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Financial Management, 9th Ed.

Theory and Practice

Euguene F. Brigham, Louis C. Gapenski, Michael C. Ehrhardt

Publisher: Dryden Press, 1999 , 1169 pages

ISBN: 0-03-024399-8

Keywords: Finance

Synopsis:

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Table of Contents:

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  • Part I: Introduction to Financial Management
    1. An Overview of Financial Management
      • Career Opportunities in Finance
      • Financial Management in the 1990s
      • Box: McDonald's Looks Overseas
      • The Financial Staff's Responsibilities
      • Alternative Forms of Business Organizatio
      • Finance in the Organizational Structure of the Firm
      • The Goals of the Corporation
      • Box: Are CEOs Overpaid?
      • Business Ethics and Social Responsibility
      • Agency Relationships
      • Organization of the Book
      • Summary
    2. Financial Statements, Cash Flow, and Taxes
      • A Brief History of Accounting and Financial Statements
      • Financial Statements and Reports
      • The Balance Sheet
      • The Income Statement
      • Statement of Retained Earnings
      • Box: Sherlock Holmes, or Corporate Enemy Number 1?
      • Statement of Cash Flows
      • Modifying Accounting Data for Managerial Decisions
      • MVA and EVA
      • Box: Economic Value Added (EVA) — Today's Hottest Financial Idea
      • The Federal Income Tax System
      • Box: Tax Havens
      • Depreciation
      • Summary
    3. Analysis of Financial Statements
      • Ratio Analysis
      • Liquidity Ratios
      • Asset Management Ratios
      • Debt Management Ratios
      • Profitability Ratios
      • Box: International Accounting: Differences Create Headaches for Investors
      • Market Value Ratios
      • Trend Analysis
      • The Value of Operations: Using the Ratios to Guide Managers
      • Tying the Ratios Together: The DuPont Chart and Equation
      • Comparative Ratios and "Benchmarking"
      • Box: ROE Is Soaring to Record Heights
      • Uses and Limitations of Ratio Analysis
      • Looking Beyond the Numbers
      • Box: Financial Analysis in the Small Firm
      • Summary
      • Extensions
    4. The Financial Environment: Markets, Institutions, and Interest Rates
      • The Financial Markets
      • Financial Institutions
      • The Stock Market
      • Box: An Expensive Beer for the NASD
      • The Cost of Money
      • Interest Rate Levels
      • The Determinants of Market Interest Rates
      • Box: A New, Truly Riskless Treasury Bond
      • Investing Overseas
      • The Term Structure of Interest Rates
      • Box: Measuring Country Risk
      • What Determines the Shape of the Yield Curve?
      • Other Factors That Influence Interest Rate Levels
      • Interest Rate Levels and Stock Prices
      • Interest Rates and Business Decisions
      • Summary
  • Part II: Fundamental Concepts
    1. Risk and Return: The Basics
      • Investment Returns
      • Stand-Alone Risk
      • Risk in a Portfoili Context
      • Box: The Trade-Off between Risk and Return
      • Box: The Benefits of Diversifying Overseas
      • The Relationship between Risk and Rates of Return
      • Physical Assets versus Securities
      • Some Concerns about Beta and the CAPM
      • Volatility versus Risk
      • Summary
    2. Risk and Return: Extensions
      • Measuring Portfolio Risk
      • Efficient Portfolios
      • Choosing the Optimal Portfolio
      • The Capital Asset Pricing Model
      • The Capital Market Line
      • Calculating Beta Coefficients
      • Empirical Tests of the CAPM
      • Arbitrage Pricing Theory
      • Summary
      • Extensions
    3. Time Value of Money
      • Time Lines
      • Future Value
      • Present Value
      • Solving for Interest Rate and Time
      • Futire Value of an Annuity
      • Present Value of an Annuity
      • Perpetuities
      • Uneven Cash Flow Streams
      • Semiannual and Other Compounding Periods
      • Comparison of Different Types of Interest Rates
      • Fractional Time Periods
      • Amortized Loans
      • Summary
      • Extensions
  • Part III: Securities and Their Valuation
    1. Bonds and Their Valuation
      • Who Issues Bonds?
      • Key Characteristics of Bonds
      • Bond Valuation
      • Bond Yields
      • Box: Drinking Your Coupons
      • Bonds With Semiannual Coupons
      • Assessing the Riskiness of a Bond
      • Default Risk
      • Box: Santa Fe Bonds Finally Mature after 114 Years
      • Bond Markets
      • Summary
    2. Stocks and Their Valuation
      • Legal Rights and Privileges of Common Stockholders
      • Types of Common Stock
      • The Market for Common Stock
      • Box: A Wild Initial Day of Trading
      • Common Stock Valuation
      • Valuing the Entire Corporation
      • Stock Market Equilibrium
      • Box: Run-Ups before Deals: Chicanery or Coincidence?
