BOOK
Financial Management: Principles and Applications, Global Edition
Sheridan Titman | Arthur J. Keown | John H. Martin
(2017)
Additional Information
Book Details
Abstract
For undergraduate courses in corporate finance and financial management.
Develop and begin to apply financial principles
Students often struggle to see how financial concepts relate to their personal lives and prospective careers. Financial Management: Principles and Applications gives students a big picture perspective of finance and how it is important in their personal and professional lives. Utilizing five key principles, the 13th Edition provides an approachable introduction to financial decision-making, weaving in real world issues to demonstrate the practical applications of critical financial concepts.
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Students, if interested in purchasing this title with MyLab Finance, ask your instructor for the correct package ISBN and Course ID. Instructors, contact your Pearson representative for more information.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover | Cover | ||
| Title Page | 3 | ||
| Copyright Page | 4 | ||
| Dedication | 5 | ||
| Brief Contents | 6 | ||
| Contents | 9 | ||
| Teaching Students the Logic of Finance | 20 | ||
| Preface | 22 | ||
| Acknowledgments | 31 | ||
| Chapter 1: Getting Started: Principles of Finance | 34 | ||
| Principle 1: Money Has a Time Value | 35 | ||
| Principle 2: There Is a Risk-Return Tradeoff | 35 | ||
| Principle 3: Cash Flows Are the Source of Value | 35 | ||
| Principle 4: Market Prices Reflect Information | 35 | ||
| Principle 5: Individuals Respond to Incentives | 35 | ||
| 1.1. Finance: An Overview | 36 | ||
| What Is Finance? | 36 | ||
| Why Study Finance? | 36 | ||
| 1.2. Three Types of Business Organizations | 37 | ||
| Sole Proprietorship | 37 | ||
| Partnership | 38 | ||
| Corporation | 39 | ||
| How Does Finance Fit into the Firm’s Organizational Structure? | 40 | ||
| 1.3. The Goal of the Financial Manager | 41 | ||
| Maximizing Shareholder Wealth | 41 | ||
| Ethical Considerations in Corporate Finance | 42 | ||
| Regulation Aimed at Making the Goal of the Firm Work: The Sarbanes–Oxley Act | 43 | ||
| 1.4. The Five Basic Principles of Finance | 43 | ||
| Principle 1: Money Has a Time Value | 43 | ||
| Principle 2: There Is a Risk-Return Tradeoff | 44 | ||
| Principle 3: Cash Flows Are the Source of Value | 44 | ||
| Principle 4: Market Prices Reflect Information | 45 | ||
| Principle 5: Individuals Respond to Incentives | 45 | ||
| Chapter Summaries | 47 | ||
| Study Questions | 49 | ||
| Chapter 2: Firms and the Financial Markets | 50 | ||
| Principle 2: There Is a Risk-Return Tradeoff | 51 | ||
| Principle 4: Market Prices Reflect Information | 51 | ||
| Principle 5: Individuals Respond to Incentives | 51 | ||
| 2.1. The Basic Structure of the U.S. Financial Markets | 52 | ||
| 2.2. The Financial Marketplace: Financial Institutions | 52 | ||
| Commercial Banks: Everyone’s Financial Marketplace | 53 | ||
| Nonbank Financial Intermediaries | 54 | ||
| Finance for Life: Controlling Costs in Mutual Funds | 56 | ||
| 2.3. The Financial Marketplace: Securities Markets | 57 | ||
| How Securities Markets Bring Corporations and Investors Together | 58 | ||
| Types of Securities | 59 | ||
| Finance in a Flat World: Where’s the Money Around the World | 64 | ||
| Chapter Summaries | 66 | ||
| Study Questions | 68 | ||
| Chapter 3: Understanding Financial Statements | 70 | ||
| Principle 1: Money Has a Time Value | 71 | ||
