Fundamentals of corporate finance/ (Record no. 163907)
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000 -LEADER | |
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fixed length control field | 00381nam a2200145Ia 4500 |
020 ## - INTERNATIONAL STANDARD BOOK NUMBER | |
International Standard Book Number | 9780070667020 |
040 ## - CATALOGING SOURCE | |
Transcribing agency | CUS |
082 ## - DEWEY DECIMAL CLASSIFICATION NUMBER | |
Classification number | 658.15 |
Item number | ROS/F |
100 ## - MAIN ENTRY--PERSONAL NAME | |
Personal name | Ross, Stephen A |
245 #0 - TITLE STATEMENT | |
Title | Fundamentals of corporate finance/ |
Statement of responsibility, etc. | Stephen A. Ross ... [et al.]. |
250 ## - EDITION STATEMENT | |
Edition statement | 8th ed. |
260 ## - PUBLICATION, DISTRIBUTION, ETC. (IMPRINT) | |
Place of publication, distribution, etc. | New Delhi: |
Name of publisher, distributor, etc. | Tata McGrew Hill, |
Date of publication, distribution, etc. | 2010. |
300 ## - PHYSICAL DESCRIPTION | |
Extent | xxxii, 753 p. |
Other physical details | ill. |
Dimensions | 24 cm. |
505 ## - FORMATTED CONTENTS NOTE | |
Formatted contents note | PART ONE<br/>Overview of Corporate Finance<br/><br/>Chapter 1<br/>Introduction to Corporate Finance 1<br/>1.1 Corporate Finance and the<br/>Financial Manager 2<br/>What Is Corporate Finance? 2<br/>The Financial Manager 2<br/>Financial Management Decisions 2<br/>Capital Budgeting 2<br/>Capital Structure 3<br/>Working Capital Management 4<br/>Conclusion 4<br/>1.2 Forms of Business Organization 4<br/>Sole Proprietorship 5<br/>Partnership 5<br/>Corporation 6<br/>A Corporation by Another Name . . . 7<br/>1.3 The Goal of Financial Management 8<br/>Possible Goals 8<br/>The Goal of Financial Management 9<br/>A More General Goal 9<br/>1.4 The Agency Problem and Control<br/>of the Corporation 10<br/>Agency Relationships 10<br/>Management Goals 10<br/>Do Managers Act in the Stockholders? Interests? 12<br/>Managerial Compensation 12<br/>Control of the Firm 13<br/>Conclusion 14<br/>Stakeholders 14<br/>1.5 Financial Markets and the Corporation 14<br/>Cash Flows to and from the Firm 14<br/>Primary versus Secondary Markets 15<br/>Primary Markets 15<br/>Secondary Markets 16<br/>1.6 Summary and Conclusions 17<br/>Chapter 2<br/>Financial Statements, Taxes,<br/>and Cash Flow 20<br/>2.1 The Balance Sheet 21<br/>Assets: The Left-Hand Side 21<br/>Liabilities and Owners? Equity: The Right-Hand Side 21<br/>>><br/>Net Working Capital 22<br/>Liquidity 23<br/>Debt versus Equity 24<br/>Market Value versus Book Value 24<br/>2.2 The Income Statement 25<br/>GAAP and the Income Statement 26<br/>Noncash Items 27<br/>Time and Costs 27<br/>2.3 Taxes 29<br/>Corporate Tax Rates 29<br/>Average versus Marginal Tax Rates 29<br/>2.4 Cash Flow 31<br/>Cash Flow from Assets 32<br/>Operating Cash Flow 32<br/>Capital Spending 33<br/>Change in Net Working Capital 33<br/>Conclusion 34<br/>A Note on "Free" Cash Flow 34<br/>Cash Flow to Creditors and Stockholders 34<br/>Cash Flow to Creditors 34<br/>Cash Flow to Stockholders 35<br/>An Example: Cash Flows for Dole Cola 36<br/>Operating Cash Flow 36<br/>Net Capital Spending 37<br/>Change in NWC and Cash Flow from Assets 37<br/>Cash Flow to Stockholders and Creditors 38<br/>2.5 Summary and Conclusions 39<br/>PART TWO<br/>Financial Statements and Long-Term<br/><br/>Financial Planning<br/>Chapter 3<br/>Working with Financial Statements 48<br/>3.1 Cash Flow and Financial Statements:<br/>A Closer Look 49<br/>Sources and Uses of Cash 49<br/>The Statement of Cash Flows 51<br/>3.2 Standardized Financial Statements 53<br/>Common-Size Statements 53<br/>Common-Size Balance Sheets 54<br/>Common-Size Income Statements 54<br/>Common-Size Statements of Cash Flows 55<br/>Common?Base Year Financial Statements:<br/>Trend Analysis 55<br/>Combined Common-Size