Corporate financial management:
Saved in:
| Main Author: | |
|---|---|
| Format: | Book |
| Language: | English |
| Published: |
Harlow [u.a.]
Financial Times/Prentice Hall
2008
|
| Edition: | 4. ed. |
| Subjects: | |
| Online Access: | Inhaltsverzeichnis |
| Physical Description: | getr. Zählung Ill., graph. Darst. |
| ISBN: | 9780273710417 |
Staff View
MARC
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Record in the Search Index
| _version_ | 1804137903187558400 |
|---|---|
| adam_text | Brief contents
Topics covered in the book xix
Introduction to the book xxi
Guided Tour xxviii
Using MyFinanceLab xxxi
Acknowledgements xxxiv
Part 1 Introduction 1
1 The financial world 2
Part 2 The investment decision 47
2 Project appraisal: Net present value and internal rate of return 48
3 Project appraisal: Cash flow and applications 91
4 The decision-making process for investment appraisal 127
5 Project appraisal: Capital rationing, taxation and inflation 153
Part 3 Risk and return 175
6 Risk and project appraisal 176
7 Portfolio theory 229
8 The capital asset pricing model and multi-factor models 274
319
320
359
423
473
513
562
617
618
648
669
700
716
749
Part 4 Sources of finance
9 Stock markets
10 Raising equity capital
11 Long-term debt finance
12 Short-term and medium-term finance
13 Treasury and working capital management
14 Stock market efficiency
Part 5 Corporate value
15 Value management
16 Strategy and value
17 Value-creation metrics
18 Entire firm value measurement
19 The cost of capital
20 Valuing shares
vi
Brief contents
21 Capital structure
22 Dividend policy
23 Mergers
792
839
863
Part 6 Managing risk 913
24 Derivatives 914
25 Managing exchange-rate risk 958
Appendices A:i
I Future value of £1 at compound interest A:2
II Present value of f 1 at compound interest A:3
III Present value of an annuity of £1 at compound interest A:4
IV The future value of an annuity of £1 at compound interest A:5
V Areas under the standardised normal distribution A:6
VI Answers to the mathematical tools exercises in Chapter 2, Appendix 2.1 A:7
VII Solutions to selected questions and problems A:8
Glossary C:7
Bibliography B:1
Index 1:1
Contents
Topics covered in the book
Introduction to the book
Guided Tour
Using MyFinanceLab
Acknowledgements
XIX
xxi
xxviii
xxxi
xxxiv
Part 1 Introduction
1 The financial world
Learning outcomes
Introduction
The objective of the firm
Case study 1.1 Cadbury Schweppes
Some possible objectives
Corporate governance
Primitive and modern economies
The role of the financial manager
The flow of funds and financial intermediation
Growth in the financial services sector
The financial system
Concluding comments
Key points and concepts
References and further reading
Websites
Self-review questions
Questions and problems
Assignments
2
3
3
3
5
15
18
21
24
30
34
39
40
41
43
44
44
45
Part 2 The investment decision
2 Project appraisal: net present value and internal rate of return
Learning outcomes
Introduction
Value creation and corporate investment
Net present value and internal rate of return
Modified internal rate of return
Concluding comments
Key points and concepts
Appendix 2.1 Mathematical tools for finance
47
48
48
49
50
54
73
76
77
78
vili Contents
Mathematical tools exercises 85
References and further reading 86
Websites 86
Case study recommendations 86
Self-review questions 87
Questions and problems 87
Assignments 90
Project appraisal: cash flow and applications 91
Learning outcomes 91
Introduction 92
Case study 3.1 Airbus s superjumbo 92
Quality of information 93
Are profit calculations useful for estimating project viability? 94
The replacement decision 105
Replacement cycles 107
When to introduce a new machine 112
Drawbacks of the annual equivalent annuity method 113
Timing of projects 113
The make or buy decision 114
Fluctuating output 115
Concluding comments 116
Key points and concepts 117
References and further reading 117
Case study recommendations 118
Self-review questions 118
Questions and problems 119
Assignments 126
4 The decision-making process for investment appraisal 127
Learning outcomes 127
Introduction 128
Evidence on the employment of appraisal techniques 129
Payback 129
Accounting rate of return 132
Internal rate of return: reasons for continued popularity 135
The managerial art of investment appraisal 135
The investment process 139
Concluding comments 144
Key points and concepts 144
References and further reading 146
Case study recommendations 149
Self-review questions 150
Questions and problems 150
Assignments 152
5 Project appraisal: capital rationing, taxation and inflation 153
Learning outcomes 753
Contents ix
Capital rationing 154
Taxation and investment appraisal 158