| Principle 3: Cash Flows Are the Source of Value | 71 | ||
| Principle 4: Market Prices Reflect Information | 71 | ||
| Principle 5: Individuals Respond to Incentives | 71 | ||
| 3.1. An Overview of the Firm’s Financial Statements | 72 | ||
| Basic Financial Statements | 72 | ||
| Why Study Financial Statements? | 73 | ||
| What Are the Accounting Principles Used to Prepare Financial Statements? | 73 | ||
| 3.2. The Income Statement | 74 | ||
| The Income Statement of H. J. Boswell, Inc. | 74 | ||
| Connecting the Income Statement and Balance Sheet | 76 | ||
| Interpreting Firm Profitability Using the Income Statement | 76 | ||
| GAAP and Earnings Management | 77 | ||
| 3.3. Corporate Taxes | 79 | ||
| Computing Taxable Income | 79 | ||
| Federal Income Tax Rates for Corporate Income | 79 | ||
| Marginal and Average Tax Rates | 80 | ||
| Dividend Exclusion for Corporate Stockholders | 80 | ||
| 3.4. The Balance Sheet | 81 | ||
| The Balance Sheet of H. J. Boswell, Inc. | 81 | ||
| Firm Liquidity and Net Working Capital | 84 | ||
| Debt and Equity Financing | 85 | ||
| Book Values, Historical Costs, and Market Values | 87 | ||
| Finance for Life: Your Personal Balance Sheet and Income Statement | 88 | ||
| 3.5. The Cash Flow Statement | 90 | ||
| Sources and Uses of Cash | 90 | ||
| H. J. Boswell’s Cash Flow Statement | 92 | ||
| Finance in a Flat World: GAAP vs. IFRS | 93 | ||
| Chapter Summaries | 99 | ||
| Study Questions | 102 | ||
| Study Problems | 103 | ||
| Mini-Case | 107 | ||
| Chapter 4: Financial Analysis: Sizing Up Firm Performance | 110 | ||
| Principle 3: Cash Flows Are the Source of Value | 111 | ||
| Principle 4: Market Prices Reflect Information | 111 | ||
| Principle 5: Individuals Respond to Incentives | 111 | ||
| 4.1. Why Do We Analyze Financial Statements? | 112 | ||
| 4.2. Common-Size Statements: Standardizing Financial Information | 113 | ||
| The Common-Size Income Statement: H. J. Boswell, Inc. | 113 | ||
| The Common-Size Balance Sheet: H. J. Boswell, Inc. | 114 | ||
| 4.3. Using Financial Ratios | 115 | ||
| Liquidity Ratios | 115 | ||
| Capital Structure Ratios | 121 | ||
| Asset Management Efficiency Ratios | 122 | ||
| Profitability Ratios | 126 | ||
| Market Value Ratios | 133 | ||
| Finance for Life: Your Cash Budget and Personal Savings Ratio | 134 | ||
| Summing Up the Financial Analysis of H. J. Boswell, Inc. | 137 | ||
| Finance in a Flat World: Ratios and International Accounting Standards | 137 | ||
| 4.4. Selecting a Performance Benchmark | 139 | ||
| Trend Analysis | 139 | ||
| Peer-Firm Comparisons | 140 | ||
| 4.5. Limitations of Ratio Analysis | 141 | ||
| Chapter Summaries | 143 | ||
| Study Questions | 146 | ||
| Study Problems | 146 | ||
| Mini-Case | 159 | ||
| Chapter 5: The Time Value of Money: The Basics | 160 | ||
| Principle 1: Money Has a Time Value | 161 | ||
| 5.1. Using Timelines to Visualize Cash Flows | 162 | ||
| 5.2. Compounding and Future Value | 164 | ||
| Compound Interest and Time | 165 | ||
| Compound Interest and the Interest Rate | 165 | ||
| Techniques for Moving Money Through Time | 165 | ||
| Applying Compounding to Things Other Than Money | 167 | ||
| Compound Interest with Shorter Compounding Periods | 167 | ||
| Finance for Life: Saving for Your First House | 171 | ||
| 5.3. Discounting and Present Value | 171 | ||
| The Mechanics of Discounting Future Cash Flows | 172 | ||
| Two Additional Types of Discounting Problems | 174 | ||
| The Rule of 72 | 175 | ||
| 5.4. Making Interest Rates Comparable | 177 | ||
| Calculating the Interest Rate and Converting It to an EAR | 179 | ||
