Please contact NYU IT (, 212-998-3333) or NYU Stern IT (, 212-998-0180) for all Zoom/email/NYU Brightspace/Admin/CapitalIQ issues. Please do not copy/contact me. Brightspace and NYU groups send all emails to the (not address, while Stern class mail lists send emails to You must check BOTH emails and use the correct browser profile. Please contact IT to figure this out. Do not write to Almaris or me if you do not get Almaris emails because this issue is between NYU and you.


This course helps you understand the flow of money in a business and its link to shareholder value and credit ratings. The course presents a framework for analysis and provides spreadsheets to implement the framework.


Help and Office



Attendance and penalty for missing classes

Requiring attendance is necessary for several reasons. First, you incorrectly assume you can catch up on a missed class by watching a recording (if available). Videos do not engage your brain as much as a live class. Second, less than 20% of you watch the recording (if available). You are then lost in class, which provides wrong signals to me as an instructor. Third, your absence hurts class discussions. Fourth, you miss out on feedback if you do not work through the questions I pose in class. Fifth, I lose the feedback since there are fewer questions.

The policy below will be in effect only after the add/drop period.

Without mandatory attendance, attendance is often below 50%. Therefore, though I dislike doing this, I penalize absences. If you anticipate being absent for good reasons, please email me well in advance. Please enter "Excused" on the attendance sheet described below to avoid the penalty if I approve. If you miss a class due to emergencies and cannot tell me in advance, do not panic. Take care of the emergency first, and then email me. I will permit you to change the "Absent" to "Excused." But, if you miss a class without a valid reason, there is a penalty, as stated below.

For sections meeting in 150-190 minute sessions, you will lose one grade (A to A-, A- to B+, B+ to B, B to B-, and so on) for EVERY missed session unless you were explicitly excused via email. Thus, if you miss two class sessions, you will lose two grades, and so on.

For sections meeting in 75-80 minute sessions, you will lose one grade (A to A-, A- to B+, B+ to B, B to B-, and so on) for EVERY TWO missed sessions unless you were explicitly excused via email. Thus, if you miss four class sessions, you will lose two grades, and so on.

Please sit in the same seat in every class and display your name tags. For Zoom classes, you must keep your video on AT ALL TIMES. You must also have a good working headset or mic, as it is extremely rude to be inaudible and force me to ask you to repeat yourself. After entering the class, please mark yourself present in the first 20 minutes on the OneDrive sheet (link posted on Brightspace). You will be marked absent if you are more than 20 minutes late unless it is because of factors beyond your control (traffic, subway, interviews running late). You will also be marked absent if you leave the class early unless you have my permission or get it afterward. You will get an F in the course if you are caught cheating on the attendance sheet.

Exams and Grading


Class Topic
  • The purpose of financial statement analysis: Valuation, credit risk assessment, and performance evaluation
  • Introduction to deriving unlevered free cash flows
  • Unlevered net income or net operating profit after tax
  • Unlevered net assets or net operating assets
  • Deriving unlevered net income
  • Distinguishing between operating and financial items
  • Drivers of unlevered net income: Size, growth, and NOPAT margin
  • Deriving net operating assets
  • Financial assets versus non-financial assets
  • Financial liabilities versus non-financial liabilities
  • Drivers of net operating assets: Revenue-related metrics
  • Days of receivables, bad debts, days of deferred revenues
  • Drivers of net operating assets: Expense-related metrics
  • Days of prepayments, days of inventories, PP&E turnover, days of payable
  • Distinguishing between operating working capital and fixed capital
  • Fixed versus variable items
  • Seasonal versus cyclical items
  • Financial assets and financial liabilities
  • Distinguishing between solvency and liquidity
  • Leverage and liquidity ratios
  • Leverage: Debt/EBITDA, Debt/EBIT, Debt/FFO,
  • Liquidity: Financial assets/Sales, (Financial assets + Undrawn revolver)/Sales
  • Effect of leverage and liquidity: ROIC versus ROE
  • How leverage amplifies changes in ROE vis-a-vis changes in ROIC
  • How liquidity dampens changes in ROE vis-a-vis changes in ROIC