Inflation 161
Case study 5.1 Eurotunnel s inflation allowance 161
Concluding comments 166
Key points and concepts 166
References and further reading 167
Case study recommendations 168
Self-review questions 168
Questions and problems 168
Assignments 173
Part 3 Risk and return 175
6 Risk and project appraisal 176
Learning outcomes 176
Case study 6.1 Two risky ventures... 177
Introduction 177
What is risk? 178
Adjusting for risk through the discount rate 180
Sensitivity analysis 180
Scenario analysis 185
Probability analysis 187
The risk of insolvency 197
Problems of using probability analysis 202
Evidence of risk analysis in practice 203
Real options 203
Case study 6.2 RJB A/lining: risky coalfields 212
Concluding comments 217
Key points and concepts 218
References and further reading 219
Case study recommendations 220
Self-review questions 221
Questions and problems 221
Assignments 228
7 Portfolio theory 229
Learning outcomes 229
Introduction 230
Holding period returns 230
Expected return and standard deviation for shares 232
Combinations of investments 235
Portfolio expected return and standard deviation 242
Dominance and the efficient frontier 246
Indifference curves 249
Choosing the optimal portfolio 252
The boundaries of diversification 253
Extension to a large number of securities 256
Evidence on the benefits of diversification 257
The capital market line 260
A practical application of portfolio theory 262
Problems with portfolio theory 264
Contents
Concluding comments 264
Key points and concepts 265
References and further reading 266
Case study recommendations 268
Self-review questions 268
Questions and problems 268
Assignments 273
The capita! asset pricing model and multi-factor models 274
Learning outcomes 274
Introduction 275
A short history of shares, bonds and bills 276
The capital asset pricing model 283
Factor models 299
The arbitrage pricing theory 301
The three-factor model 320
An alternative approach to the risk-return relationship 303
Project appraisal and systematic risk 304
Sceptics views - alternative perspectives on risk 305
Concluding comments 308
Key points and concepts 309
Appendix 8.1 Note on arithmetic and geometric means 310
References and further reading 311
Case study recommendation 314
Self-review questions 315
Questions and problems 315
Assignments 317
Part 4 Sources of finance 319
9 Stock markets 320
Learning outcomes 320
Case study 9.1 Using the stock market both to create wealth and to
treat disease 321
Introduction 321
Stock exchanges around the world 321
European stock exchanges 325
Globalisation of financial flows 328
Why do companies list their shares on more than one exchange? 329
The importance of a well-run stock exchange 332
The London Stock Exchange 335
The UK equity markets available to companies 339
Tasks for stock exchanges 342
Trading systems 343
The ownership of UK quoted shares 348
Regulation 348
Understanding the figures in the financial pages 349
Taxation and corporate finance 353
Concluding comments 354
Key points and concepts 354
References and further reading 356
Contents xi
Websites 356
Video presentations 357
Self-review questions 357
Questions and problems 358
Assignments 358
10 Raising equity capital 359
Learning outcomes 359
Case study 10.1 To float or not to float? 360
Introduction 360
What is equity capital? 361
Preference shares 364
Some unusual types of shares 366
Floating on the Main Market (Official List) 367
Methods of issue 372
Timetable for a new issue (initial public offering, IPO) 374
How does an AIM flotation differ from one on the Official List? 379
The costs of new issues 380
Rights issues 383
Case study 10.2 Cookson: a very troubled rights issue 386
Other equity issues 387
Scrip issues 389
Warrants 390
Equity finance for unquoted firms 391
Case study 10.3 The value of honesty and patience 393
Disillusionment and dissatisfaction with quotation 404
Concluding comments 405
Key points and concepts 405
Appendix 10.1 Reasons for and against floating 408
References and further reading 417
Websites 418
Video presentations 418
Case study recommendations 418
Self-review questions 419
Questions and problems 420
Assignments 422
11 Long-term debt finance 423
Learning outcomes 423
Introduction 424
Some fundamental features of debt finance 425
Bonds 425
Bank borrowing 428
Syndicated loans 431
Credit rating 431
Mezzanine finance and high-yield (junk) bonds 436
Case study 11.1 The junk bond wizard: Michael Milken 437
Convertible bonds 441
Valuing bonds 444
International sources of debt finance 449
Project finance 456
xii Contents
Sale and leaseback 458
Securitisation 458
The term structure of interest rates 461
Concluding comments 465