| To the Extreme: Continuous Compounding | 180 | ||
| Finance in a Flat World: Financial Access at Birth | 181 | ||
| Chapter Summaries | 182 | ||
| Study Questions | 184 | ||
| Study Problems | 185 | ||
| Mini-Case | 189 | ||
| Chapter 6: The Time Value of Money: Annuities and Other Topics | 190 | ||
| Principle 1: Money Has a Time Value | 191 | ||
| Principle 3: Cash Flows Are the Source of Value | 191 | ||
| 6.1. Annuities | 192 | ||
| Ordinary Annuities | 192 | ||
| Amortized Loans | 200 | ||
| Annuities Due | 201 | ||
| Finance for Life: Saving for Retirement | 204 | ||
| 6.2. Perpetuities | 205 | ||
| Calculating the Present Value of a Level Perpetuity | 205 | ||
| Calculating the Present Value of a Growing Perpetuity | 205 | ||
| 6.3. Complex Cash Flow Streams | 208 | ||
| Chapter Summaries | 212 | ||
| Study Questions | 213 | ||
| Study Problems | 214 | ||
| Mini-Case | 223 | ||
| Chapter 7: An Introduction to Risk and Return: History of Financial Market Returns | 224 | ||
| Principle 2: There Is a Risk-Return Tradeoff | 225 | ||
| Principle 4: Market Prices Reflect Information | 225 | ||
| 7.1. Realized and Expected Rates of Return and Risk | 226 | ||
| Calculating the Realized Return from an Investment | 226 | ||
| Calculating the Expected Return from an Investment | 227 | ||
| Measuring Risk | 228 | ||
| 7.2. A Brief History of Financial Market Returns | 234 | ||
| U.S. Financial Markets: Domestic Investment Returns | 234 | ||
| Lessons Learned | 236 | ||
| U.S. Stocks Versus Other Categories of Investments | 236 | ||
| Global Financial Markets: International Investing | 236 | ||
| Finance for Life: Determining Your Tolerance for Risk | 238 | ||
| 7.3. Geometric Versus Arithmetic Average Rates of Return | 239 | ||
| Computing the Geometric or Compound Average Rate of Return | 239 | ||
| Choosing the Right “Average” | 240 | ||
| 7.4. What Determines Stock Prices? | 243 | ||
| The Efficient Markets Hypothesis | 243 | ||
| Do We Expect Financial Markets to Be Perfectly Efficient? | 244 | ||
| Market Efficiency: What Does the Evidence Show? | 245 | ||
| Chapter Summaries | 247 | ||
| Study Questions | 250 | ||
| Study Problems | 250 | ||
| Mini-Case | 253 | ||
| Chapter 8: Risk and Return: Capital Market Theory | 254 | ||
| Principle 2: There Is a Risk-Return Tradeoff | 255 | ||
| Principle 4: Market Prices Reflect Information | 255 | ||
| 8.1. Portfolio Returns and Portfolio Risk | 256 | ||
| Calculating the Expected Return of a Portfolio | 256 | ||
| Evaluating Portfolio Risk | 258 | ||
| Calculating the Standard Deviation of a Portfolio’s Returns | 260 | ||
| Finance in a Flat World: International Diversification | 263 | ||
| 8.2. Systematic Risk and the Market Portfolio | 265 | ||
| Diversification and Unsystematic Risk | 266 | ||
| Diversification and Systematic Risk | 267 | ||
| Systematic Risk and Beta | 267 | ||
| Calculating the Portfolio Beta | 269 | ||
| 8.3. The Security Market Line and the CAPM | 270 | ||
| Using the CAPM to Estimate Expected Rates of Return | 272 | ||
| Chapter Summaries | 275 | ||
| Study Questions | 277 | ||
| Study Problems | 278 | ||
| Mini-Case | 285 | ||
| Chapter 9: Debt Valuation and Interest Rates | 286 | ||
| Principle 1: Money Has a Time Value | 287 | ||
| Principle 2: There Is a Risk-Return Tradeoff | 287 | ||
| Principle 3: Cash Flows Are the Source of Value | 287 | ||
| 9.1. Overview of Corporate Debt | 288 | ||
| Borrowing Money in the Private Financial Market | 288 | ||
| Borrowing Money in the Public Financial Market | 290 | ||
| Basic Bond Features | 293 | ||