and Base-Year Analysis 56<br/>ros91593_fm.qxd 12/20/04 22:06 Page xxxiii<br/>3.3 Ratio Analysis 56<br/>Short-Term Solvency, or Liquidity, Measures 57<br/>Current Ratio 58<br/>The Quick (or Acid-Test) Ratio 59<br/>Other Liquidity Ratios 59<br/>Long-Term Solvency Measures 60<br/>Total Debt Ratio 60<br/>A Brief Digression: Total Capitalization versus<br/>Total Assets 61<br/>Times Interest Earned 61<br/>Cash Coverage 61<br/>Asset Management, or Turnover, Measures 62<br/>Inventory Turnover and Days? Sales in Inventory 62<br/>Receivables Turnover and Days? Sales in Receivables 63<br/>Asset Turnover Ratios 64<br/>Profitability Measures 64<br/>Profit Margin 65<br/>Return on Assets 65<br/>Return on Equity 65<br/>Market Value Measures 66<br/>Price-Earnings Ratio 66<br/>Market-to-Book Ratio 67<br/>Conclusion 68<br/>3.4 The Du Pont Identity 68<br/>A Closer Look at ROE 68<br/>An Expanded Du Pont Analysis 70<br/>3.5 Using Financial Statement Information 71<br/>Why Evaluate Financial Statements? 72<br/>Internal Uses 72<br/>External Uses 72<br/>Choosing a Benchmark 72<br/>Time-Trend Analysis 72<br/>Peer Group Analysis 73<br/>Problems with Financial Statement Analysis 77<br/>3.6 Summary and Conclusions 78<br/>Chapter 4<br/>Long-Term Financial Planning<br/>and Growth 90<br/>4.1 What Is Financial Planning? 91<br/>Growth as a Financial Management Goal 91<br/>Dimensions of Financial Planning 92<br/>What Can Planning Acccomplish? 93<br/>Examining Interactions 93<br/>Exploring Options 93<br/>Avoiding Surprises 93<br/>Ensuring Feasibility and Internal Consistency 93<br/>Conclusion 94<br/>4.2 Financial Planning Models: A First Look 94<br/>A Financial Planning Model:The Ingredients 94<br/>Sales Forecast 94<br/>Pro Forma Statements 94<br/>Asset Requirements 95<br/>Financial Requirements 95<br/>The Plug 95<br/>Economic Assumptions 95<br/>A Simple Financial Planning Model 95<br/>4.3 The Percentage of Sales Approach 97<br/>The Income Statement 97<br/>The Balance Sheet 98<br/>A Particular Scenario 99<br/>An Alternative Scenario 100<br/>4.4 External Financing and Growth 102<br/>EFN and Growth 104<br/>Financial Policy and Growth 106<br/>The Internal Growth Rate 106<br/>The Sustainable Growth Rate 107<br/>Determinants of Growth 108<br/>A Note on Sustainable Growth Rate Calculations 109<br/>4.5 Some Caveats Regarding Financial<br/>Planning Models 111<br/>4.6 Summary and Conclusions 111<br/>PART THREE<br/>Valuation of Future Cash Flows<br/>Chapter 5<br/>Introduction to Valuation:<br/>The Time Value of Money 124<br/>5.1 Future Value and Compounding 125<br/>Investing for a Single Period 125<br/>Investing for More Than One Period 125<br/>A Note on Compound Growth 131<br/>5.2 Present Value and Discounting 132<br/>The Single-Period Case 132<br/>Present Values for Multiple Periods 133<br/>5.3 More on Present and Future Values 136<br/>Present versus Future Value 136<br/>Determining the Discount Rate 137<br/>Finding the Number of Periods 141<br/>5.4 Summary and Conclusions 144<br/>Chapter 6<br/>Discounted Cash Flow Valuation 149<br/>6.1 Future and Present Values of<br/>Multiple Cash Flows 150<br/>Future Value with Multiple Cash Flows 150<br/>Present Value with Multiple Cash Flows 153<br/>A Note on Cash Flow Timing 156<br/>6.2 Valuing Level Cash Flows:<br/>Annuities and Perpetuities 157<br/>Present Value for Annuity Cash Flows 157<br/>Annuity Tables 159<br/>Finding the Payment 160<br/>Finding the Rate 162<br/>Future Value for Annuities 163<br/>A Note on Annuities Due 164<br/>Perpetuities 165<br/>6.3 Comparing Rates:The Effect<br/>of Compounding 167<br/>Effective Annual Rates and Compounding 167<br/>Calculating and Comparing Effective<br/>Annual Rates 168<br/>EARs and APRs 170<br/>Taking It to the Limit: A Note on<br/>Continuous Compounding 171<br/>6.4 Loan Types and Loan Amortization 172<br/>Pure Discount Loans 172<br/>Interest-Only Loans 173<br/>Amortized Loans 173<br/>6.5 Summary and Conclusions 178<br/>Chapter 7<br/>Interest Rates and Bond<br/>Valuation 192<br/>7.1 Bonds and Bond Valuation 193<br/>Bond Features and Prices 193<br/>Bond Values and Yields 193<br/>Interest Rate Risk 197<br/>Finding the Yield to Maturity: More Trial<br/>and Error 198<br/>7.2 More on Bond Features 203<br/>Is It Debt or Equity? 