Debenhams Case Study

Debenhams Case Study

This course looks in detail at the Debenhams 2018 accounts and shows what conclusions investors should have drawn about the future of the business. These accounts are full of warning signals which would have given the astute analyst cause to avoid if not outright short the stock.

This course goes right through the financial accounts, looking at all the financial statements, from P&L to the audit report, in some detail, especially on the balance sheet. In fact we have covered many of the areas which tend to be neglected by investors notably the balance sheet and accounting policies in great detail and have spent less time on more conventional analysis like EBIT margins - you all know those already.

There will be many takeaways from this course, but lets flag three of the techniques employed by Steve Clapham when he was a hedge fund analyst. These three factors are typical of the practical knowledge gained from our courses, and they are techniques you won't find in any textbook:

• SAVE TIME: the three things that Steve looks for when he first opens the accounts, to avoid wasting time on a research project which is unlikely to be fruitful
• ISSUES: What Steve checks in the audit report
• DON'T OVERLOOK this element of the financial statements. A part of the accounts often missed by investors

This course is ideal for investors, analysts and portfolio managers who want to learn how to avoid trouble, to recognise warning signals, and most importantly to recognise earnings management. There are many examples here of how CFOs and Finance Directors under pressure will turn to accounting trickery to present the company in a more favourable light. Debenhams looks in our assessment to have been using multiple methods of accounting trickery to boost its results.

Enjoy the course!