Valuation Using Financial Statements, 2e

by Sommers, Easton, Drake

| ISBN: 978-1-61853-363-0 | Copyright 2021

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Welcome to the Second Edition of Valuation Using Financial Statements.

Our focus in writing this book is to provide the most complete, engaging, and user-oriented textbook for instructors and students who wish to learn and implement valuation methods based on accounting and/or cash flow information gathered from financial statements. This book is the result of many years of experience teaching valuation and guiding students through the process of valuing companies using financial statement information. We are grateful to students and colleagues whose insights, suggestions, and feedback were invaluable as we developed our book. We hope that you will enjoy the journey that is Valuation Using Financial Statements and, of course, we welcome your comments.

Target Audience

Valuation Using Financial Statements is intended for use in a valuation and/or financial statement analysis course in which a structured approach to company valuation via financial statement reformulation, profitability analysis, and forecasting is emphasized. With a clear (yet detailed) focus on each of the key steps in valuation, the book provides a template for students to follow as they complete a valuation using cash flow- and/or accounting-based models. This book accommodates graduate and advanced undergraduate courses ranging from a partial semester to a full semester in length. Some knowledge of accounting is assumed.


Practical Guidance at Every Step

We walk the reader through a detailed analysis of the financial statements including the information reported in the footnotes as she/he creates expanded financial statements capturing all of the obtainable information about the operations of the firm. Armed with a detailed understanding of the components of operating income and the operating assets used to generate that income, the reader sees a demonstration of DuPont ratio analysis and the essential steps in forecasting future payoffs (cash flow and earnings). Next, we detail the estimation of the cost of capital, which is used to discount the expected payoffs to estimate firm value. Finally, we derive and demonstrate the use of cash-flow-based and earnings-based valuation models.

We hope that the textbook will be used as a guidebook. Where possible, we demonstrate each of the steps of financial statement analysis and valuation via an example, General Mills. We encourage readers to undertake a valuation based on financial statements of another firm as they read to enhance their understanding of each of the steps in financial statement analyses and valuation. We provide a detailed spreadsheet analysis of the financial statements and valuation of General Mills, which we expect will serve as a guide to the reader undertaking the valuation of the company they select. As an alternative, readers might choose to follow the spreadsheets that show the financial statement analysis and valuation of Kellogg, Thor Industries, or Winnebago, also provided with the text.

Readability

This textbook is written in a clear and succinct manner, allowing students and instructors to absorb complex concepts quickly and without being distracted by unnecessary materials. Additionally, there is a strong emphasis on covering the practical situations that will be encountered by students and instructors in applications of each of the steps in the process of financial statement analysis and valuation.

Demonstrated Implementation

Students learn from seeing a demonstration of the concepts. The book illustrates every aspect of the valuation process by using General Mills throughout, literally starting with their Form 10-K and ending with an estimation of the equity value. Additionally, in the end of chapter materials, Kelloggs (a close competitor of General Mills) as well as recreational vehicle manufacturers—Thor Industries and Winnebago are also analyzed, providing further reinforcement of the valuation processes. Every step can be followed directly in the valuation spreadsheets for General Mills, Kelloggs, Thor Industries, and Winnebago provided with the textbook. These spreadsheets, which cover the entire financial statement analysis and valuation process, further reinforce the flow of the steps along the path to valuation. These spreadsheets and the practical spreadsheet tips in the modules serve as a critical guide to students undertaking independent or group valuation projects. For example:


Multiple Methodologies, One Focused Task

Often, valuation textbooks brush past items or provide a rough approximation rather than tackling issues, Valuation Using Financial Statements provides full explanations and demonstrations of market multiples and discounted cash flows models clearly discussing the costs and benefits and implementation issues of each. Additionally, the relation to accounting models is shown with the residual operating income and abnormal operating income growth models being covered in detail. Requirements for model equivalence and how forecasting relates to the various valuation approaches are clearly presented. Throughout the text, each approach focuses on valuation of the company's operating activities (i.e., valuation of enterprise operations), rather than equity. Not only is this necessary to avoid having to forecast future leverage, but also provides the benefit of a more focused task.

New to the Second Edition

The focus company has changed from Procter & Gamble to General Mills. Using General Mills’ financial statements from May 2018, a value is calculated at May 1, 2019. Additionally, in each chapter, the data is updated to reflect recent information.

