BOOK
Foundations of Finance, Global Edition
Arthur J. Keown | John D. Martin | J. William Petty
(2016)
Additional Information
Book Details
Abstract
For undergraduate courses in Corporate Finance.
The Five Key Principles for the Foundations of Finance
Foundations of Finance retains its foundational approach to the key concepts of finance, bolstered by real-world vignettes, cases, and problem exercises. Utilizing five principles, which are presented at the beginning of the book and applied throughout, the authors introduce a multi-step approach to financial problem solving that appeals to students’ at all levels, math and numerical skills. As in previous editions, the Ninth Edition focuses on valuation and opens every chapter with a vignette based on financial decisions faced by contemporary, real-world companies and firms. Other highly useful features include mini cases, cautionary tales, lists of key terms, and a discussion of ethics. Revised and updated, the newest edition includes new lecture videos, financial thinking, user feedback, and lessons from the recent economic crisis.
MyFinanceLab™not included. Students, if MyFinanceLab is a recommended/mandatory component of the course, please ask your instructor for the correct ISBN and course ID. MyFinanceLab should only be purchased when required by an instructor. Instructors, contact your Pearson representative for more information.
MyFinanceLab is an online homework, tutorial, and assessment program designed to work with this text to engage students and improve results. Within its structured environment, students practice what they learn, test their understanding, and pursue a personalized study plan that helps them better absorb course material and understand difficult concepts.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover | Cover | ||
| Prepare, Apply, and Confirm with MyFinanceLab™ | IFC | ||
| Title Page | 1 | ||
| The Pearson Series in Finance | 2 | ||
| Copyright Page | 4 | ||
| About the Authors | 5 | ||
| Brief Contents | 7 | ||
| Contents | 8 | ||
| Preface | 16 | ||
| Acknowledgments | 23 | ||
| Part 1: The Scope and Environment of Financial Management | 26 | ||
| 1. An Introduction to the Foundations of Financial Management | 26 | ||
| The Goal of the Firm | 27 | ||
| Five Principles That Form the Foundations of Finance | 28 | ||
| The Role of Finance in Business | 36 | ||
| The Legal Forms of Business Organization | 38 | ||
| Finance and the Multinational Firm: The New Role | 41 | ||
| Chapter Summaries | 42 | ||
| Review Questions | 44 | ||
| Mini Case | 45 | ||
| 2. The Financial Markets and Interest Rates | 46 | ||
| Financing of Business: The Movement of Funds Through the Economy | 48 | ||
| Selling Securities to the Public | 53 | ||
| Rates of Return in the Financial Markets | 58 | ||
| Interest Rate Determinants in a Nutshell | 62 | ||
| Chapter Summaries | 71 | ||
| Review Questions | 74 | ||
| Study Problems | 74 | ||
| Mini Case | 77 | ||
| 3. Understanding Financial Statements and Cash Flows | 78 | ||
| The Income Statement | 80 | ||
| The Balance Sheet | 85 | ||
| Measuring Cash Flows | 93 | ||
| GAAP and IFRS | 103 | ||
| Income Taxes and Finance | 104 | ||
| The Limitations of Financial Statements and Accounting Malpractice | 107 | ||
| Chapter Summaries | 109 | ||
| Review Questions | 112 | ||
| Study Problems | 113 | ||
| Mini Case | 121 | ||
| Appendix 3A: Free Cash Flows | 124 | ||
| Computing Free Cash Flows | 124 | ||
| Computing Financing Cash Flows | 127 | ||
| Study Problems | 128 | ||
| 4. Evaluating a Firm’s Financial Performance | 130 | ||
| The Purpose of Financial Analysis | 130 | ||
| Measuring Key Financial Relationships | 134 | ||
| The Limitations of Financial Ratio Analysis | 162 | ||
| Chapter Summaries | 163 | ||
| Review Questions | 166 | ||
| Study Problems | 166 | ||
| Mini Case | 174 | ||
| Part 2: The Valuation of Financial Assets | 176 | ||
| 5. The Time Value of Money | 176 | ||
| Compound Interest, Future Value, and Present Value | 178 | ||
| Annuities | 192 | ||
| Making Interest Rates Comparable | 199 | ||
| The Present Value of an Uneven Stream and Perpetuities | 206 | ||
| Chapter Summaries | 208 | ||
| Review Questions | 211 | ||
| Study Problems | 211 | ||
| Mini Case | 219 | ||
| 6. The Meaning and Measurement of Risk and Return | 220 | ||
| Expected Return Defined and Measured | 222 | ||
| Risk Defined and Measured | 225 | ||
| Rates of Return: The Investor’s Experience | 232 | ||
| Risk and Diversification | 233 | ||
