Earnings Quality & Fundamental Analysis

Earnings Quality and Fundamental Analysis develops the accounting knowledge, analytical skills, and judgment needed to use financial statements effectively in investment, credit, and corporate decisions. The course integrates an understanding of accounting principles (GAAP) with a critical assessment of reporting and earnings quality to evaluate profitability, risk, and growth prospects—and judge whether market pricing reflects those fundamentals. It consists of two parts of approximately equal length. The first begins with a brief review of financial reporting before turning to earnings quality and non-GAAP reporting, financial statement reformulation, profitability and risk analysis, forecasting, valuation, and financial statement–based investment strategies. The second deepens this framework through a closer examination of the reporting and analysis of key transactions and financial statement items, including revenue recognition, inventory, tangible and intangible assets, income taxes, leases, pensions, financial instruments, business combinations, and equity-related items. Throughout, students learn to assess the assumptions and accounting choices underlying reported numbers, identify red flags and potential distortions, and make adjustments that improve comparability and better reflect underlying economics. Drawing on professional practice and academic research, the course emphasizes real-world application through actual financial disclosures, cases of accounting abuse, and Excel-based analysis and modeling exercises.