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Self study cpe
The ROE Model and Firm Valuation


CPE Processing Fee$60.00
Webinar TranscriptionN/A
Presentation Length Hour(s)2.0 hours
CPE Credits 2.0 hours
Subject Area 2.0 - Finance
CE Credits 0.0 hours
Course LevelBasic
Instructional MethodQAS Self-Study
Advance PreparationNone
Recorded DateMarch 28, 2022
Date OfferedApril 10, 2024
Expiration DateApril 10, 2025
Course Description

In this course, Professor Pratt demonstrates how properly managing the key determinants of return on equity (ROE) increases the value of the firm.  He first provides a brief summary of the relevant features of time value of money with a special emphasis on internal rate of return, and then he demonstrates what it exactly means to create shareholder value. 

The ROE model is then introduced and fit into a value creation framework, followed by an intuitive and straightforward present value analysis that shows how improving ROE can drive up the value of the firm.  Professor Pratt then uses a spreadsheet, in which the model has been programmed, to conduct an analysis on the current market value of Best Buy, the well-known electronic equipment retailer. You will then be then guided through some sensitivity analysis designed to highlight which financial metrics are most important to driving up Best Buy’s market value. 

The overall theme of this course is that understanding this system provides a guide to identifying where management should focus its attention in its effort to increase the value of the firm, and due to their special understanding of financial statements, accountants are in an excellent position to take full advantage.

Learning Objective:

  • Describe how this valuation framework should be interpreted and used, which includes conducting sensitivity analysis on the model’s key inputs.


  • Time value of money

  • Value creation

  • Management decisions

  • Spreadsheet-based valuation model

  • Case study

Self-Study Course Instructions:


Download the course document(s) (below) and follow prompts contained in the document.


Download any course document(s) (below) which may include handouts, glossary, transcripts, etc. Follow any prompts contained in the documents to help you complete the course. Most documents are searchable.

Play the recording, noting the sectional guides indicating where topics on the agenda are covered and the prompts to pause video playback to respond to a review question (located below the video playback area). The timestamps for review questions are also noted below.

Upon completing the video and successfully answering all review questions, you will then take the final exam.

Prattedu theroemodelandfirmvaluation
Handout Materials
Presentation Slides
Additional Materials
Webinar Technical FAQs
Review Questions
Review Questions
QUESTION 1: 10:15 minutes
QUESTION 2: 17:45 minutes
QUESTION 3: 25:35 minutes
QUESTION 4: 31:00 minutes
QUESTION 5: 44:55 minutes
QUESTION 6: 59:35 minutes
Frequently Asked Questions
  • CPAacademy self-study courses are online.
  • The self-study format allows you to a) access the material online 24/7 and b) study at your own pace.
  • Per NASBA guidelines, you have one year from date of purchase to complete each program.
  • Complete your final exam at any time and get graded instantly. You can retake the exam at no additional charge (unlimited attempts).
  • Print your own certificate of completion on the spot upon passing the exam.
  • Grading policies: a) courses have a minimum passing score 70% b) test takers will not be provided feedback on failed exams.
  • Upon achieving a passing score, test takers will be notified of the correct answers to the questions missed.

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Jamie Pratt held the Alva L. Prickett Chair of Accounting at the Kelley School of Business at Indiana University in Bloomington, Indiana, for 10 years and in now holds the title of Emeritus faculty.  He received his doctorate in business from Indiana University in 1977, and has held faculty positions at the University of Washington (Seattle), the University of Zurich (Switzerland), Northwestern University and INSEAD (Fontainebleau, France), returning to Indiana in 1991.

Jamie’s research interests are in financial reporting and analysis, where he has published over 30 articles in the top academic research journals (including The Accounting Review, Journal of Accounting Research, Contemporary Accounting Research, Accounting, Organizations and Society, and Issues in Accounting Education), and he has taught courses in financial reporting and analysis at every level (introductory, intermediate, advanced) in every program (undergraduate, MBA, PhD).  He has received over 30 teaching awards and recognitions, and also taught executive education courses throughout the world.  Research and/or teaching recognitions have also come from the following organizations: American Accounting Association, American Taxation Association, Big 4 accounting firms (KPMG and PriceWaterhouseCoopers), Indiana Society of CPAs, the Universities of Manchester (England), Kwansei Gakuin (Japan) and Kentucky, and Business Week magazine.  His resume also includes two textbooks (one in its 11th edition), two computer-based interactive case platforms, a financial analysis case book, and several instructor guides that support these products. 

He is now CEO of PRATTedu (, which produces and delivers online video-based courses, primarily in the area of financial reporting and analysis.

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NASBA Approved (Sponsor Id#: 111889) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: 1685 S. Colorado Blvd, Suite #205, Denver, CO 80222

About Our Presenter

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PRATTedu is an accounting CPE credit provider that offers video-based financial accounting courses that anyone can use to gain knowledge of financial statements and financial analysis.