Finance for Executives

Managing for Value Creation

Claude Viallet, Gabriel Hawawini

Publisher: Thomson, 1999 , 601 pages

ISBN: 0-538-85395-6

Synopsis:

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An Ideal Resource for Managers

• A focus on value creation improves your ability to make smart financial decisions.
• Each topic is approached from a problem-solving perspective. You will learn to solve the practical financial problems that executives face every day.
• Self-contained chapters make the text an ideal quick reference guide to finance. Review questions — with detailed answers — make it a valuable self-study tool.
• The distinguished author team shares their extensive experience teaching executives around the world.
  

Table of Contents:

Toggle Table of Contents

• Chapter 1: Financial Management and Value Creation: An Overview
• The Key Question: Will Your Decison Create Value?
• The Fundamental Finance Principle
• Applying the Fundamental Finance Principle
• The Role of Financial Markets
• How Can a Firm Grow?
• HLC's Financial Statements
• How Profitable Is HLC?
  
• How Much Cash Has HLC Generated?
• How Risky Is HLC?
• Is HLC Creating Value?
  
• Summary
  
• References and Further Reading
• Review Problems
• Chapter 2: Understanding Balance Sheets and Income Statements
• Financial Accounting Statements
• The Balance Sheet
• The Income Statement
• Reconciling Balance Sheets and Income Statements
• The Structure of the Owner's Equitty Account
  
• Summary
  
• References and Further Reading
• Review Problems
• Chapter 3: Assessing Liquidity and Operational Efficiency
• The Managerial Balance Sheet
• The Matching Strategy
• A Measure of Liquidity based on the Funding Structure of Working Capital Requirement
• Improving Liquidity through Better Management of the Operating Cycle
• Traditional Measures of Liquidity
• Summary
  
• Appendix 3.1: Financing Strategies
• References and Further Reading
• Review Problems
• Chapter 4: Measuring Cash Flow
• Cash Flows and Their Sources
• Preparing a Detailed Cash Flow Statement
• Two Variations of the Cash Flow Statement
• Bankers' Cash Flow versus Net Operating Cash Flow
• Managerial Implications
• Summary
  
• Appendix 4.1: Obtaining the Net Operating Cash Flow from Balance Sheet and Income Statement Accounts
• References and Further Reading
• Review Problems
• Chapter 5: Diagnosing Profitability, Risk and Growth
• Measures of Profitability
• Return on Equity
• Other Measures of Profitability
• Financial Leverage and Risk
• Self-Sustainable Growth
• Summary
  
• Appendix 5.1: Factors Affecting a Firm's Operating Profitability
• Market Share
• Perceived Product Quality
• Assets and Cost Structures
  
• Appendix 5.2: The Relationship Between a Firm's ROE and Its Aftertax ROIC
• References and Further Reading
• Review Problems
• Chapter 6: Using the Net Present Value Rule to Make Value-Creating Investment Decisions
• The Capital Investment Process
• Would You Buy This Parcel of Land?
• The Net Present Value Rule
• Applying the Net Present Value Rule to a Capital Investment Decision
• Why NPV Rule Is a Good Investment Rule
• Special Cases of Capital Budgeting
• Limitations of the Net Present Value Criterion
• Summary
  
• Appendix 6.1: Calculation of the Present Value of an Annuity and the Constant Annual-Equivalent Cash Flow of a Project's Cash Flow Stream
• References and Further Reading
• Review Problems
• Chapter 7: Alternatives to the Net Present Value Rule
• The Payback Period
• The Discounted Payback Period
• The Internal Rate of return (IRR)
• The Profitability Index (PI)
• Summary
  
• References and Further Reading
• Review Problems
• Chapter 8: Identifying and Estimating a Projects Cash Flows
• The Actual Cash-Flow Principle
• The With/Without Principle
• The Designer Desk Lamp Project
• Identifying a Project's Relevant cash Flows
• Estimating a Project's Relevant cash Flows
• Should SMC Launch the New Product?
  
• Summary
  
• References and Further Reading
• Review Problems
• Chapter 9: Raising Capital and valuing Securities
• Estimating the Amount of Required External Funds
• The Financial System: Its Structure and Functions
• How Firms Issue Securities
• Debt Capital: Characteristics and Valuation
• Equity Capital: Characteristics and Valuation
• Summary
  
• Appendix 9.1: The Bond Valuation Formula
  
• Appendix 9.2: The Valuation Formula for the Constant Growth Dividend Model
• References and Further Reading
• Review Problems
• Chapter 10: Estimating the Cost of Capital
• Identifying Proxy or Pure-Play Firms
• Estimating the Cost of Debt
• Estimating the Cost of Equity: The Dividend Discount Model
• Estimating the Cost of Equity: The Capital Asset Pricing Model
• Estimating the Cost of Capital of a Firm
  
• Estimating the Cost of Capital of a Project
  
• Summary
  
• References and Further Reading
• Review Problems
• Chapter 11: Designing a Capital Structure
• The Capital Structure Decision: No Corporate Taxes and No Financial Distress Costs
• Effect of Changes in Capital Structure on the Firm's Value: The Pizza Theory
• The Capital Structre Decision: Corporate Income Taxes and No Financial Distress Costs
• The Capital Structure Decision When Financial Distress Is Costly
• Formulating a Capital Structure Policy
  
• Summary
  
• References and Further Reading
• Review Problems
• Chapter 12: Valuing and Acquiring a Business
• Alternative Valuation Models
• Valuing a Firm's Equity Using Comparables
• Valuing a Firm's Assets and Equity Using the Discounted Cash Flow Approach
• Estimating the DCF Value of OS Distributors' Assets and Equity
• Estimating the Acquisition Value of OS Distributors
• Estimating the Leveraged Buyout Value of OS Distributors
• Summary
  
• Appendix 12.1: The Dividend Discount Model Approach to the Valuation of a Firm's Equity
• References and Further Reading
• Review Problems
• Chapter 13: Making Value-Creating Decisions in an International Environment
• The Firm's Risk Exposure from Foreign Operations
• The Foreign Exchange Market
• Hedging Contractual Exposure to Currency Risk
• Hedging Long-Term Contractual Exposure to Currency Risk with Swaps
• The Relationship among Exchange Rates, Inflation Rates, and Interest Rates
• Analyzing an International Investment Project
• Managing Country Risk
• Summary
  
• Appendix 13.1: Translating Financial Statement With the Monetary/Nonmonetary Method and the Current Method
  
• Appendix 13.2: The Parity Relations
• References and Further Reading
• Review Problems
• Chapter 14: Managing for Value Creation
• Measuring Value Creation
• Identifying the Drivers of Value Creation
• Linking Operating Performance and Remuneration to Value Creation
• Linking the Capital Budgeting Process to Value Creation
• Putting It All Together: The Financial Strategy Matrix
• Summary
  
• Appendix 14.1: Adjsuting Book Values to Estimate the Amount of Invested Equity Capital and Operating Profit
  
• Appendix 14.2: Estimating Market Value Added (MVA) When Future Cash Flows are Expected to Grow at a Constant Rate in Perpetuity
• References and Further Reading
• Review Problems
• Answers to Review Problems