| Finance for Life: Adjustable-Rate Mortgages | 295 | ||
| 9.2. Valuing Corporate Debt | 297 | ||
| Valuing Bonds by Discounting Future Cash Flows | 297 | ||
| Step 1: Determine Bondholder Cash Flows | 298 | ||
| Step 2: Estimate the Appropriate Discount Rate | 298 | ||
| Step 3: Calculate the Present Value Using the Discounted Cash Flow | 301 | ||
| 9.3. Bond Valuation: Four Key Relationships | 305 | ||
| Relationship 1 | 305 | ||
| Relationship 2 | 307 | ||
| Relationship 3 | 307 | ||
| Relationship 4 | 308 | ||
| 9.4. Types of Bonds | 310 | ||
| Secured Versus Unsecured | 310 | ||
| Priority of Claims | 310 | ||
| Initial Offering Market | 310 | ||
| Abnormal Risk | 310 | ||
| Coupon Level | 310 | ||
| Amortizing or Non-amortizing | 310 | ||
| Convertibility | 311 | ||
| Finance in a Flat World: International Bonds | 312 | ||
| 9.5. Determinants of Interest Rates | 312 | ||
| Inflation and Real Versus Nominal Interest Rates | 312 | ||
| Interest Rate Determinants—Breaking It Down | 314 | ||
| The Maturity-Risk Premium and the Term Structure of Interest Rates | 317 | ||
| Chapter Summaries | 322 | ||
| Study Questions | 326 | ||
| Study Problems | 327 | ||
| Mini-Case | 331 | ||
| Chapter 10: Stock Valuation | 332 | ||
| Principle 1: Money Has a Time Value | 333 | ||
| Principle 2: There Is a Risk-Reward Tradeoff | 333 | ||
| Principle 3: Cash Flows Are the Source of Value | 333 | ||
| Principle 4: Market Prices Reflect Information | 333 | ||
| Principle 5: Individuals Respond to Incentives | 333 | ||
| 10.1. Common Stock | 334 | ||
| Characteristics of Common Stock | 334 | ||
| Finance for Life: Herd Mentality | 335 | ||
| Agency Costs and Common Stock | 336 | ||
| Valuing Common Stock Using the Discounted Dividend Model | 336 | ||
| 10.2. The Comparables Approach to Valuing Common Stock | 343 | ||
| Defining the P/E Ratio Valuation Model | 343 | ||
| What Determines the P/E Ratio for a Stock? | 343 | ||
| An Aside on Managing for Shareholder Value | 347 | ||
| A Word of Caution About P/E Ratios | 347 | ||
| 10.3. Preferred Stock | 347 | ||
| Features of Preferred Stock | 347 | ||
| Valuing Preferred Stock | 348 | ||
| A Quick Review: Valuing Bonds, Preferred Stock, and Common Stock | 350 | ||
| Chapter Summaries | 353 | ||
| Study Questions | 355 | ||
| Study Problems | 356 | ||
| Mini-Case | 359 | ||
| Chapter 11: Investment Decision Criteria | 360 | ||
| Principle 1: Money Has a Time Value | 361 | ||
| Principle 2: There Is a Risk-Return Tradeoff | 361 | ||
| Principle 3: Cash Flows Are the Source of Value | 361 | ||
| Principle 5: Individuals Respond to Incentives | 361 | ||
| 11.1. An Overview of Capital Budgeting | 362 | ||
| The Typical Capital-Budgeting Process | 363 | ||
| What Are the Sources of Good Investment Projects? | 363 | ||
| Types of Capital Investment Projects | 363 | ||
| 11.2. Net Present Value | 364 | ||
| Why Is the NPV the Right Criterion? | 365 | ||
| Calculating an Investment’s NPV | 365 | ||
| Independent Versus Mutually Exclusive Investment Projects | 366 | ||
| 11.3. Other Investment Criteria | 372 | ||
| Profitability Index | 372 | ||
| Internal Rate of Return | 374 | ||
| Modified Internal Rate of Return | 380 | ||
| Finance for Life: Higher Education as an Investment in Yourself | 384 | ||
| Payback Period | 384 | ||
| Discounted Payback Period | 385 | ||
| Summing Up the Alternative Decision Rules | 387 | ||
| 11.4. A Glance at Actual Capital-Budgeting Practices | 387 | ||
| Chapter Summaries | 390 | ||
| Study Questions | 393 | ||
| Study Problems | 394 | ||
| Mini-Cases | 401 | ||
