Course Review: FINA 410 Investment Analysis

By Yashaswi Vig

This course introduces and teaches concepts required for most Investment Analyst job positions. To excel in this course, it is crucial to develop a solid understanding of the theory taught in FINA 395, which relates to the cost of capital for both levered and unlevered firms. FINA 410 covers concepts on the valuation of firms, including corporations, companies in the financial services sector, and startups. Most of the course will be dedicated to learning concepts used to value public firms.

FINA 410 requires an intermediate level of understanding in Accounting, mainly to perform a discounted cash flow model. One will have to extract and use data from income statements and balance sheets to prepare cash flow statements which will then be used to prepare valuation models. Of equal significance is the cost of capital, the measure of risk needed to value a company. Cost of capital is one of the critical inputs in valuation because if this measure is not correct, one will not achieve an accurate value of the project or firm. Another major element is the growth rate, as this is the measure that the company’s future depends on. The growth rate and future expected cash flows significantly impact a company's survival and value.