Key points and concepts 465
References and further reading 467
Websites 468
Video presentations 469
Case study recommendations 468
Self-review questions 469
Questions and problems 470
Assignments 472
12 Short-term and medium-term finance 473
Learning outcomes 473
Introduction 474
Bank sources 474
Trade credit 479
Trade debtor management 483
Factoring 489
Hire purchase 493
Leasing 495
Bills of exchange 500
Acceptance credits (bank bills or banker s acceptance) 502
Concluding comments 503
Key points and concepts 505
References and further reading 507
Websites 507
Video presentations 508
Case study recommendations 508
Self-review questions 508
Questions and problems 509
Assignments 512
13 Treasury and working capita! management 513
Learning outcomes 513
Introduction 514
The main areas of treasury and working capital management 515
Case study 13.1 Cadbury Schweppes treasury risk management 517
Financing 518
Risk management 526
Working capital management 529
Investment of temporary surplus funds 549
Concluding comments 552
Key points and concepts 553
References and further reading 554
Websites 555
Video presentations 555
Case study recommendations 555
Self-review questions 556
Contents xili
Questions and problems 556
Assignments 561
14 Stock market efficiency 562
Learning outcomes 562
Introduction 563
What is meant by efficiency? 563
Random walks 568
The three levels of efficiency 570
Weak-form tests 570
Semi-strong-form tests 577
Strong-form tests 595
Behavioural finance 596
Misconceptions about the efficient market hypothesis 601
Implications of the EMH for investors 602
Implications of the EMH for companies 603
Concluding comments 604
Key points and concepts 605
References and further reading 606
Case study recommendations 613
Self-review questions 614
Questions and problems 614
Assignment 616
Part 5 Corporate value 617
15 Value management 618
Learning outcomes 618
Introduction 619
Value creation and value destruction 621
The shareholder wealth-maximising goal 623
Three steps of value 626
Earnings-based management 626
How a business creates value 635
Concluding comments 641
Key points and concepts 642
References and further reading 644
Case study recommendation 644
Self-review questions 645
Questions and problems 645
Assignment 647
16 Strategy and value 648
Learning outcomes 648
Introduction 649
An overview of the application of value principles 649
The firm s objective 649
Strategic business unit management 649
xiv Contents
Corporate strategy 660
Targets and motivation 662
Case study 16.1 Strategy, planning and budgeting at Lloyds TSB 664
Concluding comments 664
Key points and concepts 664
References and further reading 666
Video presentations 667
Website 667
Case study recommendation 667
Self-review questions 667
Questions and problems 668
Assignments 668
17 Value-creation metrics 669
Learning outcomes 669
Introduction 670
Using cash flow to measure value 670
Shareholder value analysis 675
Economic profit 682
Economic value added (EVA®) 688
Cash flow return on investment (CFROI) 690
Concluding comments 691
Key points and concepts 691
References and further reading 694
Website 694
Case study recommendations 695
Self-review questions 695
Questions and problems 695
Assignment 698
18 Entire firm value measurement 700
Learning outcomes 700
Introduction 701
Total shareholder return (TSR) 701
Wealth Added Index (WAI) 704
Case study 18.1 Vodafone 705
Market Value Added (MVA) 706
Excess return (ER) 709
Market to book ratio (MBR) 710
Concluding comments 712
Key points and concepts 712
References and further reading 713
Website 714
Case study recommendation 714
Self-review questions 714
Questions and problems 714
Assignment 715
Contents
19 The cost of capital 716
Learning outcomes 716
Introduction 717
A word of warning 717
The required rate of return 717
The weighted average cost of capital (WACC) 719
The cost of equity capital 725
The cost of retained earnings 727
The cost of debt capital 727
The cost of preference share capital 729
Calculating the weights 730
Applying the WACC to projects and SBUs 731
Empirical evidence of corporate practice 732
Implementation issues 736
Fundamental beta 740
Some thoughts on the cost of capital 741
Concluding comments 742
Key points and concepts 742
References and further reading 743
Websites 745
Video presentations 745
Case study recommendations 745
Self-review questions 745
Questions and problems 746
Assignment 748
20 Valuing shares 749
Learning outcomes 749
Introduction 750
Case study 20.1 Amazon.com 750
Valuation using net asset value (NAV) 751
Valuation using income-flow methods 754
The dividend valuation models 755
The price-earnings ratio (PER) model 763
Valuation using cash flow 768