| Chapter 12: Analyzing Project Cash Flows | 404 | ||
| Principle 3: Cash Flows Are the Source of Value | 405 | ||
| Principle 5: Individuals Respond to Incentives | 405 | ||
| 12.1. Project Cash Flows | 406 | ||
| Incremental Cash Flows Are What Matters | 407 | ||
| Guidelines for Forecasting Incremental Cash Flows | 407 | ||
| 12.2. Forecasting Project Cash Flows | 409 | ||
| Dealing with Depreciation Expense, Taxes, and Cash Flow | 409 | ||
| Four-Step Procedure for Calculating Project Cash Flows | 410 | ||
| Computing Project NPV | 414 | ||
| 12.3. Inflation and Capital Budgeting | 416 | ||
| Estimating Nominal Cash Flows | 416 | ||
| 12.4. Replacement Project Cash Flows | 417 | ||
| Category 1: Initial Outlay, CF0 | 417 | ||
| Category 2: Annual Cash Flows | 417 | ||
| Replacement Example | 418 | ||
| Finance in a Flat World: Entering New Markets | 422 | ||
| Chapter Summaries | 423 | ||
| Study Questions | 425 | ||
| Study Problems | 426 | ||
| Mini-Cases | 435 | ||
| Appendix: The Modified Accelerated Cost Recovery System | 438 | ||
| Chapter 13: Risk Analysis and Project Evaluation | 440 | ||
| Principle 1: Money Has a Time Value | 441 | ||
| Principle 2: There Is a Risk-Return Tradeoff | 441 | ||
| Principle 3: Cash Flows Are the Source of Value | 441 | ||
| 13.1. The Importance of Risk Analysis | 442 | ||
| 13.2. Tools for Analyzing the Risk of Project Cash Flows | 443 | ||
| Key Concepts: Expected Values and Value Drivers | 443 | ||
| Sensitivity Analysis | 445 | ||
| Scenario Analysis | 449 | ||
| Simulation Analysis | 452 | ||
| Finance in a Flat World: Currency Risk | 454 | ||
| 13.3. Break-Even Analysis | 454 | ||
| Accounting Break-Even Analysis | 455 | ||
| Cash Break-Even Analysis | 459 | ||
| NPV Break-Even Analysis | 459 | ||
| Operating Leverage and the Volatility of Project Cash Flows | 462 | ||
| 13.4. Real Options in Capital Budgeting | 464 | ||
| The Option to Delay the Launch of a Project | 464 | ||
| The Option to Expand a Project | 465 | ||
| The Option to Reduce the Scale and Scope of a Project | 465 | ||
| Chapter Summaries | 467 | ||
| Study Questions | 469 | ||
| Study Problems | 470 | ||
| Mini-Case | 475 | ||
| Chapter 14: The Cost of Capital | 476 | ||
| Principle 1: Money Has a Time Value | 477 | ||
| Principle 2: There Is a Risk-Return Tradeoff | 477 | ||
| Principle 3: Cash Flows Are the Source of Value | 477 | ||
| Principle 4: Market Prices Reflect Information | 477 | ||
| Principle 5: Individuals Respond to Incentives | 477 | ||
| 14.1. The Cost of Capital: An Overview | 478 | ||
| Investor’s Required Return and the Firm’s Cost of Capital | 479 | ||
| WACC Equation | 479 | ||
| Three-Step Procedure for Estimating the Firm’s WACC | 480 | ||
| 14.2. Determining the Firm’s Capital Structure Weights | 481 | ||
| 14.3. Estimating the Cost of Individual Sources of Capital | 485 | ||
| The Cost of Debt | 485 | ||
| The Cost of Preferred Equity | 486 | ||
| The Cost of Common Equity | 488 | ||
| 14.4. Summing Up: Calculating the Firm’s WACC | 495 | ||
| Use Market-Based Weights | 495 | ||
| Use Market-Based Costs of Capital | 495 | ||
| Use Forward-Looking Weights and Opportunity Costs | 495 | ||
| Weighted Average Cost of Capital in Practice | 495 | ||
| 14.5. Estimating Project Costs of Capital | 497 | ||
| The Rationale for Using Multiple Discount Rates | 497 | ||
| Why Don’t Firms Typically Use Project Costs of Capital? | 497 | ||
| Estimating Divisional WACCs | 498 | ||
| Divisional WACC: Estimation Issues and Limitations | 499 | ||
| Finance in a Flat World: Why Do Interest Rates Differ Among Countries? | 500 | ||