  • Chapter 1: A discussion of issues around identifying material risks and companies with multiple business environments has been added. Also, an example of a SWOT analysis of General Mills produced by MarketLine is now included.
  • Chapter 2: Figures showing the relations between the company, its product / input markets, and suppliers of capital are now included. These figures also demonstrate the relations of operating profits, operating assets, financial items, and cash flows. Additionally, a clearer description is now provided of the operating and financial aspects of the company and ac- counting’s articulation over time.
  • Chapter 3: A discussion of issues to be watched when downloading data from sources such as Mergent Online has been added. The discussion of classification of deferred tax assets and liabilities has been adjusted to reflect changes to accounting standards.
  • Chapter 4: Effects of beginning with downloaded financial statements are discussed. Additionally, the changes in accounting for pension and other postemployment benefit costs are incorporated. Finally, the effects of changing the statutory tax rate (and its effect in each fiscal year) is addressed.
  • Chapter 5: The discussion of operating leases has been completely revised to cover both the old standards and the new standards that require recording of an asset and liability related to operating leases on the balance sheet. Similarly, the discussion of share-based compensation and the calculations in the related spreadsheets have been completely revised to streamline and clarify the issues and steps required.
  • Chapter 6: Complete coverage of effects related to 52-53 week years on DuPont analysis is illustrated using General Mills. Discussion of further analyses that may be performed has been expanded throughout the chapter. Finally, the effects of equity deficits on financial analysis are covered.
  • Chapter 7: More direct coverage of the effects of an acquisition is added through examination of General Mills' acquisition of Blue Buffalo. Additionally, the adjustments to both the revenue and the operating efficiency forecasting procedures resulting from the 52-53 week year issue are addressed.
  • Chapter 8: Discussion on situations in which the use of the market multiples has been expanded. Quotes from Warren Buffet and Charlie Munger related to the merits of using EBITDA in analysis have been added.
  • Chapter 9: A discussion of the effects of interest capitalization on estimates of the pretax borrowing rate has been added. Also, additional guidance is provided on how to determine whether a cost of capital estimate is reasonable and steps that can be taken if they are not.
  • Chapters 10-12: In the valuation models, the forecasted payoffs from Chapter 7 and the cost of capital for operations from Chapter 9 are used to show the value calculated from both cash-and earnings-based models is identical.
  • Chapter 13: The order of the last two chapters has been reversed to allow students to get to equity value sooner. Additionally, a detailed discussion of how the models presented in the text relate to the Discounted Cash Flow and Adjusted Present Value Models presented in finance texts is included. Finally, detailed instruction on performing sensitivity analysis in Excel is shown.
  • Chapter 14: Guidance drawn from the Delaware Court of Chancery on acceptable terminal growth rates is shown. This provides concrete evidence of the applicability of the material and justification to the approaches shown in the text.
  • End of Chapter Materials: In each chapter, the questions, exercises, and continuing examples have been increased to provide additional items for faculty to draw from and students to practice. This includes coverage of three companies in the continuing examples.
  • Test Bank: A test bank has been created that incorporates continuing examples of Procter & Gamble, Kimberly-Clark, Federal Express, and United Parcel Service. Valuation spreadsheets for these companies are also included.




Available Supplements

To access, go to the Ancillaries tab.

