Description
Book SynopsisTable of Contents1 The Financial Manager and the Firm 1-1
1.1 The Role of the Financial Manager 1-2
1.2 Forms of Business Organization 1-7
1.3 Managing the Financial Function 1-10
1.4 The Goal of the Firm 1-13
1.5 Agency Conflicts: Separation of Ownership and Control 1-16
1.6 The Importance of Ethics in Business 1-22
Summary of Learning Objectives/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
Ethics Case: Incentives and Ethics: Cross-Selling at Wells Fargo 1-28
2 The Financial System and the Level of Interest Rates 2-1
2.1 The Financial System 2-2
2.2 Direct Financing 2-5
2.3 Types of Financial Markets 2-7
2.4 Market Efficiency 2-10
2.5 Financial Institutions and Indirect Financing 2-12
2.6 The Determinants of Interest Rate Levels 2-16
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
3 Financial Statements, Cash Flows, and Taxes 3-1
3.1 Financial Statements and Accounting Principles 3-2
3.2 The Balance Sheet 3-5
3.4 The Income Statement and the Statement of Retained Earnings 3-14
3.5 The Statement of Cash Flows 3-17
3.6 Tying Together the Financial Statements 3-20
3.7 Cash Flow to Investors 3-22
3.8 Federal Income Tax 3-27
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
4 Analyzing Financial Statements 4-1
4.1 Background for Financial Statement Analysis 4-2
4.2 Common-Size Financial Statements 4-4
4.3 Financial Ratios and Firm Performance 4-7
4.4 The Dupont System: A Diagnostic Tool 4-22
4.5 Selecting a Benchmark 4-27
4.6 Using Financial Ratios 4-30
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
Ethics Case: A Sad Tale: The Demise of Arthur Andersen 4-45
5 The Time Value of Money 5-1
5.1 The Time Value of Money 5-2
5.2 Future Value and Compounding 5-4
5.3 Present Value and Discounting 5-16
5.4 Additional Concepts and Applications 5-22
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
6 Discounted Cash Flows and Valuation 6-1
6.1 Multiple Cash Flows 6-2
6.2 Level Cash Flows: Annuities 6-9
6.3 Level Cash Flows: Perpetuities 6-22
6.4 Cash Flows That Grow at a Constant Rate 6-24
6.5 The Effective Annual Interest Rate 6-26
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems/Appendix: Deriving the Formula for the Present Value of an Ordinary Annuity/Problem
Ethics Case: America’s Ailing Drug Prices 6-38
7 Risk and Return 7-1
7.1 Risk and Return 7-2
7.2 Holding Period Returns 7-3
7.3 Expected Returns 7-4
7.4 Variance and Standard Deviation as Measures of Risk 7-8
7.5 Arithmetic Average and Geometric (Compounded) Average Returns 7-15
7.6 Risk and Diversification 7-17
7.7 Systematic Risk 7-26
7.8 The Capital Asset Pricing Model 7-31
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
Ethics Case: Pay for Performance or Just More Pay? The Conflicting Case for CEO Pay 7-41
8 Bond Valuation and the Structure of Interest Rates 8-1
8.1 Corporate Bonds 8-2
8.2 Bond Valuation 8-4
8.3 Bond Yields 8-12
8.4 Interest Rate Risk 8-15
8.5 The Determinants of Corporate Borrowing Costs 8-18
8.6 The Term Structure of Interest Rates 8-21
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
Ethics Case: The Subprime Mortgage Market Meltdown:How Did It Happen? 8-29
9 Stock Valuation 9-1
9.1 The Market for Stocks 9-2
9.2 Common and Preferred Stock 9-7
9.3 Common Stock Valuation 9-8
9.4 The General Dividend-Valuation Model 9-11
9.5 Stock Valuation: Some Simplifying Assumptions 9-12
9.6 The Relation between R and g 9-17 Mixed (Supernormal) Growth Dividend Model 9-18
9.7 Valuing Preferred Stock 9-21
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
Ethics Case: Insider Trading: Have I Got a Stock Tip for You! 9-29
10 The Fundamentals of Capital Budgeting 10-1
10.1 An Introduction to Capital Budgeting 10-2
10.2 Net Present Value 10-6
10.3 The Payback Period 10-14
10.4 The Accounting Rate of Return 10-18
10.5 Internal Rate of Return 10-19
10.6 Investment Decisions with Capital Rationing 10-29