Valuation using owner earnings 770
Valuing unquoted shares 773
Unusual companies 774
Managerial control and valuation 775
Allowing for real option values 777
Concluding comments 780
Key points and concepts 781
References and further reading 783
Websites 784
Case study recommendations 784
Self-review questions 784
Questions and problems 785
Assignments 791
xvi Contents
21 Capita! structure 792
Learning outcomes 792
Introduction 793
Case study 21.1 The balance between debt and ordinary share capital 794
What do we mean by gearing ? 795
The effect of gearing 800
The value of the firm and the cost of capital 803
Does the cost of capital (WACC) decrease with higher debt levels? 804
Modigliani and Miller s argument in a world with no taxes 805
The capital structure decision in a world with tax 809
Additional considerations 812
Some further thoughts on debt finance 822
Concluding comments 826
Key points and concepts 828
Appendix 21.1 Asset beta 829
Appendix 21.2 Adjusted present value (APV) 831
References and further reading 832
Video presentations 835
Case study recommendations 835
Self-review questions 835
Questions and problems 836
Assignments 838
22 Dividend policy 839
Learning outcomes 839
Introduction 840
Defining the problem 840
Miller and Modigliani s dividend irrelevancy proposition 841
Dividends as a residual 843
Clientele effects 844
Taxation 846
Dividends as conveyors of information 846
Resolution of uncertainty 848
Owner control (agency theory) 849
Scrip dividends 850
Share buy-backs and special dividends 851
A round-up of the arguments 854
Concluding comments 855
Key points and concepts 856
References and further reading 857
Video presentations 859
Case study recommendations 859
Self-review questions 859
Questions and problems 859
Assignments 862
23 Mergers 863
Learning outcomes 863
Introduction 864
The merger decision 864
Contents xvii
Definitions and semantics 865
Merger statistics 866
Merger motives 866
Case study 23.1 Economies of scale in oil 871
Financing mergers 878
The merger process 883
The impact of mergers 887
Managing mergers 893
Concluding comments 902
Key points and concepts 902
References and further reading 904
Websites 907
Video presentations 907
Case study recommendations 908
Self-review questions 908
Questions and problems 909
Assignment 911
Part 6 Managing risk 913
24 Derivatives 914
Learning outcomes 914
Introduction 915
A long history 915
Options 916
Forwards 924
Futures 925
Forward rate agreements (FRAs) 938
A comparison of options, futures, forwards and FRAs 938
Caps 940
Swaps 941
Derivatives users 944
Concluding comments 945
Key points and concepts 946
Appendix 24.1 Option pricing 947
Appendix 24.2 The relationship between FRAs and swaps 949
References and further reading 952
Websites 952
Self-review questions 953
Questions and problems 954
Assignments 957
25 Managing exchange-rate risk 958
Learning outcomes 958
Introduction 959
Case study 25.1 What a difference a few percentage point moves on the
exchange rate make 959
The effects of exchange-rate changes 960
Volatility in foreign exchange 960
The foreign exchange markets 962
Exchange rates 965
xvlii Contents
Types of foreign-exchange risk 969
Transaction risk strategies 972
Managing translation risk 981
Managing economic risk 982
Exchange-rate determination 984
Concluding comments 991
Key points and concepts 991
References and further reading 992
Websites 993
Case study recommendations 993
Self-review questions 993
Questions and problems 994
Assignments 996
APPENDICES a:i
I Future value of £1 at compound interest A:2
II Present value of £1 at compound interest A:3
III Present value of an annuity of £1 at compound interest A:4
IV The future value of an annuity of £1 at compound interest A:5
V Areas under the standardised normal distribution A:6
VI Answers to the mathematical tools exercises in Chapter 2, Appendix 2.1 A:7
VII Solutions to selected questions and problems A:8
Glossary G:1
Bibliography B:1
Index 1:1
|
| adam_txt |
Brief contents
Topics covered in the book xix
Introduction to the book xxi
Guided Tour xxviii
Using MyFinanceLab xxxi
Acknowledgements xxxiv
Part 1 Introduction 1
1 The financial world 2
Part 2 The investment decision 47
2 Project appraisal: Net present value and internal rate of return 48
3 Project appraisal: Cash flow and applications 91
4 The decision-making process for investment appraisal 127
5 Project appraisal: Capital rationing, taxation and inflation 153
Part 3 Risk and return 175
6 Risk and project appraisal 176
7 Portfolio theory 229
8 The capital asset pricing model and multi-factor models 274
319
320
359
423
473
513
562
617
618
648
669
700
716
749
Part 4 Sources of finance