  • Valuation Spreadsheets: Excel spreadsheets for General Mills, Kellogg’s, Thor Industries, and Winnebago central to the textbook are provided, which show the flow of information and calculations when moving from financial statements to a value estimate. Two bonus spreadsheets for Cooper Tire & Rubber and Goodyear are also available that can be used in presenting the materials in classes.
  • Solutions Manual: Created by the authors, the Solutions Manual contains complete solutions to all assignments.
  • Test Bank: Created by the authors, the Test Bank contains a variety of questions, exercises, and problems related to each aspect of the text. The Test Bank utilizes Procter & Gamble, Kimberly-Clark, Federal Express, and United Parcel Service as continuing examples and complete Excel spreadsheets on these companies are also available.
  • PowerPoint: Created by the authors, the PowerPoint slides outline key elements of each chapter.
Expand/Collapse All
About the Authors (pg. iii)
Preface (pg. v)
Table of Contents (pg. ix)
Chapter One: The Link between Valuation and Financial Statement Analysis (pg. 1.1)
Why Valuation? (pg. 1.1)
Use of Accounting Data for Valuation (pg. 1.3)
Why Use Accounting-Based Valuation Models? (pg. 1.4)
Focusing on Operations (pg. 1.6)
Organization (pg. 1.7)
Understanding the Business and the Business Environment (pg. 1.9)
Summary (pg. 1.13)
Questions (pg. 1.13)
Exercises (pg. 1.13)
Continuing Examples (pg. 1.14)
Chapter Two: Role of Accounting (pg. 2.1)
Understanding the Relation between Accounting Earnings and Free Cash Flows (pg. 2.1)
Operating Versus Financial Activities (pg. 2.4)
Formalizing the Relation between Free Cash Flows and Accounting Numbers (pg. 2.7)
Demonstrations of the Relation between Free Cash Flows and Accounting Numbers (pg. 2.10)
The Statement of Cash Flows (pg. 2.12)
Summary (pg. 2.13)
Appendix 2A: Financial Statement Articulation and Free Cash Flows (pg. 2.13)
Articulation of Financial Statements (pg. 2.13)
Connection to Free Cash Flows via Reformulation (pg. 2.14)
Questions (pg. 2.15)
Exercises (pg. 2.15)
Continuing Examples (pg. 2.17)
Chapter Three: Reformulation to Identify Operating Activities (pg. 3.1)
Separation of Operating and Financial Activities (pg. 3.1)
The Starting Point: Identifying Operating Income and Assets, NOPAT and NOA (pg. 3.2)
Identifying Net Operating Assets, NOA (pg. 3.5)
Classifying Balance Sheet Items as Operating or Financial (pg. 3.7)
The Equity Section of the Balance Sheet (pg. 3.10)
Identifying Net Operating Profitability after Tax, NOPAT (pg. 3.12)
Deciding if Income Items are Operating or Financial (pg. 3.13)
Financial Statement Linkages (pg. 3.18)
Summary (pg. 3.19)
Appendix 3A: A Detailed Example of Effects of Classification as Operating versus Financial Activitie (pg. 3.19)
Introduction (pg. 3.20)
Classification as Enterprise Operations versus Financial Activities (pg. 3.20)
Calculation of Enterprise Operating Free Cash Flow (FCF) (pg. 3.21)
Detailed Numerical Example of Effects of Classification of Financial Assets as Enterprise Operations (pg. 3.23)
Deciding between the Mingled and Separated Approaches to Classification (pg. 3.29)
Appendix Summary (pg. 3.30)
Appendix References (pg. 3.31)
Questions (pg. 3.31)
Exercises (pg. 3.32)
Continuing Examples (pg. 3.39)
Chapter Four: Use of Additional Information to Enhance Reformulation (pg. 4.1)
Additional Information Related to General Mills’ Balance Sheet (pg. 4.4)
Information on Pension and Other Postretirement Benefits (pg. 4.7)
Additional Information Related to General Mills’ Income Statement (pg. 4.8)
More Information on Pension and Other Postretirement Benefits (pg. 4.9)
Appropriate Tax Rate Assumption for Reformulating General Mills (pg. 4.10)
Summary (pg. 4.11)
Questions (pg. 4.22)
Exercises (pg. 4.22)
Continuing Examples (pg. 4.25)
Chapter Five: Adjusting Accounting Information (pg. 5.1)
The Effect of Accounting Method Choices on Valuation Models (pg. 5.1)
