Efnisyfirlit

• Cover
• Title page
• Copyright
• Brief contents
• Preface
• Key features
• About the authors
• Part 1 Introduction
• Chapter 1 The financial manager and the company
• Chapter preview
• 1.1 The role of the financial manager
• Stakeholders
• It’s all about cash flows
• Three fundamental decisions in financial management
• 1.2 Forms of business organisation
• Sole traders
• Partnerships
• Companies
• 1.3 Managing the financial function
• Organisation structure
• Positions reporting to the CFO
• External auditors
• The audit committee
• 1.4 The goal of the company
• What should management maximise?
• Why not maximise profits?
• Maximise the value of the company’s shares
• Can management decisions affect share prices?
• 1.5 Agency conflicts: separation of ownership and control
• Ownership and control
• Agency relationships
• Do managers really want to maximise share price?
• Aligning the interests of management and shareholders
• 1.6 The importance of ethics in business
• Business ethics
• Are business ethics different from everyday ethics?
• Types of ethical conflicts in business
• The importance of an ethical business culture
• Serious consequences
• Concept check
• Summary
• Key terms
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Chapter 2 The financial environment and the level of interest rates
• Chapter preview
• 2.1 The financial system
• The financial system at work
• How funds flow through the financial system
• 2.2 Direct financing
• A direct financing transaction (without using the market)
• Direct financing (using the market)
• 2.3 Types of financial markets
• Primary and secondary markets
• Exchanges and over-the-counter markets
• Money and capital markets
• Public and private markets
• Futures and options markets
• 2.4 Financial institutions and indirect financing
• Indirect market transactions
• Financial institutions and their services
• Companies and the financial system
• 2.5 The determinants of interest rate levels
• The real rate of interest
• Loan contracts and inflation
• The Fisher equation and inflation
• Cyclical and long-term trends in interest rates
• Planning ahead by financial managers
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Part 2 Valuation of future cash flows and risk
• Chapter 3 The time value of money
• Chapter preview
• 3.1 The time value of money
• Consuming today or tomorrow?
• Time lines as aids to problem solving
• The financial calculator
• 3.2 Future value and compounding
• Single-period investment
• Two-period investment
• The future value equation
• The future value factor
• Applying the future value formula
• Calculator tips for future value problems
• 3.3 Present value and discounting
• Single-period investment
• Multiple-period investment
• The present value equation
• Future and present value equations are the same
• Applying the present value formula
• The relationship between time, the discount rate and present value
• Calculator tips for present value problems
• Future value versus present value
• 3.4 Additional concepts and applications
• Finding the interest rate
• Finding how many periods it takes an investment to grow to a certain amount
• Compound growth rates
• Concluding comments
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Chapter 4 Discounted cash flows and valuation
• Chapter preview
• 4.1 Multiple cash flows
• Future value of multiple cash flows
• Present value of multiple cash flows
• 4.2 Level cash flows: annuities and perpetuities
• Present value of an annuity
• Future value of an annuity
• 4.3 Perpetuities
• Annuities due
• 4.4 The effective annual interest rate
• Why the confusion?
• Calculating the effective annual interest rate
• Comparing interest rates
• Consumer protection acts and interest rate disclosure
• The appropriate interest rate factor
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Appendix: Deriving the formula for the present value of an ordinary annuity
• Endnotes
• Acknowledgements
• Chapter 5 Risk and return
• Chapter preview
• 5.1 Risk and return
• 5.2 Quantitative measures of return
• Holding period returns
• 5.3 Expected returns
• 5.4 The variance and standard deviation as measures of risk
• Calculating the variance and standard deviation
• Interpreting the variance and standard deviation
• Historical market performance
• 5.5 Risk and diversification
• Single-asset portfolios
• Portfolios with more than one asset
• The limits of diversification
• 5.6 Systematic risk
• Why systematic risk is all that matters
• Measuring systematic risk
• Compensation for bearing systematic risk
• 5.7 The Capital Asset Pricing Model
• The Security Market Line
• The Capital Asset Pricing Model and portfolio returns
• A word of caution for the CAPM
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Chapter 6 Bond valuation and the structure of interest rates
• Chapter preview
• 6.1 Capital market efficiency
• Efficient market hypotheses
• 6.2 Corporate bonds
• Market for corporate bonds
• Bond price information
• Types of corporate bonds
• 6.3 Bond valuation
• The bond valuation formula
• Calculator tip: bond valuation problems
• Par, premium and discount bonds
• Semiannual compounding
• Zero coupon bonds
• 6.4 Bond yields
• Yield to maturity
• Effective annual yield
• Realised yield
• 6.5 Interest rate risk
• Bond theorems
• Bond theorem applications
• 6.6 The structure of interest rates
• Marketability
• Call provision
• Default risk
• 6.7 The term structure of interest rates
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Chapter 7 Share valuation
• Chapter preview
• 7.1 The market for shares
• Secondary markets
• Secondary markets and their efficiency
• Reading the share market listings
• 7.2 Ordinary and preference shares
• Preference shares: debt or equity?