| 14.6. Flotation Costs and Project NPV | 501 | ||
| WACC, Flotation Costs, and the NPV | 501 | ||
| Chapter Summaries | 504 | ||
| Study Questions | 507 | ||
| Study Problems | 508 | ||
| Mini-Case | 513 | ||
| Chapter 15: Capital Structure Policy | 514 | ||
| Principle 2: There Is a Risk-Return Tradeoff | 515 | ||
| Principle 3: Cash Flows Are the Source of Value | 515 | ||
| Principle 5: Individuals Respond to Incentives | 515 | ||
| 15.1. A Glance at Capital Structure Choices in Practice | 516 | ||
| Defining a Firm’s Capital Structure | 516 | ||
| Financial Leverage | 519 | ||
| How Do Firms in Different Industries Finance Their Assets? | 519 | ||
| 15.2. Capital Structure Theory | 520 | ||
| A First Look at the Modigliani and Miller Capital Structure Theorem | 520 | ||
| Yogi Berra and the M&M Capital Structure Theory | 522 | ||
| Capital Structure, the Cost of Equity, and the Weighted Average Cost of Capital | 522 | ||
| Why Capital Structure Matters in Reality | 524 | ||
| Making Financing Choices When Managers Are Better Informed than Shareholders | 529 | ||
| Managerial Implications | 530 | ||
| 15.3. Why Do Capital Structures Differ Across Industries? | 531 | ||
| 15.4. Making Financing Decisions | 532 | ||
| Benchmarking the Firm’s Capital Structure | 532 | ||
| Evaluating the Effect of Financial Leverage on Firm Earnings per Share | 533 | ||
| Using the EBIT-EPS Chart to Analyze the Effect of Capital Structure on EPS | 538 | ||
| Can the Firm Afford More Debt? | 540 | ||
| Survey Evidence: Factors That Influence CFO Debt Policy | 541 | ||
| Finance in a Flat World: Capital Structures Around the World | 542 | ||
| Lease Versus Buy | 543 | ||
| Finance for Life: Leasing or Buying Your Next Car | 545 | ||
| Chapter Summaries | 546 | ||
| Study Questions | 548 | ||
| Study Problems | 550 | ||
| Mini-Case | 554 | ||
| Appendix: Demonstrating the Modigliani and Miller Theorem | 555 | ||
| Chapter 16: Dividend and Share Repurchase Policy | 558 | ||
| Principle 1: Money Has a Time Value | 559 | ||
| Principle 3: Cash Flows Are the Source of Value | 559 | ||
| Principle 4: Market Prices Reflect Information | 559 | ||
| 16.1. How Do Firms Distribute Cash to Their Shareholders? | 560 | ||
| Cash Dividends | 561 | ||
| Stock Repurchases | 562 | ||
| How Do Firms Repurchase Their Shares? | 562 | ||
| Personal Tax Considerations: Dividend Versus Capital Gains Income | 563 | ||
| Noncash Distributions: Stock Dividends and Stock Splits | 563 | ||
| 16.2. Does Dividend Policy Matter? | 564 | ||
| The Irrelevance of the Distribution Choice | 564 | ||
| Why Dividend Policy Is Important | 570 | ||
| Finance for Life: The Importance of Dividends | 573 | ||
| 16.3. Cash Distribution Policies in Practice | 573 | ||
| Stable Dividend Payout Policy | 573 | ||
| Residual Dividend Payout Policy | 577 | ||
| Other Factors Playing a Role in How Much to Distribute | 577 | ||
| Chapter Summaries | 578 | ||
| Study Questions | 579 | ||
| Study Problems | 581 | ||
| Mini-Case | 583 | ||
| Chapter 17: Financial Forecasting and Planning | 584 | ||
| Principle 2: There Is a Risk-Return Tradeoff | 585 | ||
| 17.1. An Overview of Financial Planning | 586 | ||
| 17.2. Developing a Long-Term Financial Plan | 587 | ||
| Financial Forecasting Example: Ziegen, Inc. | 588 | ||
| Finance for Life: Your Personal Budget | 593 | ||
| 17.3. Developing a Short-Term Financial Plan | 596 | ||
| Cash Budget Example: Melco Furniture, Inc. | 596 | ||
| Uses of the Cash Budget | 597 | ||
| Chapter Summaries | 599 | ||
| Study Questions | 600 | ||