Adjustment A: Inventory Method (pg. 5.3)
Example 1: ConocoPhillips and HollyFrontier (pg. 5.3)
Example 2: General Mills (pg. 5.5)
Adjustment B: Operating Leases (pg. 5.6)
Classification of Leases and the Financial Statement Effects (pg. 5.6)
The Economics of Leases (pg. 5.7)
Determining the Lease Standard Used (pg. 5.8)
Example 1: Operating Lease Adjustments for Delta Air Lines (DAL) (pg. 5.9)
Example 2: General Mills (pg. 5.13)
Adjustment C: Special-Purpose Entities (pg. 5.16)
Adjustment D: Share-Based Compensation (pg. 5.18)
The Economics and Accounting of SBC (pg. 5.20)
Calculating the Adjustments Necessary for SBC (pg. 5.23)
Summary of SBC Adjustments (pg. 5.25)
Reformulation Updated for Additional Information and Adjustments (pg. 5.26)
Summary (pg. 5.30)
Questions (pg. 5.30)
Exercises (pg. 5.31)
Continuing Examples (pg. 5.33)
Chapter Six: Analysis of Enterprise Operations (pg. 6.1)
Evaluating Profitability of Operations (pg. 6.1)
Calculating Return on Net Operating Assets (pg. 6.2)
Disaggregating Return on Net Operating Assets (pg. 6.4)
Operating Profit Margin (pg. 6.4)
Operating Asset Turnover (pg. 6.6)
Trade-Off between Operating Profit Margin and Asset Turnover (pg. 6.7)
Evaluating Financial Activities (pg. 6.8)
Detailed Analysis of Operating Profit Margin (pg. 6.9)
Detailed Analysis of Operating Asset Turnover (pg. 6.10)
Understanding Profitability by Examining Other Companies (pg. 6.13)
The Mapping from Return on Net Operating Assets to Return on Equity (pg. 6.15)
Advantages and Disadvantages of Equity Versus Debt Financing (pg. 6.18)
Summary (pg. 6.18)
Appendix 6A: Informed Ratio Analysis (pg. 6.19)
Quick Ratio (pg. 6.19)
Daily Cash Expenditures (pg. 6.19)
Questions (pg. 6.20)
Exercises (pg. 6.21)
Continuing Examples (pg. 6.24)
Chapter Seven: Full-Information Forecasting for Valuation (pg. 7.1)
Overview of the Forecasting Process (pg. 7.1)
The Roles of Sales Growth, PM, and ATO (pg. 7.3)
Parsimonious Forecasting (pg. 7.3)
Compiling Parsimonious Forecasts (pg. 7.7)
Introduction to Industry Analysis (pg. 7.8)
Moving from Parsimonious to Full-Information Forecasting (pg. 7.8)
Full-Information Forecasts of Sales Growth (pg. 7.9)
Full-Information Forecasts of Operating Profit Margin (pg. 7.14)
Full-Information Forecasts of Operating Asset Turnover (pg. 7.17)
Preparing for Valuation (pg. 7.20)
Suspect Accounting (pg. 7.21)
Summary (pg. 7.23)
Questions (pg. 7.23)
Exercises (pg. 7.24)
Continuing Examples (pg. 7.27)
Chapter Eight: Market Multiple Valuation (pg. 8.1)
Use of Accounting Data in Market Multiples (pg. 8.1)
Calculating Market Multiples (pg. 8.3)
Steps to Using Market Multiples (pg. 8.3)
Implementing the Multiples Method for Valuing General Mills (pg. 8.6)
Valuation Using an NOA Multiple (pg. 8.7)
Valuation Using a Book Value Multiple (pg. 8.8)
Price-to-Earnings Ratios Observed in Practice (pg. 8.9)
Valuation Using a NOPAT Multiple (pg. 8.10)
Valuation Using a Net Income Multiple (pg. 8.12)
Valuation Using Other Multiples (pg. 8.13)
Valuation Using Operating Forward Earnings and PEG Multiples (pg. 8.13)
Valuation Using Other Multiples, including Sales Multiples or Industry-Based Multiples (pg. 8.14)
Valuation Using a Sales Multiple (pg. 8.15)
Valuation Using the Ratio of (Price − Book) to R&D (pg. 8.15)
Consideration of EBITDA Multiples (pg. 8.16)
Combining Estimates from Differing Multiples (pg. 8.17)
The Product of a Multiples Valuation (pg. 8.18)
Perspective on Valuation Multiples and Fundamental Analysis (pg. 8.18)
Summary (pg. 8.19)
Questions (pg. 8.20)
Exercises (pg. 8.20)
Continuing Examples (pg. 8.21)
Chapter Nine: Cost of Capital for Operations and Equity (pg. 9.1)
Estimating the Cost of Capital (pg. 9.2)
Calculation of the Weighted Average Cost of Capital for Operations (pg. 9.3)
Diversifiable and Non-Diversifiable Risk (pg. 9.4)
Estimating Cost of Equity Capital Using the Capital Asset Pricing Model (pg. 9.5)