• Ordinary share valuation
• A one-period model
• A perpetuity model
• 7.3 The general dividend valuation model
• The growth share pricing paradox
• 7.4 Share valuation: some simplifying assumptions
• Zero growth dividend model
• Constant growth dividend model
• Calculating future share prices
• The relationship between R and g
• Mixed (supernormal) growth dividend model
• 7.5 Valuing preference shares
• Preference shares with a fixed maturity
• Perpetuity preference shares
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Part 3 Capital budgeting decisions
• Chapter 8 The fundamentals of capital budgeting
• Chapter preview
• 8.1 An introduction to capital budgeting
• The importance of capital budgeting
• The capital budgeting process
• Sources of information
• Classification of investment projects
• Basic capital budgeting terms
• 8.2 Net present value
• Valuation of real assets
• NPV — the basic concept
• NPV and value creation
• Framework for calculating NPV
• Net present value technique
• Concluding comments on NPV
• 8.3 The payback period
• Calculating the payback period
• How the payback period performs
• Discounted payback period
• Evaluating the payback rule
• 8.4 The accounting rate of return
• 8.5 Internal rate of return
• Calculating the IRR
• When the IRR and NPV methods agree — independent projects and conventional cash flows
• When the IRR and NPV methods disagree — mutually exclusive projects and unconventional cash flows
• Modified internal rate of return (MIRR)
• IRR versus NPV: a final comment
• 8.6 Capital budgeting in practice
• Practitioners’ methods of choice
• Ongoing and postaudit reviews
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Appendix: An example using a financial calculator for capital budgeting calculations
• Endnotes
• Acknowledgements
• Chapter 9 Cash flows and capital budgeting
• Chapter preview
• 9.1 Calculating project cash flows
• Cash flow versus accounting earnings
• Incremental after-tax free cash flows
• The FCF calculation
• Cash flows from operations
• Cash flows associated with investments
• The FCF calculation: an example
• 9.2 Estimating cash flows in practice
• Five general rules for incremental after-tax free cash flow calculations
• Nominal versus real cash flows
• Tax rates and depreciation
• Calculating the terminal-year FCF
• Expected cash flows
• 9.3 Projects with different lives
• 9.4 When to harvest an asset
• When to replace an existing asset
• The cost of using an existing asset
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Chapter 10 Evaluating project economics and capital rationing
• Chapter preview
• 10.1 Variable costs, fixed costs and project risk
• Cost structure and sensitivity of EBITDA to revenue changes
• Cost structure and sensitivity of EBIT to revenue changes
• 10.2 Calculating operating leverage
• Degree of pre-tax cash flow operating leverage
• Degree of accounting operating leverage
• 10.3 Break-even analysis
• Pre-tax operating cash flow break-even
• Accounting break-even
• 10.4 Risk analysis
• Sensitivity analysis
• Scenario analysis
• Simulation analysis
• Decision tree analysis
• 10.5 Investment decisions with capital rationing
• Capital rationing in a single period
• Capital rationing across multiple periods
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Chapter 11 The cost of capital
• Chapter preview
• 11.1 The company’s overall cost of capital
• The finance balance sheet
• How companies estimate their cost of capital
• 11.2 The cost of debt
• Key concepts for estimating the cost of debt
• Estimating the current cost of a bond or an outstanding loan
• Tax and the cost of debt
• Estimating the cost of debt for a company
• 11.3 The cost of equity
• Ordinary shares
• Preference shares
• 11.4 Using the WACC in practice
• Calculating WACC: an example
• Limitations of WACC as a discount rate for evaluating projects
• Alternatives to using WACC for evaluating projects
• Consistency of the WACC and Dividend Discount Models
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Sample test problems
• Endnotes
• Acknowledgements
• Part 4 Working capital management and financing decisions
• Chapter 12 Working capital management
• Chapter preview
• 12.1 Working capital basics
• Working capital terms and concepts
• Working capital accounts and trade-offs
• 12.2 The operating and cash conversion cycles
• Operating cycle
• Cash conversion cycle
• 12.3 Working capital management strategies
• Flexible current asset management strategy
• Restrictive current asset management strategy
• The working capital trade-off
• 12.4 Accounts receivable
• Terms of sale
• Ageing accounts receivable
• 12.5 Inventory management
• Economic order quantity
• Just-in-time inventory management
• 12.6 Cash management and budgeting
• Reasons for holding cash
• Cash collection
• 12.7 Financing working capital
• Strategies for financing working capital
• Financing working capital in practice
• Sources of short-term financing
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Chapter 13 How companies raise capital
• Chapter preview
• 13.1 Bootstrapping
• How new businesses get started
• Initial funding of the company
• 13.2 Venture capital
• The venture capital industry
• Why venture capital funding is different
• The venture capital funding cycle
• The cost of venture capital funding
• 13.3 Initial public offering
• Advantages and disadvantages of going public
• Investment banking services
• Origination
• Underwriting