| Study Problems | 601 | ||
| Mini-Case | 607 | ||
| Chapter 18: Working-Capital Management | 608 | ||
| Principle 2: There Is a Risk-Return Tradeoff | 609 | ||
| 18.1. Working-Capital Management and the Risk-Return Tradeoff | 610 | ||
| Measuring Firm Liquidity | 610 | ||
| Managing Firm Liquidity | 611 | ||
| Risk-Return Tradeoff | 611 | ||
| 18.2. Working-Capital Policy | 611 | ||
| The Principle of Self-Liquidating Debt | 611 | ||
| A Graphic Illustration of the Principle of Self-Liquidating Debt | 614 | ||
| 18.3. Operating and Cash Conversion Cycles | 614 | ||
| Measuring Working-Capital Efficiency | 614 | ||
| Calculating the Operating and Cash Conversion Cycles | 616 | ||
| 18.4. Managing Current Liabilities | 619 | ||
| Calculating the Cost of Short-Term Financing | 619 | ||
| Evaluating the Cost of Trade Credit | 620 | ||
| Evaluating the Cost of Bank Loans | 621 | ||
| 18.5. Managing the Firm’s Investment in Current Assets | 623 | ||
| Managing Cash and Marketable Securities | 623 | ||
| Managing Accounts Receivable | 625 | ||
| Finance for Life: Credit Scoring | 627 | ||
| Managing Inventories | 629 | ||
| Chapter Summaries | 630 | ||
| Study Questions | 632 | ||
| Study Problems | 633 | ||
| Mini-Case | 637 | ||
| Chapter 19: International Business Finance | 638 | ||
| Principle 2: There Is a Risk-Return Tradeoff | 639 | ||
| Principle 3: Cash Flows Are the Source of Value | 639 | ||
| 19.1. Foreign Exchange Markets and Currency Exchange Rates | 640 | ||
| What a Change in the Exchange Rate Means for Business | 640 | ||
| Foreign Exchange Rates | 642 | ||
| Types of Foreign Exchange Transactions | 645 | ||
| 19.2. Interest Rate and Purchasing-Power Parity | 648 | ||
| Interest Rate Parity | 648 | ||
| Purchasing-Power Parity and the Law of One Price | 648 | ||
| The International Fisher Effect | 649 | ||
| 19.3. Capital Budgeting for Direct Foreign Investment | 651 | ||
| Finance for Life: International Investing | 652 | ||
| Foreign Investment Risks | 655 | ||
| Chapter Summaries | 657 | ||
| Study Questions | 659 | ||
| Study Problems | 660 | ||
| Mini-Case | 663 | ||
| Chapter 20: Corporate Risk Management | 664 | ||
| Principle 1: Money Has a Time Value | 665 | ||
| Principle 2: There Is a Risk-Return Tradeoff | 665 | ||
| 20.1. Five-Step Corporate Risk Management Process | 666 | ||
| Step 1: Identify and Understand the Firm’s Major Risks | 666 | ||
| Step 2: Decide Which Types of Risks to Keep and Which to Transfer | 667 | ||
| Step 3: Decide How Much Risk to Assume | 667 | ||
| Step 4: Incorporate Risk into All the Firm’s Decisions and Processes | 667 | ||
| Step 5: Monitor and Manage the Firm’s Risk Exposures | 668 | ||
| 20.2. Managing Risk with Insurance Contracts | 669 | ||
| Types of Insurance Contracts | 669 | ||
| Why Purchase Insurance? | 669 | ||
| Finance for Life: Do You Need Life Insurance? | 670 | ||
| 20.3. Managing Risk by Hedging with Forward Contracts | 670 | ||
| Hedging Commodity Price Risk Using Forward Contracts | 671 | ||
| Hedging Currency Risk Using Forward Contracts | 671 | ||
| 20.4. Managing Risk with Exchange-Traded Financial Derivatives | 675 | ||
| Futures Contracts | 676 | ||
| Option Contracts | 677 | ||
| 20.5. Valuing Options and Swaps | 683 | ||
| The Black-Scholes Option Pricing Model | 684 | ||
| Swap Contracts | 688 | ||
| Credit Default Swaps | 689 | ||
| Chapter Summaries | 691 | ||
| Study Questions | 693 | ||
| Study Problems | 694 | ||
| Mini-Case | 697 | ||
| Glossary | 699 | ||
| Organization Index | 707 | ||
| Subject Index | 709 | ||
| Back Cover | Back Cover |