Estimating the Cost of Equity Capital Using a Multifactor Model (pg. 9.6)
Cost of Debt Capital (pg. 9.8)
Estimating the Cost of Debt Capital (pg. 9.9)
Computing the Weighted Average Cost of Capital for Operations (pg. 9.11)
Summary (pg. 9.13)
Appendix 9A: Estimating the Cost of Equity Capital (pg. 9.14)
Questions (pg. 9.21)
Exercises (pg. 9.21)
Continuing Examples (pg. 9.23)
Chapter Ten: Valuation Using Forecasts of Cash Flows (pg. 10.1)
Valuation of a Savings Account and Illustration of the Concept of Time-Value of Money (pg. 10.2)
Cash Flow-Based Valuation of a Finite-Life Project (pg. 10.4)
The Free Cash Flow Valuation Model (pg. 10.6)
Forecasts of Free Cash Flows from Operations for General Mills (pg. 10.6)
The Use of Continuing Values in the Free Cash Flow Model (pg. 10.8)
Free Cash Flow Valuation of General Mills’ Enterprise Operations (pg. 10.11)
Summary (pg. 10.14)
Questions (pg. 10.14)
Exercises (pg. 10.14)
Continuing Examples (pg. 10.15)
Chapter Eleven: Valuation Using the Residual Operating Income Valuation Model (pg. 11.1)
Moving from Cash Flows to Accounting Data in Valuing a Finite-Life Project (pg. 11.1)
Derivation of the Residual Operating Income Valuation Model (pg. 11.3)
Project Valuation Using the Residual Operating Income Model (pg. 11.5)
Effects of Accounting Choices on the Residual Operating Income Model (pg. 11.6)
Determining Value Based on the Forecasts of Operations for General Mills (pg. 11.8)
The Use of Continuing Values in the Residual Operating Income Valuation Model (pg. 11.9)
Residual Operating Income Valuation of General Mills’ Operations (pg. 11.11)
Summary (pg. 11.13)
Questions (pg. 11.13)
Exercises (pg. 11.13)
Continuing Examples (pg. 11.14)
Chapter Twelve: Valuation Using the Abnormal Operating Income Growth Model (pg. 12.1)
Moving from Cash Flows to Accounting Data in Valuing a Finite-Life Project (pg. 12.1)
Derivation of the Abnormal Operating Income Growth Valuation Model (pg. 12.3)
The Role of Cum-Free-Cash-Flow Earnings in the Abnormal Operating Income Growth Valuation Model (pg. 12.4)
Project Valuation Using the Abnormal Operating Income Growth Model (pg. 12.5)
Effects of Accounting Choices on the Abnormal Operating Income Growth Model (pg. 12.7)
Determining Value Based on the Forecasts of Operations for General Mills (pg. 12.9)
The Use of Continuing Values in the Abnormal Operating Income Growth Valuation Model (pg. 12.10)
Abnormal Operating Income Growth Valuation of General Mills’ Operations Using Forecasts (pg. 12.13)
Summary (pg. 12.14)
Questions (pg. 12.14)
Exercises (pg. 12.15)
Continuing Examples (pg. 12.16)
Chapter Thirteen: Valuation of Equity (pg. 13.1)
Calculating the Value of Equity From the Value Of Operations (pg. 13.1)
Valuation Formulas for Equity (pg. 13.5)
Choosing between an Operations or Equity Valuation Model (pg. 13.7)
Using Analysts’ Forecasts as a Shortcut to Valuation (pg. 13.8)
Midyear Adjustment (pg. 13.11)
Adjusting Valuation to the Valuation Date (pg. 13.11)
Demonstration of Steps for Comparison of Value Estimate to Market Price (pg. 13.12)
Sensitivity Analysis and Valuation (pg. 13.14)
Summary (pg. 13.15)
Questions (pg. 13.15)
Exercises (pg. 13.16)
Continuing Examples (pg. 13.17)
Chapter Fourteen: Steady State and Forecast Horizon (pg. 14.1)
Defining Steady State (pg. 14.1)
Implementation of Steady State (pg. 14.3)
Evaluating Valuation Models (pg. 14.4)
Choice of Steady State Growth (pg. 14.6)
Tying Market Multiples to Valuation Models (pg. 14.9)
Summary (pg. 14.10)
Questions (pg. 14.11)
Exercises (pg. 14.11)
Continuing Examples (pg. 14.12)
Quick Reference Guide (pg. QRG.1)
Chapter 1 (pg. QRG.1)
Chapter 2 (pg. QRG.2)
Chapter 3 (pg. QRG.3)
Chapter 4 (pg. QRG.4)
Chapter 5 (pg. QRG.4)
Chapter 6 (pg. QRG.5)
Chapter 7 (pg. QRG.6)
Chapter 8 (pg. QRG.6)
Chapter 9 (pg. QRG.7)
Chapter 10 (pg. QRG.8)
Chapter 11 (pg. QRG.9)
Chapter 12 (pg. QRG.10)
Chapter 13 (pg. QRG.12)
Chapter 14 (pg. QRG.13)
Index (pg. I.1)
Gregory A. Sommers