9 Stock markets
10 Raising equity capital
11 Long-term debt finance
12 Short-term and medium-term finance
13 Treasury and working capital management
14 Stock market efficiency
Part 5 Corporate value
15 Value management
16 Strategy and value
17 Value-creation metrics
18 Entire firm value measurement
19 The cost of capital
20 Valuing shares
vi
Brief contents
21 Capital structure
22 Dividend policy
23 Mergers
792
839
863
Part 6 Managing risk 913
24 Derivatives 914
25 Managing exchange-rate risk 958
Appendices A:i
I Future value of £1 at compound interest A:2
II Present value of f 1 at compound interest A:3
III Present value of an annuity of £1 at compound interest A:4
IV The future value of an annuity of £1 at compound interest A:5
V Areas under the standardised normal distribution A:6
VI Answers to the mathematical tools exercises in Chapter 2, Appendix 2.1 A:7
VII Solutions to selected questions and problems A:8
Glossary C:7
Bibliography B:1
Index 1:1
Contents
Topics covered in the book
Introduction to the book
Guided Tour
Using MyFinanceLab
Acknowledgements
XIX
xxi
xxviii
xxxi
xxxiv
Part 1 Introduction
1 The financial world
Learning outcomes
Introduction
The objective of the firm
Case study 1.1 Cadbury Schweppes
Some possible objectives
Corporate governance
Primitive and modern economies
The role of the financial manager
The flow of funds and financial intermediation
Growth in the financial services sector
The financial system
Concluding comments
Key points and concepts
References and further reading
Websites
Self-review questions
Questions and problems
Assignments
2
3
3
3
5
15
18
21
24
30
34
39
40
41
43
44
44
45
Part 2 The investment decision
2 Project appraisal: net present value and internal rate of return
Learning outcomes
Introduction
Value creation and corporate investment
Net present value and internal rate of return
Modified internal rate of return
Concluding comments
Key points and concepts
Appendix 2.1 Mathematical tools for finance
47
48
48
49
50
54
73
76
77
78
vili Contents
Mathematical tools exercises 85
References and further reading 86
Websites 86
Case study recommendations 86
Self-review questions 87
Questions and problems 87
Assignments 90
Project appraisal: cash flow and applications 91
Learning outcomes 91
Introduction 92
Case study 3.1 Airbus's superjumbo 92
Quality of information 93
Are profit calculations useful for estimating project viability? 94
The replacement decision 105
Replacement cycles 107
When to introduce a new machine 112
Drawbacks of the annual equivalent annuity method 113
Timing of projects 113
The make or buy decision 114
Fluctuating output 115
Concluding comments 116
Key points and concepts 117
References and further reading 117
Case study recommendations 118
Self-review questions 118
Questions and problems 119
Assignments 126
4 The decision-making process for investment appraisal 127
Learning outcomes 127
Introduction 128
Evidence on the employment of appraisal techniques 129
Payback 129
Accounting rate of return 132
Internal rate of return: reasons for continued popularity 135
The managerial 'art' of investment appraisal 135
The investment process 139
Concluding comments 144
Key points and concepts 144
References and further reading 146
Case study recommendations 149
Self-review questions 150
Questions and problems 150
Assignments 152
5 Project appraisal: capital rationing, taxation and inflation 153
Learning outcomes 753
Contents ix
Capital rationing 154
Taxation and investment appraisal 158
Inflation 161
Case study 5.1 Eurotunnel's inflation allowance 161
Concluding comments 166
Key points and concepts 166
References and further reading 167
Case study recommendations 168
Self-review questions 168
Questions and problems 168
Assignments 173
Part 3 Risk and return 175
6 Risk and project appraisal 176
Learning outcomes 176
Case study 6.1 Two risky ventures. 177
Introduction 177
What is risk? 178
Adjusting for risk through the discount rate 180
Sensitivity analysis 180
Scenario analysis 185
Probability analysis 187
The risk of insolvency 197
Problems of using probability analysis 202
Evidence of risk analysis in practice 203
Real options 203
Case study 6.2 RJB A/lining: risky coalfields 212
Concluding comments 217
Key points and concepts 218
References and further reading 219
Case study recommendations 220
Self-review questions 221
Questions and problems 221
Assignments 228
7 Portfolio theory 229
Learning outcomes 229
Introduction 230
Holding period returns 230
Expected return and standard deviation for shares 232
Combinations of investments 235
Portfolio expected return and standard deviation 242
Dominance and the efficient frontier 246
Indifference curves 249