• The proceeds
• 13.4 IPO pricing and cost
• The underpricing debate
• IPOs are consistently underpriced
• The cost of an IPO
• 13.5 Open offers by a public company
• The cost of an open public offer
• 13.6 Private markets and bank loans
• Private versus public markets
• Private placements
• Private equity companies
• 13.7 Commercial bank lending
• Business overdraft
• Bank term loans
• The loan pricing model
• Concluding comments on funding the company
• Concept check
• Summary
• Key terms
• Summary of key equation
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Chapter 14 Capital structure policy
• Chapter preview
• 14.1 Capital structure and company value
• The optimal capital structure
• The Modigliani and Miller propositions
• 14.2 The benefits and costs of using debt
• The benefits of debt
• The costs of debt
• 14.3 Two theories of capital structure
• The trade-off theory
• The pecking order theory
• The empirical evidence
• 14.4 Practical considerations in choosing a capital structure
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Chapter 15 Dividends and dividend policy
• Chapter preview
• 15.1 Dividends
• Types of dividends
• Dividends and taxation
• The dividend payment process
• 15.2 Share buy-backs
• How share buy-backs differ from dividends
• How a share buy-back happens
• 15.3 Dividend policy and company value
• Benefits and costs of dividends
• Share price reactions to dividend announcements
• Dividends versus share buy-backs
• 15.4 Bonus share issues and share splits
• Bonus share issues
• Share splits
• Reasons for bonus share issues and splits
• 15.5 Setting a dividend policy
• What managers tell us
• Practical considerations in setting a dividend policy
• Concept check
• Summary
• Key terms
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Part 5 Business formation, valuation and financial planning
• Chapter 16 Business formation, growth and valuation
• Chapter preview
• 16.1 Starting a business
• Making the decision to proceed
• Choosing the right organisational form
• Financial considerations
• 16.2 The role of the business plan
• Why business plans are important
• The key elements of a business plan
• 16.3 Valuing a business
• Fundamental business valuation principles
• Business valuation approaches
• 16.4 Important issues in valuation
• Public versus private companies
• Young (rapidly growing) versus mature companies
• Controlling interest versus non-controlling interest
• Key people
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Chapter 17 Strategic financial planning and forecasting
• Chapter preview
• 17.1 Financial planning
• The planning documents
• Concluding comments
• 17.2 Financial planning models
• The sales forecast
• Building a financial planning model
• A simple planning model
• 17.3 A better financial planning model
• Blackwell Sales Ltd
• The income statement
• The balance sheet
• The preliminary pro forma balance sheet
• The final pro forma balance sheet
• 17.4 Beyond the basic planning models
• Improving financial planning models
• 17.5 Managing and financing growth
• External funding needed
• A graphical view of growth
• The internal growth rate
• The sustainable growth rate
• Growth rates and profits
• Growth as a planning goal
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Part 6 Options and corporate finance and international decisions
• Chapter 18 Options and corporate finance
• Chapter preview
• 18.1 Financial options
• Call options
• Put options
• American, European and Bermudan options
• More on the shapes of option pay-off functions
• 18.2 Option valuation
• Limits on option values
• Variables that affect option values
• The binomial option pricing model
• Put-call parity
• Valuing options associated with financial securities issued by companies
• 18.3 Real options
• Options to defer investment
• Options to make follow-on investments
• Options to change operations
• Options to abandon projects
• 18.4 Agency costs
• Agency costs of debt
• Agency costs of equity
• 18.5 Options and risk management
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Chapter 19 International financial management
• Chapter preview
• 19.1 Introduction to international financial management
• Globalisation of the world economy
• The rise of multinational companies
• Factors affecting international financial management
• Goals of international financial management
• Basic principles remain the same
• 19.2 Foreign exchange markets
• Market structure and major participants
• Foreign exchange rates
• The equilibrium exchange rate
• Foreign currency quotations
• 19.3 International capital budgeting
• Determining cash flows
• Exchange rate risk
• Country risk
• The Barcelona example
• 19.4 Global money and capital markets
• The emergence of the Euromarkets
• The Eurocurrency market
• The Eurocredit market
• International bond markets
• 19.5 International banking
• Risks involved in international bank lending
• Eurocredit bank loans
• Concept check
• Summary
• Key terms
• Summary of key equations
• Self-study problems
• Critical thinking questions
• Questions and problems
• Endnotes
• Acknowledgements
• Appendix A Present value and future value tables
• Appendix B Solutions to self-study problems
• Chapter 1
• Chapter 2
• Chapter 3
• Chapter 4
• Chapter 5
• Chapter 6
• Chapter 7
• Chapter 8
• Chapter 9
• Chapter 10
• Chapter 11
• Chapter 12
• Chapter 13
• Chapter 14
• Chapter 15
• Chapter 16
• Chapter 17
• Chapter 18
• Chapter 19
• EULA