Since starting my degree at the end of 2018, I have learnt many skills and concepts, however I have not been required to use the key concepts and questions method required for this unit since studying ACCT11059. This is very daunting as I must learn how to think critically again, rather than just working out the correct mathematical figure – which I must admit, I prefer over writing my thoughts in a word document.
While reading the preface, I have realised all of my learning at CQU is starting to become clear and integrate together. In this unit we will be analysing our own firm with the outcome being to understand how the firm is really placed in the business world by using financial and non-financial information to understand its reality. This made me think back to studying management accounting where we used different measures to really get a sense of how a firm was tracking in the business world. I feel happy that I have prior knowledge which will help me learn in this unit. I feel in my working life I have not had a good understanding of financial statements and what they actually mean for a firm. Each month I used to print the financial statements for my schools I was working for and just put them away in a folder without ever knowing what the end figures meant. It was up to the accountants to download and analyse the reports. Hopefully, by the end of this term, I will be able to have more insight into the business realities of my schools.
In Chapter 1, it is evident that fundamental analysis will be critical in understanding and assessing a firm. It will involve uncovering the whole business environment the firm is placed under along with the financial placement of the firm by using two frameworks in the analysis. The concept of fundamental analysis made me feel confident that I will be able to fully understand what the value actually is of the firm I will be analysing. This does raise the question of how will we be able to gain more insight into our firms by using the discounted cash flow and economic profit frameworks? Surely major investors would go through a similar process before investing in a firm. I am looking forward to learning how this process works and applying it to the firm I have been assigned.
On page 6 and 7 the concept of Free Cash Flow has been explained by Martin – I was instantly full of joy – finally some figures to get my teeth into to understand which firm is more valuable. Then I was disappointed when it was explained that FCF is not a great way to measure a firm as the FCF can be easily increased by reducing the net investment.
Previous concepts I have studied like the Capital Asset Pricing Model (CAPM) which uses beta and risk rates to determine the discount rate, are starting to pop up in the study guide and it makes me feel happy to know there will be an integration of my learning throughout the last 5 years in this unit.
I am also pleased to read that we will be using spreadsheets to calculate forecasts for our firms. I am looking forward to expanding my excel skills and seeing how the DCF and Economic profit frameworks help to calculate valuations of our firms. Now that I have one week completed for this unit, I am excited to be able to expand my critical reading/thinking skills further while also learning each week. I do find it difficult expressing myself into words so this aspect of our unit will be a challenge but I am looking forward to it.
Mandy's blog 