10.7 Capital Budgeting in Practice 10-33
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
Ethics Case: Going Green: Can Automakers Invest in Environmental Solutions? 10-45
11 Cash Flows and Capital Budgeting 11-1
11.1 Calculating Project Cash Flows 11-2
11.2 Estimating Cash Flows in Practice 11-10
11.3 Forecasting Free Cash Flows 11-23
11.4 Special Cases 11-25
11.5 Harvesting an Asset 11-29
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
Ethics Case: Unilever’s Sustainable Living Plan 11-37
12 Evaluating Project Economics 12-1
12.1 Variable Costs, Fixed Costs, and Project Risk 12-2
12.2 Calculating Operating Leverage 12-9
12.3 Break-Even Analysis 12-11
12.4 The Economic Break-Even Point 12-15
12.5 Risk Analysis 12-19
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
13 The Cost of Capital 13-1
13.1 The Firm’s Overall Cost of Capital 13-2
13.2 The Cost of Debt 13-7
13.3 The Cost of Equity 13-13
13.4 Using the WACC in Practice 13-21
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
14 Working Capital Management 14-1
14.1 Working Capital Basics 14-2
14.2 The Operating and Cash Conversion Cycles 14-5
14.3 Working Capital Management Strategies 14-10
14.4 Accounts Receivable 14-13
14.5 Inventory Management 14-16
14.6 Cash Management and Budgeting 14-18
14.7 Financing Working Capital 14-20
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
15 How Firms Raise Capital 15-1
15.1 Bootstrapping 15-2
15.2 Venture Capital 15-4
15.3 Initial Public Offering 15-9
15.4 IPO Pricing and Cost 15-15
15.5 General Cash Offer by a Public Company 15-19
15.6 Private Markets 15-22
15.7 Commercial Bank Loans 15-25
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
16 Capital Structure Policy 16-1
16.1 Capital Structure and Firm Value 16-2
16.2 The Benefits and Costs of Using Debt 16-11
16.3 Two Theories of Capital Structure 16-24
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
Appendix: Leasing 16-33
Two Types of Leases 16-33
Motivations for Leasing 16-34
Conflicts between Lessees and Lessors 16-37
Evaluating a Leasing Opportunity 16-39
Summary of Learning Objective/Self-Study Problem/Solution to Self-Study Problem/Discussion Questions/Questions and Problems
17 Dividends, Stock Repurchases, and Payout Policy 17-1
17.1 Dividends 17-2
17.2 Stock Repurchases 17-7
17.3 Dividends and Firm Value 17-10
17.4 Stock Dividends and Stock Splits 17-16
17.5 Setting a Dividend Payout 17-19
Summary of Learning Objectives/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
18 Business Formation, Growth, and Valuation 18-1
18.1 Starting a Business 18-2
18.2 The Role of the Business Plan 18-10
18.3 Valuing a Business 18-11
18.4 Important Issues in Valuation 18-26
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
19 Financial Planning and Managing Growth 19-1
19.1 Financial Planning 19-2
19.2 Financial Planning Models 19-5
19.3 A Better Financial Planning Model 19-11
19.4 Beyond the Basic Planning Models 19-18
19.5 Managing and Financing Growth 19-20
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
20 Options and Corporate Finance 20-1
20.1 Financial Options 20-2
20.2 Option Valuation 20-6
20.3 Real Options 20-15
20.4 Agency Costs 20-19
20.5 Options and Risk Management 20-22
Summary of Learning Objectives/Summary of Key Equations/Self-Study Problems/Solutions to Self-Study Problems/Discussion Questions/Questions and Problems/Sample Test Problems
21 International Financial Management 21-1
21.1 Introduction to International Financial Management 21-2
21.2 Foreign Exchange Markets 21-7
21.3 International Capital Budgeting 21-16
21.4 Global Money and Capital Markets 21-21
21.5 International Banking 21-24
Appendix A Future Value and Present Value Tables A-1
Appendix B Solutions to Odd Problems B-1
AppendixC The 2017 Tax Cuts and Jobs Act: Implications for Cash Flow to Investors, the Cost of Capital, and Capital Structure C-1
Glossary G-1
Subject Index I-1
Company Index I-19