203<br/>Long-Term Debt: The Basics 203<br/>The Indenture 205<br/>Terms of a Bond 205<br/>Security 206<br/>Seniority 206<br/>Repayment 206<br/>The Call Provision 207<br/>Protective Covenants 207<br/>7.3 Bond Ratings 208<br/>7.4 Some Different Types of Bonds 209<br/>Government Bonds 209<br/>Zero Coupon Bonds 210<br/>Floating-Rate Bonds 211<br/>Other Types of Bonds 212<br/>7.5 Bond Markets 214<br/>How Bonds Are Bought and Sold 214<br/>Bond Price Reporting 216<br/>A Note on Bond Price Quotes 219<br/>7.6 Inflation and Interest Rates 219<br/>Real versus Nominal Rates 219<br/>The Fisher Effect 220<br/>7.7 Determinants of Bond Yields 221<br/>The Term Structure of Interest Rates 221<br/>Bond Yields and the Yield Curve: Putting<br/>It All Together 223<br/>Conclusion 225<br/>7.8 Summary and Conclusions 226<br/>Chapter 8<br/>Stock Valuation 233<br/>8.1 Common Stock Valuation 234<br/>Cash Flows 234<br/>Some Special Cases 236<br/>Zero Growth 236<br/>Constant Growth 236<br/>Nonconstant Growth 239<br/>Components of the Required Return 241<br/>8.2 Some Features of Common and<br/>Preferred Stocks 243<br/>Common Stock Features 243<br/>Shareholder Rights 243<br/>Proxy Voting 244<br/>Classes of Stock 245<br/>Other Rights 245<br/>Dividends 245<br/>Preferred Stock Features 246<br/>Stated Value 246<br/>Cumulative and Noncumulative Dividends 246<br/>Is Preferred Stock Really Debt? 247<br/>8.3 The Stock Markets 247<br/>Dealers and Brokers 247<br/>Organization of the NYSE 248<br/>Members 248<br/>Operations 249<br/>Floor Activity 249<br/>NASDAQ Operations 250<br/>NASDAQ Participants 251<br/>Stock Market Reporting 252<br/>8.4 Summary and Conclusions 254<br/>PART FOUR<br/>Capital Budgeting<br/>Chapter 9<br/>Net Present Value and Other<br/>Investment Criteria 261<br/>9.1 Net Present Value 262<br/>The Basic Idea 262<br/>Estimating Net Present Value 263<br/>9.2 The Payback Rule 266<br/>Defining the Rule 266<br/>Analyzing the Rule 267<br/>Redeeming Qualities of the Rule 268<br/>Summary of the Rule 269<br/>9.3 The Discounted Payback 269<br/>9.4 The Average Accounting Return 272<br/>9.5 The Internal Rate of Return 274<br/>Problems with the IRR 278<br/>Nonconventional Cash Flows 278<br/>Mutually Exclusive Investments 280<br/>Redeeming Qualities of the IRR 282<br/>9.6 The Profitability Index 283<br/>9.7 The Practice of Capital Budgeting 284<br/>9.8 Summary and Conclusions 286<br/>Chapter 10<br/>Making Capital Investment<br/>Decisions 295<br/>10.1 Project Cash Flows:A First Look 296<br/>Relevant Cash Flows 296<br/>The Stand-Alone Principle 296<br/>10.2 Incremental Cash Flows 296<br/>Sunk Costs 297<br/>Opportunity Costs 297<br/>Side Effects 298<br/>Net Working Capital 298<br/>Financing Costs 298<br/>Other Issues 299<br/>10.3 Pro Forma Financial Statements and Project<br/>Cash Flows 299<br/>Getting Started: Pro Forma Financial<br/>Statements 299<br/>Project Cash Flows 300<br/>Project Operating Cash Flow 301<br/>Project Net Working Capital and Capital<br/>Spending 301<br/>Projected Total Cash Flow and Value 301<br/>10.4 More on Project Cash Flow 302<br/>A Closer Look at Net Working Capital 302<br/>Depreciation 305<br/>Modified ACRS Depreciation (MACRS) 305<br/>Book Value versus Market Value 307<br/>An Example: The Majestic Mulch and<br/>Compost Company (MMCC) 308<br/>Operating Cash Flows 309<br/>Change in NWC 309<br/>Capital Spending 310<br/>Total Cash Flow and Value 310<br/>Conclusion 312<br/>10.5 Alternative Definitions of Operating<br/>Cash