| The Investor’s Required Rate of Return | 246 | ||
| Chapter Summaries | 249 | ||
| Review Questions | 253 | ||
| Study Problems | 253 | ||
| Mini Case | 258 | ||
| 7. The Valuation and Characteristics of Bonds | 260 | ||
| Types of Bonds | 261 | ||
| Terminology and Characteristics of Bonds | 263 | ||
| Defining Value | 266 | ||
| What Determines Value? | 268 | ||
| Valuation: The Basic Process | 269 | ||
| Valuing Bonds | 270 | ||
| Bond Yields | 276 | ||
| Bond Valuation: Three Important Relationships | 279 | ||
| Chapter Summaries | 284 | ||
| Review Questions | 287 | ||
| Study Problems | 288 | ||
| Mini Case | 291 | ||
| 8. The Valuation and Characteristics of Stock | 292 | ||
| Preferred Stock | 293 | ||
| Valuing Preferred Stock | 295 | ||
| Common Stock | 299 | ||
| Valuing Common Stock | 301 | ||
| The Expected Rate of Return of Stockholders | 306 | ||
| Chapter Summaries | 311 | ||
| Review Questions | 314 | ||
| Study Problems | 314 | ||
| Mini Case | 317 | ||
| 9. The Cost of Capital | 318 | ||
| The Cost of Capital: Key Definitions and Concepts | 319 | ||
| Determining the Costs of the Individual Sources of Capital | 321 | ||
| The Weighted Average Cost of Capital | 331 | ||
| Calculating Divisional Costs of Capital | 335 | ||
| Chapter Summaries | 341 | ||
| Review Questions | 343 | ||
| Study Problems | 344 | ||
| Mini Cases | 348 | ||
| Part 3: Investment in Long-Term Assets | 350 | ||
| 10. Capital-Budgeting Techniques and Practice | 350 | ||
| Finding Profitable Projects | 351 | ||
| Capital-Budgeting Decision Criteria | 352 | ||
| Capital Rationing | 372 | ||
| Ranking Mutually Exclusive Projects | 374 | ||
| Chapter Summaries | 380 | ||
| Review Questions | 383 | ||
| Study Problems | 383 | ||
| Mini Case | 390 | ||
| 11. Cash Flows and Other Topics in Capital Budgeting | 392 | ||
| Guidelines for Capital Budgeting | 393 | ||
| Calculating a Project’s Free Cash Flows | 396 | ||
| Options in Capital Budgeting | 406 | ||
| Risk and the Investment Decision | 409 | ||
| Chapter Summaries | 418 | ||
| Review Questions | 420 | ||
| Study Problems | 420 | ||
| Mini Case | 426 | ||
| Appendix 11A: The Modified Accelerated Cost Recovery System | 428 | ||
| What Does All This Mean? | 429 | ||
| Study Problems | 429 | ||
| Part 4: Capital Structure and Dividend Policy | 430 | ||
| 12. Determining the Financing Mix | 430 | ||
| Understanding the Difference Between Business and Financial Risk | 432 | ||
| Break-Even Analysis | 433 | ||
| Sources of Operating Leverage | 438 | ||
| Capital Structure Theory | 444 | ||
| The Basic Tools of Capital Structure Management | 453 | ||
| Chapter Summaries | 460 | ||
| Review Questions | 463 | ||
| Study Problems | 463 | ||
| Mini Cases | 466 | ||
| 13. Dividend Policy and Internal Financing | 468 | ||
| Key Terms | 469 | ||
| Does Dividend Policy Matter to Stockholders? | 470 | ||
| The Dividend Decision in Practice | 476 | ||
| Stock Dividends and Stock Splits | 478 | ||
| Stock Repurchases | 479 | ||
| Chapter Summaries | 483 | ||
| Review Questions | 485 | ||
| Study Problems | 486 | ||
| Mini Case | 489 | ||
| Part 5: Working-Capital Management and International Business Finance | 490 | ||
| 14. Short-Term Financial Planning | 490 | ||
| Financial Forecasting | 491 | ||
| Limitations of the Percent of Sales Forecasting Method | 497 | ||
| Constructing and Using a Cash Budget | 498 | ||
| Chapter Summaries | 501 | ||
| Review Questions | 502 | ||
| Study Problems | 503 | ||
| Mini Case | 508 | ||
| 15. Working-Capital Management | 510 | ||
| Managing Current Assets and Liabilities | 511 | ||
| Determining the Appropriate Level of Working Capital | 513 | ||
| The Cash Conversion Cycle | 516 | ||
| Estimating the Cost of Short-Term Credit Using the Approximate Cost-of-Credit Formula | 518 | ||
| Sources of Short-Term Credit | 520 | ||
| Chapter Summaries | 530 | ||
| Review Questions | 533 | ||
| Study Problems | 534 | ||
| 16. International Business Finance | 538 | ||
| The Globalization of Product and Financial Markets | 539 | ||
| Foreign Exchange Markets and Currency Exchange Rates | 540 | ||
| Interest Rate Parity | 550 | ||
| Purchasing-Power Parity and the Law of One Price | 551 | ||
| Capital Budgeting for Direct Foreign Investment | 552 | ||
| Chapter Summaries | 554 | ||
| Review Questions | 556 | ||
| Study Problems | 557 | ||
| Mini Case | 558 | ||
| Glossary | 560 | ||
| Indexes | 569 | ||
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| Back Cover | Back Cover |