Choosing the optimal portfolio 252
The boundaries of diversification 253
Extension to a large number of securities 256
Evidence on the benefits of diversification 257
The capital market line 260
A practical application of portfolio theory 262
Problems with portfolio theory 264
Contents
Concluding comments 264
Key points and concepts 265
References and further reading 266
Case study recommendations 268
Self-review questions 268
Questions and problems 268
Assignments 273
The capita! asset pricing model and multi-factor models 274
Learning outcomes 274
Introduction 275
A short history of shares, bonds and bills 276
The capital asset pricing model 283
Factor models 299
The arbitrage pricing theory 301
The three-factor model 320
An alternative approach to the risk-return relationship 303
Project appraisal and systematic risk 304
Sceptics' views - alternative perspectives on risk 305
Concluding comments 308
Key points and concepts 309
Appendix 8.1 Note on arithmetic and geometric means 310
References and further reading 311
Case study recommendation 314
Self-review questions 315
Questions and problems 315
Assignments 317
Part 4 Sources of finance 319
9 Stock markets 320
Learning outcomes 320
Case study 9.1 Using the stock market both to create wealth and to
treat disease 321
Introduction 321
Stock exchanges around the world 321
European stock exchanges 325
Globalisation of financial flows 328
Why do companies list their shares on more than one exchange? 329
The importance of a well-run stock exchange 332
The London Stock Exchange 335
The UK equity markets available to companies 339
Tasks for stock exchanges 342
Trading systems 343
The ownership of UK quoted shares 348
Regulation 348
Understanding the figures in the financial pages 349
Taxation and corporate finance 353
Concluding comments 354
Key points and concepts 354
References and further reading 356
Contents xi
Websites 356
Video presentations 357
Self-review questions 357
Questions and problems 358
Assignments 358
10 Raising equity capital 359
Learning outcomes 359
Case study 10.1 To float or not to float? 360
Introduction 360
What is equity capital? 361
Preference shares 364
Some unusual types of shares 366
Floating on the Main Market (Official List) 367
Methods of issue 372
Timetable for a new issue (initial public offering, IPO) 374
How does an AIM flotation differ from one on the Official List? 379
The costs of new issues 380
Rights issues 383
Case study 10.2 Cookson: a very troubled rights issue 386
Other equity issues 387
Scrip issues 389
Warrants 390
Equity finance for unquoted firms 391
Case study 10.3 The value of honesty and patience 393
Disillusionment and dissatisfaction with quotation 404
Concluding comments 405
Key points and concepts 405
Appendix 10.1 Reasons for and against floating 408
References and further reading 417
Websites 418
Video presentations 418
Case study recommendations 418
Self-review questions 419
Questions and problems 420
Assignments 422
11 Long-term debt finance 423
Learning outcomes 423
Introduction 424
Some fundamental features of debt finance 425
Bonds 425
Bank borrowing 428
Syndicated loans 431
Credit rating 431
Mezzanine finance and high-yield (junk) bonds 436
Case study 11.1 The junk bond wizard: Michael Milken 437
Convertible bonds 441
Valuing bonds 444
International sources of debt finance 449
Project finance 456
xii Contents
Sale and leaseback 458
Securitisation 458
The term structure of interest rates 461
Concluding comments 465
Key points and concepts 465
References and further reading 467
Websites 468
Video presentations 469
Case study recommendations 468
Self-review questions 469
Questions and problems 470
Assignments 472
12 Short-term and medium-term finance 473
Learning outcomes 473
Introduction 474
Bank sources 474
Trade credit 479
Trade debtor management 483
Factoring 489
Hire purchase 493
Leasing 495
Bills of exchange 500
Acceptance credits (bank bills or banker's acceptance) 502
Concluding comments 503
Key points and concepts 505
References and further reading 507
Websites 507
Video presentations 508
Case study recommendations 508
Self-review questions 508
Questions and problems 509
Assignments 512
13 Treasury and working capita! management 513
Learning outcomes 513
Introduction 514
The main areas of treasury and working capital management 515
Case study 13.1 Cadbury Schweppes' treasury risk management 517
Financing 518
Risk management 526
Working capital management 529
Investment of temporary surplus funds 549
Concluding comments 552
Key points and concepts 553
References and further reading 554
Websites 555
Video presentations 555
Case study recommendations 555
Self-review questions 556