Flow 312<br/>The Bottom-Up Approach 313<br/>The Top-Down Approach 313<br/>The Tax Shield Approach 314<br/>Conclusion 314<br/>10.6 Some Special Cases of Discounted<br/>Cash Flow Analysis 314<br/>Evaluating Cost-Cutting Proposals 315<br/>Setting the Bid Price 316<br/>Evaluating Equipment Options with<br/>Different Lives 319<br/>10.7 Summary and Conclusions 321<br/>Chapter 11<br/>Project Analysis and<br/>Evaluation 330<br/>11.1 Evaluating NPV Estimates 331<br/>The Basic Problem 331<br/>Projected versus Actual Cash Flows 331<br/>Forecasting Risk 331<br/>Sources of Value 332<br/>11.2 Scenario and Other What-If Analyses 333<br/>Getting Started 333<br/>Scenario Analysis 334<br/>Sensitivity Analysis 336<br/>Simulation Analysis 337<br/>11.3 Break-Even Analysis 337<br/>Fixed and Variable Costs 338<br/>Variable Costs 338<br/>Fixed Costs 339<br/>Total Costs 339<br/>Accounting Break-Even 341<br/>Accounting Break-Even:<br/>A Closer Look 342<br/>Uses for the Accounting Break-Even 343<br/>11.4 Operating Cash Flow, Sales Volume,<br/>and Break-Even 344<br/>Accounting Break-Even and Cash Flow 344<br/>The Base Case 344<br/>Calculating the Break-Even Level 344<br/>Payback and Break-Even 345<br/>Sales Volume and Operating Cash Flow 345<br/>Cash Flow, Accounting, and Financial<br/>Break-Even Points 346<br/>Accounting Break-Even Revisited 346<br/>Cash Break-Even 346<br/>Financial Break-Even 347<br/>Conclusion 347<br/>11.5 Operating Leverage 349<br/>The Basic Idea 349<br/>Implications of Operating Leverage 349<br/>Measuring Operating Leverage 349<br/>Operating Leverage and Break-Even 351<br/>11.6 Capital Rationing 352<br/>Soft Rationing 352<br/>Hard Rationing 352<br/>11.7 Summary and Conclusions 353<br/>PART FIVE<br/>Risk and Return<br/>Chapter 12<br/>Some Lessons from Capital<br/>Market History 361<br/>12.1 Returns 362<br/>Dollar Returns 362<br/>Percentage Returns 364<br/>12.2 The Historical Record 366<br/>A First Look 367<br/>A Closer Look 368<br/>12.3 Average Returns: The First Lesson 372<br/>Calculating Average Returns 372<br/>Average Returns: The Historical Record 372<br/>Risk Premiums 373<br/>The First Lesson 373<br/>12.4 The Variability of Returns: The Second<br/>Lesson 374<br/>Frequency Distributions and Variability 374<br/>The Historical Variance and Standard Deviation 375<br/>The Historical Record 377<br/>Normal Distribution 377<br/>The Second Lesson 379<br/>Using Capital Market History 379<br/>12.5 More on Average Returns 380<br/>Arithmetic versus Geometric Averages 380<br/>Calculating Geometric Average Returns 381<br/>Arithmetic Average Return or Geometric<br/>Average Return? 382<br/>12.6 Capital Market Efficiency 383<br/>Price Behavior in an Efficient Market 383<br/>The Efficient Markets Hypothesis 385<br/>Some Common Misconceptions about the EMH 385<br/>The Forms of Market Efficiency 387<br/>12.7 Summary and Conclusions 388<br/>Chapter 13<br/>Return, Risk, and the Security<br/>Market Line 394<br/>13.1 Expected Returns and Variances 395<br/>Expected Return 395<br/>Calculating the Variance 397<br/>13.2 Portfolios 398<br/>Portfolio Weights 399<br/>Portfolio Expected Returns 399<br/>Portfolio Variance 400<br/>13.3 Announcements, Surprises, and<br/>Expected Returns 402<br/>Expected and Unexpected Returns 402<br/>Announcements and News 403<br/>13.4 Risk: Systematic and Unsystematic 404<br/>Systematic and Unsystematic Risk 404<br/>Systematic and Unsystematic Components of Return 405<br/>13.5 Diversification and Portfolio Risk 406<br/>The Effect of Diversification: Another Lesson from<br/>Market History 406<br/>The Principle of Diversification 407<br/>Diversificaton and Unsystematic Risk 408<br/>Diversification and Systematic Risk 408<br/>13.6 Systematic Risk and Beta 409<br/>The Systematic Risk Principle 409<br/>Measuring Systematic Risk 410<br/>Portfolio Betas 411<br/>13.7 The Security Market Line 