Financial management and policy

Includes index

Original edition published by Prentice Hall, Upper Saddle River, N.J. : ISBN 0130326577

Preface --
Part 1. Foundations Of Finance --
Vignette: Problems at Gillette --
1. Goals and Functions of Finance --
Creation of Value --
Investment Decision --
Financing Decision --
Dividend/Share Repurchase Decision --
Bringing It All Together --
2. Concepts in Valuation --
The Time Value of Money --
Present Values --
Internal Rate of Return or Yield --
Bond Returns --
Return from a Stock Investment --
Dividend Discount Models --
Measuring Risk: Standard Deviation --
3. Market Risk and Returns --
Efficient Financial Markets --
Security Portfolios --
Multiple Security Portfolio Analysis and Selection --
Capital Asset Pricing Model --
Expected Return for Individual Security --
Certain Issues with the CAPM --
4. Multivariable and Factor Valuation --
Extended CAPM --
Factor Models in General --
Arbitrage Pricing Theory --
5. Option Valuation --
Expiration Date Value of an Option --
Valuation with One Period to Expiration General Consideration --
Binomial Option Pricing of a Hedged Position --
The Black-Scholes Option Model --
American Options --
Debt and Other Options --
Appendix. Put-Call Parity --
Part 2. Investment In Assets And Required Returns --
Case: Fazio Pump Corporation --
6. Principles of Capital Investment --
Administrative Framework --
Methods for Evaluation --
NPV versus IRR --
Depreciation and Other Refinements in Cash-Flow Information --
What Happens When Capital Is Rationed? --
Inflation and Capital Budgeting --
Information to Analyze an Acquisition --
Appendix. Multiple Internal Rates of Return --
7. Risk and Real Options in Capital Budgeting --
Quantifying Risk and its Appraisal --
Total Risk for Multiple Investments --
Real Options in Capital Investments --
8. Creating Value through Required Returns --
Foundations of Value Creation --
Required Market-Based Return for a Single Project --
Modification for Leverage --
Weighted Average Required Return --
Adjusted Present Value --
Divisional Required Returns --
Company's Overall Cost of Capital --
Diversification of Assets and Total Risk Analysis --
Evaluation of Acquisitions --
Case: National Foods Corporation --
Part 3. Financing And Dividend Policies --
Case: Restructuring the Capital Structure at Marriott --
9. Theory of Capital Structure --
Introduction to the Theory --
Modigliani-Miller Position --
Taxes and Capital Structure --
Effect of Bankruptcy Costs --
Other Imperfections --
Incentive Issues and Agency Costs --
Financial Signaling --
10. Making Capital Structure Decisions --
EBIT-EPS Analysis --
Cash-Flow Ability to Service Debt --
Effect on Debt Ratios --
Effect on Security Rating --
Timing and Flexibility --
A Pecking Order of Financing? --
Checklist when it Comes to Financing --
11. Dividends and Share Repurchase: Theory and Practice --
Procedural Aspects of Paying Dividends --
Dividend Payout Irrelevance --
Arguments for Dividend Payout Mattering --
Financial Signaling --
Empirical Testing and Implications for Payout --
Share Repurchase --
Stock Dividends and Stock Splits --
Managerial Considerations as to Dividend/Share-Repurchase Policy --
Part 4. Tools Of Financial Analysis And Control --
Case: Morley Industries, Inc. --
12. Financial Ratio Analysis --
Introduction to Financial Analysis --
Liquidity Ratios --
Debt Ratios --
Coverage Ratios --
Profitability Ratios --
Market-Value Ratios --
Predictive Power of Financial Ratios --
Common Size and Index Analysis --
Case: Financial Ratios and Industries --
13. Financial Planning --
Methods of Analysis --
Source and Use of Funds --
Cash Budgeting --
Pro Forma Statements --
Sustainable Growth Modeling --
Part 5. Liquidity And Working Capital Management --
Case: Caceres Semilla S.A. de C.V. --
14. Liquidity, Cash, and Marketable Securities --
Liquidity and its Role --
Cash Management and Collections --
Control of Disbursements --
Investment in Marketable Securities --
15. Management of Accounts Receivable and Inventories --
Credit Policies --
Collection Policy --
Evaluating the Credit Applicant --
Inventory Management and Control --
Uncertainty and Safety Stock --
Inventory and the Financial Manager --
Appendix. Application of Discriminant Analysis to the Selection of Accounts --
16. Liability Management and Short/Medium-Term Financing --
Liability Structure of a Company --
Trade Credit Financing --
Accrual Accounts as Spontaneous Financing --
Unsecured Short-Term Loans --
Secured Lending Arrangements --
Intermediate-Term Debt --
Protective Covenants and Loan Agreements --
Part 6. Capital Market Financing And Risk Management --
Case: Douglas & Gilligan Global Agency --
17. Foundations for Longer-Term Financing --
Purpose and Function of Financial Markets --
Yield Curves and Their Use --
Pricing Default Risk Off Treasuries --
18. Lease Financing --
Features of a Lease --
Accounting and Tax Treatments of Leases --
Return to the Lessor --
After-Tax Analysis of Lease versus Buy/Borrow --
Sources of Value in Leasing --
19. Issuing Securities --
Public Offering of Securities --
Government Regulations --
Selling Common Stock through a Rights Issue --
Financing a Fledgling --
Information Effects --
20. Fixed-Income Financing and Pension Liability --
Features of Debt --
Types of Debt Financing --
Call Feature and Refunding --
Private Placements --
Preferred Stock --
Pension Fund Liability --
21. Hybrid Financing through Equity-Linked Securities --
Use of Warrants --
Convertible Securities --
Valuation of Convertible Securities --
Exchangeable Debt --
Other Hybrid Securities --
Appendix. Valuing Convertible Bonds in the Face of Firm Volatility, Default Risks, and Fluctuating Interest Rates --
22. Managing Financial Risk --
Derivative Securities --
Hedging Risk --
Futures Markets --
Forward Contracts --
Option Contracts --
Interest-Rate Swaps --
Credit Derivatives --
Commodity Contracts --
Part 7. Expansion And Contraction --
Case: Rayovac Corporation --
23. Mergers and the Market for Corporate Control --
What Is Control Worth? --
Features of a Merger --
Strategic Acquisitions Involving Stock --
Sources or Rearrangements of Value --
Corporate Voting and Control --
Tender Offers and Company Resistance --
Empirical Evidence on Mergers and Takeovers --
24. Corporate and Distress Restructuring --
Divestitures in General --
Voluntary Liquidation and Sell-Offs --
Spin-Offs --
Equity Carve-Outs --
Going Private and Leveraged Buyouts --
Leveraged Recapitalizations --
Distress Restructuring --
Gaming with the Rule of Absolute Priority --
25. International Financial Management --
Some Background --
Types of Exposure --
Economic Exposure --
Exposure of Expected Future Cash Flows --
Currency Market Hedges --
Should Exposure Be Managed? --
Macro Factors Governing Exchange-Rate Behavior --
Structuring International Trade Transactions --
Appendix. Translation Exposure --
Appendix. Present-Value Tables and Normal Probability Distribution Table --
Index.

The twelfth edition of this classic text, highly respected for its effective integration of financial theory and practice, provides managerial perspective on the rapidly evolving and exciting theory of finance and addresses issues of growing importance to the performance of companies in areas of investment in assets, financing, and dividends. It explains the disciplined approach to the subject that enables readers to understand how the analytical techniques are brought to bear on financial decision making. The key themes, major issues, and concepts are presented clearly for a deeper understanding of the environment in which financial decisions are made.