Contents xili
Questions and problems 556
Assignments 561
14 Stock market efficiency 562
Learning outcomes 562
Introduction 563
What is meant by efficiency? 563
Random walks 568
The three levels of efficiency 570
Weak-form tests 570
Semi-strong-form tests 577
Strong-form tests 595
Behavioural finance 596
Misconceptions about the efficient market hypothesis 601
Implications of the EMH for investors 602
Implications of the EMH for companies 603
Concluding comments 604
Key points and concepts 605
References and further reading 606
Case study recommendations 613
Self-review questions 614
Questions and problems 614
Assignment 616
Part 5 Corporate value 617
15 Value management 618
Learning outcomes 618
Introduction 619
Value creation and value destruction 621
The shareholder wealth-maximising goal 623
Three steps of value 626
Earnings-based management 626
How a business creates value 635
Concluding comments 641
Key points and concepts 642
References and further reading 644
Case study recommendation 644
Self-review questions 645
Questions and problems 645
Assignment 647
16 Strategy and value 648
Learning outcomes 648
Introduction 649
An overview of the application of value principles 649
The firm's objective 649
Strategic business unit management 649
xiv Contents
Corporate strategy 660
Targets and motivation 662
Case study 16.1 Strategy, planning and budgeting at Lloyds TSB 664
Concluding comments 664
Key points and concepts 664
References and further reading 666
Video presentations 667
Website 667
Case study recommendation 667
Self-review questions 667
Questions and problems 668
Assignments 668
17 Value-creation metrics 669
Learning outcomes 669
Introduction 670
Using cash flow to measure value 670
Shareholder value analysis 675
Economic profit 682
Economic value added (EVA®) 688
Cash flow return on investment (CFROI) 690
Concluding comments 691
Key points and concepts 691
References and further reading 694
Website 694
Case study recommendations 695
Self-review questions 695
Questions and problems 695
Assignment 698
18 Entire firm value measurement 700
Learning outcomes 700
Introduction 701
Total shareholder return (TSR) 701
Wealth Added Index (WAI) 704
Case study 18.1 Vodafone 705
Market Value Added (MVA) 706
Excess return (ER) 709
Market to book ratio (MBR) 710
Concluding comments 712
Key points and concepts 712
References and further reading 713
Website 714
Case study recommendation 714
Self-review questions 714
Questions and problems 714
Assignment 715
Contents
19 The cost of capital 716
Learning outcomes 716
Introduction 717
A word of warning 717
The required rate of return 717
The weighted average cost of capital (WACC) 719
The cost of equity capital 725
The cost of retained earnings 727
The cost of debt capital 727
The cost of preference share capital 729
Calculating the weights 730
Applying the WACC to projects and SBUs 731
Empirical evidence of corporate practice 732
Implementation issues 736
Fundamental beta 740
Some thoughts on the cost of capital 741
Concluding comments 742
Key points and concepts 742
References and further reading 743
Websites 745
Video presentations 745
Case study recommendations 745
Self-review questions 745
Questions and problems 746
Assignment 748
20 Valuing shares 749
Learning outcomes 749
Introduction 750
Case study 20.1 Amazon.com 750
Valuation using net asset value (NAV) 751
Valuation using income-flow methods 754
The dividend valuation models 755
The price-earnings ratio (PER) model 763
Valuation using cash flow 768
Valuation using owner earnings 770
Valuing unquoted shares 773
Unusual companies 774
Managerial control and valuation 775
Allowing for real option values 777
Concluding comments 780
Key points and concepts 781
References and further reading 783
Websites 784
Case study recommendations 784
Self-review questions 784
Questions and problems 785
Assignments 791
xvi Contents
21 Capita! structure 792
Learning outcomes 792
Introduction 793
Case study 21.1 The balance between debt and ordinary share capital 794
What do we mean by 'gearing'? 795
The effect of gearing 800
The value of the firm and the cost of capital 803
Does the cost of capital (WACC) decrease with higher debt levels? 804
Modigliani and Miller's argument in a world with no taxes 805
The capital structure decision in a world with tax 809
Additional considerations 812
Some further thoughts on debt finance 822
Concluding comments 826
Key points and concepts 828
Appendix 21.1 Asset beta 829
Appendix 21.2 Adjusted present value (APV) 831
References and further reading 832
Video presentations 835
Case study recommendations 835
Self-review questions 835
Questions and problems 836
Assignments 838
22 Dividend policy 839