412<br/>Beta and the Risk Premium 412<br/>The Reward-to-Risk Ratio 413<br/>The Basic Argument 414<br/>The Fundamental Result 416<br/>The Security Market Line 417<br/>Market Portfolios 417<br/>The Capital Asset Pricing Model 418<br/>13.8 The SML and the Cost of Capital:<br/>A Preview 420<br/>The Basic Idea 420<br/>The Cost of Capital 420<br/>13.9 Summary and Conclusions 421<br/>Chapter 14<br/>Options and Corporate Finance 430<br/>14.1 Options: The Basics 431<br/>Puts and Calls 431<br/>Stock Option Quotations 431<br/>Option Payoffs 433<br/>14.2 Fundamentals of Option Valuation 436<br/>Value of a Call Option at Expiration 436<br/>The Upper and Lower Bounds on a Call<br/>Option?s Value 437<br/>The Upper Bound 437<br/>The Lower Bound 437<br/>A Simple Model: Part I 438<br/>The Basic Approach 439<br/>A More Complicated Case 439<br/>Four Factors Determining Option Values 440<br/>14.3 Valuing a Call Option 441<br/>A Simple Model: Part II 441<br/>The Fifth Factor 442<br/>A Closer Look 443<br/>14.4 Employee Stock Options 444<br/>ESO Features 444<br/>ESO Repricing 445<br/>14.5 Equity as a Call Option on the<br/>Firm?s Assets 445<br/>Case I: The Debt Is Risk-Free 446<br/>Case II: The Debt Is Risky 446<br/>14.6 Options and Capital Budgeting 448<br/>The Investment Timing Decision 448<br/>Managerial Options 450<br/>Contingency Planning 451<br/>Options in Capital Budgeting: An Example 452<br/>Strategic Options 453<br/>Conclusion 453<br/>14.7 Options and Corporate Securities 454<br/>Warrants 454<br/>The Difference between Warrants and Call Options 454<br/>Earnings Dilution 455<br/>Convertible Bonds 455<br/>Features of a Convertible Bond 455<br/>Value of a Convertible Bond 455<br/>Other Options 457<br/>The Call Provision on a Bond 457<br/>Put Bonds 458<br/>Insurance and Loan Guarantees 458<br/>14.8 Summary and Conclusions 459<br/>PART SIX<br/>Cost of Capital and Long-Term<br/>Financial Policy<br/>Chapter 15<br/>Cost of Capital 468<br/>15.1 The Cost of Capital: Some Preliminaries 469<br/>Required Return versus Cost of Capital 469<br/>Financial Policy and Cost of Capital 469<br/>15.2 The Cost of Equity 470<br/>The Dividend Growth Model Approach 470<br/>Implementing the Approach 470<br/>Estimating g 471<br/>Advantages and Disadvantages of the Approach 472<br/>The SML Approach 472<br/>Implementing the Approach 473<br/>Advantages and Disadvantages of the Approach 473<br/>15.3 The Costs of Debt and Preferred Stock 474<br/>The Cost of Debt 474<br/>The Cost of Preferred Stock 475<br/>15.4 The Weighted Average Cost of Capital 476<br/>The Capital Structure Weights 476<br/>Taxes and the Weighted Average Cost<br/>of Capital 477<br/>Calculating the WACC for Eastman Chemical 478<br/>Eastman?s Cost of Equity 478<br/>Eastman?s Cost of Debt 480<br/>Eastman?s WACC 481<br/>Solving the Warehouse Problem and Similar Capital<br/>Budgeting Problems 483<br/>Performance Evaluation: Another Use of<br/>the WACC 485<br/>15.5 Divisional and Project Costs of Capital 485<br/>The SML and the WACC 485<br/>Divisional Cost of Capital 486<br/>The Pure Play Approach 487<br/>The Subjective Approach 488<br/>15.6 Flotation Costs and the Weighted Average Cost<br/>of Capital 489<br/>The Basic Approach 489<br/>Flotation Costs and NPV 490<br/>15.7 Summary and Conclusions 492<br/>Chapter 16<br/>Raising Capital 499<br/>16.1 The Financing Life Cycle of a Firm:<br/>Early-Stage Financing and Venture Capital 500<br/>Venture Capital 500<br/>Some Venture Capital Realities 501<br/>Choosing a Venture Capitalist 501<br/>Conclusion 502<br/>16.2 Selling Securities to the Public:<br/>The Basic Procedure 502<br/>16.3 Alternative Issue Methods 503<br/>16.4 Underwriters 505<br/>Choosing an Underwriter 506<br/>Types of Underwriting 506<br/>Firm Commitment Underwriting 506<br/>Best Efforts Underwriting 506<br/>Dutch Auction Underwriting 507<br/>The Aftermarket 507<br/>The Green Shoe Provision 508<br/>Lockup Agreements 508<br/>The Quiet Period 508<br/>16.5 IPOs and Underpricing 509<br/>IPO Underpricing: The 1999?2000 Experience 509<br/>Evidence on Underpricing 510<br/>Why Does Underpricing Exist? 