How much is a share worth? This is one of the things Professor Jim Wahlen teaches during his online course Advanced Financial Statement Analysis at the Amsterdam Institute of Finance (AIF). The title doesn’t immediately suggest a thriller, but the questions the training tries to answer do: can you use the accounting information to make smart financial decisions? Can you evaluate the quality of accounting and adjust the numbers if you suspect earnings management?
“I really enjoy making accounting information come to life for people who want to analyze financial statements and reports”, says Wahlen, Professor of Accounting at the Kelley School of Business at Indiana University, about his chosen profession. “A lot of people think that accounting information is difficult to understand or too technical or too dense or irrelevant, but in my course I think most people gain a big appreciation for how important and interesting and dynamic that information can be. Assuming you know how to read and analyze it correctly.”
Although Wahlen thinks it is important not to look for ‘earnings management’ (profit steering), it is addressed in a part of his course that people find ‘surprisingly interesting’. “The first step when looking for profit steering must be to know the fundamentals of accounting and think about them rigorously. Making people aware that even companies that follow the standards can come up with bad financial reports.”
Furthermore, Jim Wahlen shows where plenty of crucial company information can be found: the footnotes. “The footnotes reveal a lot of information about a firm. The adjusted financial reports that we compile during the exercises probably provide much better information about a firm’s actual financial position than the balance sheets that the company itself publishes according to the US GAAP American accounting standards.”
Jim Wahlen speaks calmly, but with an intensity that highlights his enthusiasm. “In the course, we work through several cases, all based on real companies. Some are discussed at universities and others I have written myself. We do exercises, analyze strategies, read statements, study industries, and identify which accounting information is of high and which is of low quality. When there is question of low quality, it is important to look at the motives of the management. Are they perhaps trying to misrepresent the company?”
Join ambitious professionals for the challenging Advanced Financial Statement Analysis online program taught by Professor Jim Wahlen at Amsterdam Institute of Finance.
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