Learning outcomes 839
Introduction 840
Defining the problem 840
Miller and Modigliani's dividend irrelevancy proposition 841
Dividends as a residual 843
Clientele effects 844
Taxation 846
Dividends as conveyors of information 846
Resolution of uncertainty 848
Owner control (agency theory) 849
Scrip dividends 850
Share buy-backs and special dividends 851
A round-up of the arguments 854
Concluding comments 855
Key points and concepts 856
References and further reading 857
Video presentations 859
Case study recommendations 859
Self-review questions 859
Questions and problems 859
Assignments 862
23 Mergers 863
Learning outcomes 863
Introduction 864
The merger decision 864
Contents xvii
Definitions and semantics 865
Merger statistics 866
Merger motives 866
Case study 23.1 Economies of scale in oil 871
Financing mergers 878
The merger process 883
The impact of mergers 887
Managing mergers 893
Concluding comments 902
Key points and concepts 902
References and further reading 904
Websites 907
Video presentations 907
Case study recommendations 908
Self-review questions 908
Questions and problems 909
Assignment 911
Part 6 Managing risk 913
24 Derivatives 914
Learning outcomes 914
Introduction 915
A long history 915
Options 916
Forwards 924
Futures 925
Forward rate agreements (FRAs) 938
A comparison of options, futures, forwards and FRAs 938
Caps 940
Swaps 941
Derivatives users 944
Concluding comments 945
Key points and concepts 946
Appendix 24.1 Option pricing 947
Appendix 24.2 The relationship between FRAs and swaps 949
References and further reading 952
Websites 952
Self-review questions 953
Questions and problems 954
Assignments 957
25 Managing exchange-rate risk 958
Learning outcomes 958
Introduction 959
Case study 25.1 What a difference a few percentage point moves on the
exchange rate make 959
The effects of exchange-rate changes 960
Volatility in foreign exchange 960
The foreign exchange markets 962
Exchange rates 965
xvlii Contents
Types of foreign-exchange risk 969
Transaction risk strategies 972
Managing translation risk 981
Managing economic risk 982
Exchange-rate determination 984
Concluding comments 991
Key points and concepts 991
References and further reading 992
Websites 993
Case study recommendations 993
Self-review questions 993
Questions and problems 994
Assignments 996
APPENDICES a:i
I Future value of £1 at compound interest A:2
II Present value of £1 at compound interest A:3
III Present value of an annuity of £1 at compound interest A:4
IV The future value of an annuity of £1 at compound interest A:5
V Areas under the standardised normal distribution A:6
VI Answers to the mathematical tools exercises in Chapter 2, Appendix 2.1 A:7
VII Solutions to selected questions and problems A:8
Glossary G:1
Bibliography B:1
Index 1:1 |
| any_adam_object | 1 |
| any_adam_object_boolean | 1 |
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| author_facet | Arnold, Glen |
| author_role | aut |
| author_sort | Arnold, Glen |
| author_variant | g a ga |
| building | Verbundindex |
| bvnumber | BV023478162 |
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| dewey-full | 658.15 |
| dewey-hundreds | 600 - Technology (Applied sciences) |
| dewey-ones | 658 - General management |
| dewey-raw | 658.15 |
| dewey-search | 658.15 |
| dewey-sort | 3658.15 |
| dewey-tens | 650 - Management and auxiliary services |
| discipline | Wirtschaftswissenschaften |
| discipline_str_mv | Wirtschaftswissenschaften |
| edition | 4. ed. |
| format | Book |
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| indexdate | 2024-07-09T21:19:41Z |
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| spelling | Arnold, Glen Verfasser aut Corporate financial management Glen Arnold 4. ed. Harlow [u.a.] Financial Times/Prentice Hall 2008 getr. Zählung Ill., graph. Darst. txt rdacontent n rdamedia nc rdacarrier Financieel management gtt Finanzmanagement swd Kapitalgesellschaft swd Unternehmen Business enterprises Finance Corporations Finance Unternehmen (DE-588)4061963-1 gnd rswk-swf Finanzierung (DE-588)4017182-6 gnd rswk-swf Corporate Finance (DE-588)4269795-5 gnd rswk-swf Finanzmanagement (DE-588)4139075-1 gnd rswk-swf 1\p (DE-588)4123623-3 Lehrbuch gnd-content Unternehmen (DE-588)4061963-1 s Corporate Finance (DE-588)4269795-5 s Finanzierung (DE-588)4017182-6 s Finanzmanagement (DE-588)4139075-1 s 2\p DE-604 HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=016660365&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis 1\p cgwrk 20201028 DE-101 https://d-nb.info/provenance/plan#cgwrk 2\p cgwrk 20201028 DE-101 https://d-nb.info/provenance/plan#cgwrk |
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