512<br/>16.6 New Equity Sales and the Value of<br/>the Firm 515<br/>16.7 The Costs of Issuing Securities 516<br/>The Costs of Selling Stock to the Public 516<br/>The Costs of Going Public:The Case<br/>of Symbion 518<br/>16.8 Rights 520<br/>The Mechanics of a Rights Offering 520<br/>Number of Rights Needed to Purchase a Share 521<br/>The Value of a Right 522<br/>Ex Rights 524<br/>The Underwriting Arrangements 524<br/>Effects on Shareholders 525<br/>16.9 Dilution 526<br/>Dilution of Proportionate Ownership 526<br/>Dilution of Value: Book versus Market Values 526<br/>A Misconception 527<br/>The Correct Arguments 528<br/>16.10 Issuing Long-Term Debt 528<br/>16.11 Shelf Registration 529<br/>16.12 Summary and Conclusions 530<br/>Chapter 17<br/>Financial Leverage and Capital<br/>Structure Policy 536<br/>17.1 The Capital Structure Question 537<br/>Firm Value and Stock Value: An Example 537<br/>Capital Structure and the Cost of Capital 538<br/>17.2 The Effect of Financial Leverage 538<br/>The Basics of Financial Leverage 539<br/>Financial Leverage, EPS, and ROE: An Example 539<br/>EPS versus EBIT 540<br/>Corporate Borrowing and Homemade Leverage 542<br/>17.3 Capital Structure and the Cost of<br/>Equity Capital 543<br/>M&M Proposition I:The Pie Model 544<br/>The Cost of Equity and Financial Leverage:<br/>M&M Proposal II 544<br/>Business and Financial Risk 546<br/>17.4 M&M Propositions I and II with<br/>CorporateTaxes 547<br/>The Interest Tax Shield 547<br/>Taxes and M&M Proposition I 548<br/>Taxes, the WACC, and Proposition II 549<br/>Conclusion 550<br/>17.5 Bankruptcy Costs 552<br/>Direct Bankruptcy Costs 553<br/>Indirect Bankruptcy Costs 553<br/>17.6 Optimal Capital Structure 554<br/>The Static Theory of Capital Structure 554<br/>Optimal Capital Structure and the Cost of Capital 555<br/>Optimal Capital Structure: A Recap 556<br/>Capital Structure: Some Managerial<br/>Recommendations 558<br/>Taxes 558<br/>Financial Distress 558<br/>17.7 The Pie Again 558<br/>The Extended Pie Model 559<br/>Marketed Claims versus Nonmarketed Claims 560<br/>17.8 Observed Capital Structures 560<br/>17.9 A Quick Look at the Bankruptcy Process 562<br/>Liquidation and Reorganization 562<br/>Bankruptcy Liquidation 562<br/>Bankruptcy Reorganization 563<br/>Financial Management and the Bankruptcy Process 564<br/>Agreements to Avoid Bankruptcy 565<br/>17.10 Summary and Conclusions 565<br/>Chapter 18<br/>Dividends and Dividend Policy 572<br/>18.1 Cash Dividends and Dividend<br/>Payment 573<br/>Cash Dividends 573<br/>Standard Method of Cash Dividend Payment 574<br/>Dividend Payment: A Chronology 574<br/>More on the Ex-Dividend Date 575<br/>18.2 Does Dividend Policy Matter? 576<br/>An Illustration of the Irrelevance of Dividend<br/>Policy 576<br/>Current Policy: Dividends Set Equal to Cash Flow 576<br/>Alternative Policy: Initial Dividend Greater than<br/>Cash Flow 577<br/>Homemade Dividends 577<br/>A Test 578<br/>18.3 Real-World Factors Favoring<br/>a Low Payout 578<br/>Taxes 578<br/>Expected Return, Dividends, and Personal Taxes 580<br/>Flotation Costs 580<br/>Dividend Restrictions 580<br/>18.4 Real-World Factors Favoring<br/>a High Payout 581<br/>Desire for Current Income 581<br/>Uncertainty Resolution 582<br/>Tax and Legal Benefits from High Dividends 582<br/>Corporate Investors 582<br/>Tax-Exempt Investors 582<br/>Conclusion 583<br/>18.5 A Resolution of Real-World Factors? 