equip you for the contemporary world.

GQ1	Depth of disciplinary expertise Deep disciplinary expertise is the ability to integrate and rigorously apply knowledge, understanding and skills of a recognised discipline defined by scholarly activity, as well as familiarity with evolving practice of the discipline.
GQ2	Critical thinking and problem solving Critical thinking and problem solving are the questioning of ideas, evidence and assumptions in order to propose and evaluate hypotheses or alternative arguments before formulating a conclusion or a solution to an identified problem.
GQ3	Oral and written communication Effective communication, in both oral and written form, is the clear exchange of meaning in a manner that is appropriate to audience and context.
GQ4	Information and digital literacy Information and digital literacy is the ability to locate, interpret, evaluate, manage, adapt, integrate, create and convey information using appropriate resources, tools and strategies.
GQ5	Inventiveness Generating novel ideas and solutions.
GQ6	Cultural competence Cultural Competence is the ability to actively, ethically, respectfully, and successfully engage across and between cultures. In the Australian context, this includes and celebrates Aboriginal and Torres Strait Islander cultures, knowledge systems, and a mature understanding of contemporary issues.
GQ7	Interdisciplinary effectiveness Interdisciplinary effectiveness is the integration and synthesis of multiple viewpoints and practices, working effectively across disciplinary boundaries.
GQ8	Integrated professional, ethical, and personal identity An integrated professional, ethical and personal identity is understanding the interaction between one’s personal and professional selves in an ethical context.
GQ9	Influence Engaging others in a process, idea or vision.

Outcome map

Learning outcomes	Graduate qualities
Learning outcomes

Responding to student feedback

This section outlines changes made to this unit following staff and student reviews.

A clarification has been added that there can be no simple extensions to the final project because it is in lieu of a final exam, and that any approved special considerations for extensions of the submission deadline will replace the final project submission with an oral exam.

Additional information

More information can be found on Canvas.

Disclaimer

The University reserves the right to amend units of study or no longer offer certain units, including where there are low enrolment numbers.

To help you understand common terms that we use at the University, we offer an online glossary.

Current students

Overview

Overview

Unit details and rules

Teaching staff

Assessment

Assessment

Assessment summary

Assessment criteria

Late submission

Academic integrity

Learning support

Learning support

Simple extensions

Special consideration

Using AI responsibly

Support for students

Weekly schedule

Weekly schedule

Attendance and class requirements

Study commitment

Required readings

Learning outcomes

Learning outcomes

Graduate qualities

Outcome map

Responding to student feedback

Responding to student feedback

Additional information

Additional information

Disclaimer

On this page

Useful links

Media

Student links

About us

Connect

Current students

ACCT6003: Fundamental Analysis for Equity Investment

Semester 1, 2024 [Normal day] - Camperdown/Darlington, Sydney

Overview

Overview

Unit details and rules

Teaching staff

Assessment

Assessment

Assessment summary

Assessment criteria

Late submission

Academic integrity

Learning support

Learning support

Simple extensions

Special consideration

Using AI responsibly

Support for students

Weekly schedule

Weekly schedule

Attendance and class requirements

Study commitment

Required readings

Learning outcomes

Learning outcomes

Graduate qualities

Outcome map

Responding to student feedback

Responding to student feedback

Additional information

Additional information

Disclaimer

On this page

Useful links

Media

Student links

About us

Connect