Gregory A. Sommers

Gregory A. Sommers is Director of the Master of Science in Accounting program and Professor of Practice in Accounting in the Edwin L. Cox School of Business at Southern Methodist University.

He holds an undergraduate degree in accounting from Fresno Pacific University and a PhD in Accounting and Management Information Systems from The Ohio State University. Professor Sommers is a Certified Public Accountant who practiced in and continues to be licensed in California.

Professor Sommers’ research focuses on market-based empirical studies of the relations between currently available accounting data, expectations of future accounting data, expected cost of capital and valuation. His research has been published in Journal of Accounting Research and Journal of Business, Finance, and Accounting. Professor Sommers serves on the editorial board of Review of Accounting Studies.

Professor Sommers teaches financial accounting, including international accounting, in the undergraduate and graduate programs as well as in executive education at Southern Methodist University. He has taught financial statement analysis and valuation for over ten years at the graduate level and his teaching materials were previously utilized as resources for another textbook in this area. Professor Sommers’ teaching has earned him numerous awards including Outstanding MBA Teaching as well as recognition from student organizations.

Professor Sommers is an active member of the American Accounting Association and its Financial Accounting and Reporting Section. He has served as chairman of the Trueblood Seminar for Professors sponsored by Deloitte. Professor Sommers is recognized as an expert in the areas of financial reporting, financial analysis, estimation of cost of capital, and business valuation.


Peter D. Easton

Peter D. Easton

Peter D. Easton is an expert in accounting and valuation and holds the Notre Dame Alumni Chair in Accountancy in the Mendoza College of Business.

Professor Easton’s expertise is widely recognized by the academic research community and by the legal community. Professor Easton frequently serves as a consultant on accounting and valuation issues in federal and state courts.

Professor Easton holds undergraduate degrees from the University of Adelaide and the University of South Australia. He holds a graduate degree from the University of New England and a PhD in Business Administration (majoring in accounting and finance) from the University of California, Berkeley.

Professor Easton’s research on corporate valuation has been published in the Journal of Accounting and Economics, Journal of Accounting Research, The Accounting Review, Contemporary Accounting Research, Review of Accounting Studies, and Journal of Business Finance and Accounting.

Professor Easton has served as an associate editor for 11 leading accounting journals and he is currently an associate editor for the Journal of Accounting Research, Journal of Business Finance and Accounting, and Journal of Accounting, Auditing, and Finance. He is an editor of the Review of Accounting Studies.

Professor Easton has held appointments at the University of Chicago, the University of California at Berkeley, Ohio State University, Macquarie University, the Australian Graduate School of Management, the University of Melbourne, Tilburg University, National University of Singapore, Seoul National University, and Nyenrode University. He is the recipient of numerous awards for excellence in teaching and in research. Professor Easton regularly teaches accounting analysis and security valuation to MBAs. In addition, Professor Easton has taught managerial accounting at the graduate level.


Phil D. Drake

Phil D. Drake

Phil D. Drake is a Clinical Professor of Accountancy at the W. P Carey School of Business at Arizona State University where he is the Faculty Director for the Master of Accountancy and the Master of Taxation programs.

He holds an undergraduate degree in Accounting from the University of Alabama and a PhD in Accounting and Management Information Systems from The Ohio State University. Professor Drake is a Certified Public Accounting (Texas) and a Certified Financial Planner, CFP®. Professor Drake has held appointments at Southern Methodist University, the University of Illinois (visiting), and Thunderbird. His past professional experiences include being the Chief Financial Officer of Natures One, Inc, a specialty medical foods company, and the Chief Investment Officer of Inspired Capitalworks, a boutique wealth management firm. Professor Drake has published in Financial Management, The Journal of Portfolio Management, and the Journal of Risk Management in Financial Institutions along with several case studies and book chapters. With nearly twenty years teaching financial statement analysis at the graduate level, Professor Drake has won numerous teaching and curriculum development awards including the prestigious John W. Teets Award for Outstanding Graduate Teaching Award.


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