583<br/>Information Content of Dividends 583<br/>The Clientele Effect 584<br/>18.6 Establishing a Dividend Policy 585<br/>Residual Dividend Approach 585<br/>Dividend Stability 587<br/>A Compromise Dividend Policy 587<br/>Some Survey Evidence on Dividends 589<br/>18.7 Stock Repurchase: An Alternative<br/>to Cash Dividends 590<br/>Cash Dividends versus Repurchase 591<br/>Real-World Considerations in a Repurchase 592<br/>Share Repurchase and EPS 593<br/>18.8 Stock Dividends and Stock Splits 593<br/>Some Details on Stock Splits and Stock<br/>Dividends 593<br/>Example of a Small Stock Dividend 594<br/>Example of a Stock Split 594<br/>Example of a Large Stock Dividend 595<br/>Value of Stock Splits and Stock Dividends 595<br/>The Benchmark Case 595<br/>Popular Trading Range 595<br/>Reverse Splits 596<br/>18.9 Summary and Conclusions 597<br/>PART SEVEN<br/>Short-Term Financial Planning<br/>and Management<br/>Chapter 19<br/>Short-Term Finance and Planning 605<br/>19.1 Tracing Cash and Net Working Capital 606<br/>19.2 The Operating Cycle and the Cash Cycle 607<br/>Defining the Operating and Cash Cycles 608<br/>The Operating Cycle 608<br/>The Cash Cycle 608<br/>The Operating Cycle and the Firm?s<br/>Organizational Chart 610<br/>Calculating the Operating and Cash Cycles 610<br/>The Operating Cycle 611<br/>The Cash Cycle 612<br/>Interpreting the Cash Cycle 613<br/>19.3 Some Aspects of Short-Term<br/>Financial Policy 613<br/>The Size of the Firm?s Investment in<br/>Current Assets 614<br/>Alternative Financing Policies for<br/>Current Assets 615<br/>An Ideal Case 615<br/>Different Policies for Financing Current Assets 615<br/>Which Financing Policy Is Best? 618<br/>Current Assets and Liabilities in Practice 619<br/>19.4 The Cash Budget 619<br/>Sales and Cash Collections 620<br/>Cash Outflows 621<br/>The Cash Balance 621<br/>19.5 Short-Term Borrowing 622<br/>Unsecured Loans 623<br/>Compensating Balances 623<br/>Cost of a Compensating Balance 623<br/>Letters of Credit 624<br/>Secured Loans 624<br/>Accounts Receivable Financing 624<br/>Inventory Loans 625<br/>Other Sources 625<br/>19.6 A Short-Term Financial Plan 626<br/>19.7 Summary and Conclusions 627<br/>Chapter 20<br/>Cash and Liquidity Management 637<br/>20.1 Reasons for Holding Cash 638<br/>The Speculative and Precautionary Motives 638<br/>The Transaction Motive 638<br/>Compensating Balances 638<br/>Costs of Holding Cash 638<br/>Cash Management versus Liquidity Management 639<br/>20.2 Understanding Float 639<br/>Disbursement Float 639<br/>Collection Float and Net Float 640<br/>Float Management 641<br/>Measuring Float 641<br/>Some Details 642<br/>Cost of the Float 643<br/>Ethical and Legal Questions 645<br/>Electronic Data Interchange: The End of Float? 645<br/>20.3 Cash Collection and Concentration 646<br/>Components of Collection Time 646<br/>Cash Collection 646<br/>Lockboxes 647<br/>Cash Concentration 648<br/>Accelerating Collections: An Example 648<br/>20.4 Managing Cash Disbursements 651<br/>Increasing Disbursement Float 651<br/>Controlling Disbursements 651<br/>Zero-Balance Accounts 651<br/>Controlled Disbursement Accounts 652<br/>20.5 Investing Idle Cash 652<br/>Temporary Cash Surpluses 653<br/>Seasonal or Cyclical Activities 653<br/>Planned or Possible Expenditures 653<br/>Characteristics of Short-Term Securities 654<br/>Maturity 654<br/>Default Risk 654<br/>Marketability 654<br/>Taxes 654<br/>Some Different Types of Money Market Securities 654<br/>20.6 Summary and Conclusions 655<br/>Appendix 20A Determining the Target<br/>Cash Balance 660<br/>The Basic Idea 660<br/>The BAT Model 660<br/>The Opportunity Costs 662<br/>The Trading Costs 662<br/>The Total Cost 663<br/>The Solution 663<br/>Conclusion 665<br/>The Miller-Orr Model: A More General Approach 665<br/>The Basic Idea 665<br/>Using the Model 665<br/>Implications of the BAT and Miller-Orr Models 666<br/>Other Factors Influencing the Target<br/>Cash Balance 667<br/>Chapter 21<br/>Credit and Inventory Management 670<br/>21.1 Credit and Receivables 671<br/>Components of Credit Policy 671<br/>The Cash Flows from Granting Credit 671<br/>The Investment in Receivables 672<br/>21.2 Terms of the Sale 672<br/>The Basic Form 672<br/>The Credit Period 673<br/>The Invoice Date 673<br/>Length of the Credit Period 673<br/>Cash Discounts 674<br/>Cost of the Credit 675<br/>Trade Discounts 675<br/>The Cash Discount and the ACP 675<br/>Credit Instruments 676<br/>21.3 Analyzing Credit Policy 676<br/>Credit Policy Effects 676<br/>Evaluating a Proposed Credit Policy 677<br/>NPV of Switching Policies 677<br/>A Break-Even Application 679<br/>21.4 Optimal Credit Policy 679<br/>The Total Credit Cost Curve 679<br/>Organizing the Credit Function 680<br/>21.5 Credit Analysis 681<br/>When Should Credit Be Granted? 681<br/>A One-Time Sale 681<br/>Repeat Business 682<br/>Credit Information 683<br/>Credit Evaluation and Scoring 683<br/>21.6 Collection Policy 684<br/>Monitoring Receivables 684<br/>Collection Effort 685<br/>21.7 Inventory Management 685<br/>The Financial Manager and Inventory Policy 686<br/>Inventory Types 686<br/>Inventory Costs 686<br/>21.8 Inventory Management Techniques 687<br/>The ABC Approach 687<br/>The Economic Order Quantity Model 688<br/>Inventory Depletion 688<br/>The Carrying Costs 689<br/>The Shortage Costs 690<br/>The Total Costs 690<br/>Extensions to the EOQ Model 692<br/>Safety Stocks 692<br/>Reorder Points 692<br/>Managing Derived-Demand Inventories 694<br/>Materials Requirements Planning 694<br/>Just-in-Time Inventory 694<br/>21.9 Summary and Conclusions 695<br/>Appendix 21A More on Credit Policy Analysis 700<br/>Two Alternative Approaches 700<br/>The One-Shot Approach 700<br/>The Accounts Receivable Approach 701<br/>Discounts and Default Risk 702<br/>NPV of the Credit Decision 703<br/>A Break-Even Application 703<br/>PART EIGHT<br/>Topics in Corporate Finance<br/>Chapter 22<br/>International Corporate Finance 709<br/>22.1 Terminology 710<br/>22.2 Foreign Exchange Markets and<br/>Exchange Rates 711<br/>Exchange Rates 712<br/>Exchange Rate Quotations 712<br/>Cross-Rates and Triangle Arbitrage 713<br/>Types of Transactions 715<br/>22.3 Purchasing Power Parity 716<br/>Absolute Purchasing Power Parity 716<br/>Relative Purchasing Power Parity 717<br/>The Basic Idea 718<br/>The Result 718<br/>Currency Appreciation and Depreciation 719<br/>22.4 Interest Rate Parity, Unbiased Forward Rates,<br/>and the International Fisher Effect 719<br/>Covered Interest Arbitrage 720<br/>Interest Rate Parity 721<br/>Forward Rates and Future Spot Rates 722<br/>Putting It All Together 722<br/>Uncovered Interest Parity 722<br/>The International Fisher Effect 722<br/>22.5 International Capital Budgeting 723<br/>Method 1: The Home Currency Approach 724<br/>Method 2: The Foreign Currency Approach 725<br/>Unremitted Cash Flows 725<br/>22.6 Exchange Rate Risk 726<br/>Short-Run Exposure 726<br/>Long-Run Exposure 726<br/>Translation Exposure 727<br/>Managing Exchange Rate Risk 728<br/>22.7 Political Risk 729<br/>22.8 Summary and Conclusions 729 |
650 ## - SUBJECT | |
Keyword | Corporations--Finance |
650 ## - SUBJECT | |
Keyword | Financial statements |
650 ## - SUBJECT | |
Keyword | Cash flow |
700 ## - ADDED ENTRY--PERSONAL NAME | |
Personal name | Westerfield, Randolph |
700 ## - ADDED ENTRY--PERSONAL NAME | |
Personal name | Jordan, Bradford D |
700 ## - ADDED ENTRY--PERSONAL NAME | |
Personal name | Jaffe, Jeffrey F |
942 ## - ADDED ENTRY ELEMENTS (KOHA) | |
Koha item type | General Books |
Withdrawn status | Lost status | Damaged status | Not for loan | Home library | Current library | Shelving location | Date acquired | Full call number | Accession number | Date last seen | Koha item type |
---|---|---|---|---|---|---|---|---|---|---|---|
Central Library, Sikkim University | Central Library, Sikkim University | General Book Section | 29/08/2016 | 658.15 ROS/F | P18817 | 29/08/2016 | General Books |