      • Actual Stock Prices and Returns
      • Box: Investing in Emerging Markets
      • Preferred Stock
      • Summary
  • Part IV: Strategic Investment Decisions
    1. The Cost of Capital
      • The Weighted Average Cost of Capital
      • Cost of Debt, kd(1 - T)
      • Cost of Preferred Stock, kps
      • Cost of Common Stock, ks
      • Composite, or Weighted Average, Cost of Capital, WACC
      • Factors That Affect the Weighted Average Cost of Capital
      • Box: WACC Estimates for Some Large U.S. Corporations
      • Box: Global Variations in the Cost of Capital
      • Adjusting the Cost of Capital for Risk
      • Estimating Project Risk
      • Using the CAPM to Estimate a Project's Risk-Adjusted Cost of Capital
      • Techniques for Measuring Beta Risk
      • The Cost of Depreciation and Other Types of Internally Generated Funds
      • Box: The Cost of Equity Capital for Small Firms
      • Some Problem Areas in Cost of Capital
      • Four Mistakes to Avoid
      • Summary
      • Extensions
    2. The Basics of Capital Budgeting
      • Importance of Capital Budgeting
      • Generating Ideas for Capital Projects
      • Project Classifications
      • Similarities between Capital Budgeting and Security Valuation
      • Capital Budgeting Decision Rules
      • Comparison of the NPV and IRR Methods
      • Modified Internal Rate of Return (MIRR)
      • Profitability Index
      • Conclusion on Capital Budgeting Methods
      • Business Practices
      • The Post-Audit
      • Box: Capital Budgeting in the Small Firm
      • Using Capital Budgeting Techniques in Other Contexts
      • Summary
    3. Cash Flow Estimation and Other Topics in Capital Budgeting
      • Estimating Cash Flows
      • Identifying the Relevant Cash Flows
      • Tax Effects
      • Evaluating Capital Budgeting Projects
      • Example of Cash Flow Analysis: Expansion Project
      • Box: GE Bets on Europe
      • Example of Cash Flow Analysis: Replacement Project
      • Cash Flow Estimation Bias
      • Option Value
      • Comparing Projects with Unequal Lives
      • Abandonment Value
      • Adjusting for Inflation
      • Summary
    4. Risk Analysis and Real Options
      • Introduction to Project Risk Analysis
      • Techniques for Measuring Stand-Alone Risk
      • Box: Coca-Cola Takes on the High-Risk, High-Return Markets of Asia
      • Should Firms Diversify to Reduce Corporate Risk?
      • Market Risk and Divisional Betas
      • Box: High-Tech CFOs
      • Our View of Project Risk Analysis
      • Risky Cash Outflows
      • Introduction to Real Options
      • Identifying Optimal Responses to Changing Conditions: Decision Trees
      • Determining the Value of Real Options
      • Real Options and Financial Management
      • The Optimal Capital Budget
      • Establishing the Optimal Capital Budget in Practice
      • Summary
      • Extensions
  • Part V: Strategic Financing Decisions
    1. Long-Term Financial Planning
      • Strategic Plans
      • Operating Plans
      • The Financial Plan
      • Sales Forecasts
      • Financial Statement Forecasting: The Percent of Sales Method
      • The AFN Formula
      • Forecasting Financial Requirements When the Balance Sheet Ratios Are Subject to Change
      • Other Techniques for Forecasting Financial Statements
      • Computerized Financial Planning Models
      • Summary
    2. Capital Structure Decisions: The Basics
      • Business and Financial Risk
      • Capital Structure Theory
      • Setting the Target Capital Structure When Cash Flows Are Perpetuities
      • Some Considerations in the Capital Structure Decisions
      • An Approach to Setting the Target Capital Structure
      • Some Additional Insights into Capital Structure Decisions
      • Summary
    3. Capital Structure Decisions: Extensions
      • Capital Structure Theory: Modigliani-Miller Models
      • The Hamada Model: Introducing Market Risk
      • Capital Structure Theory: The Miller Model
      • Criticism of the MM and Miller Models
      • Capital Structure Theory: The Trade-Off Models
      • Capital Structure Theory: The Signaling Model
      • Capital Structure Theory: Our View
      • Variations in Capital Structures
      • Book Weights versus Market Weights
      • Summary
    4. Distributions to Shareholders: Dividends and Repurchases
      • Dividends versus Capital Gains: What Do Investors Prefer?
      • Other Dividend Policy Issues
      • Dividend Stability
      • Establishing the Dividend Policy in Practice
      • Changing Dividend Policies
      • Dividend Reinvestment Plans
      • Summary of Factors Influencing Dividend Policy
      • Overview of the Dividend Policy Decision
      • Stock Dividends and Stock Splits
      • Stock Repurchases
      • Box: Stock Repurchases: An Easy Way to Boost Stock Prices?
      • Box: Share Repurchases Are Less Common Overseas
      • Summary
  • Part VI: Tactical Financing Decisions
    1. Issuing Securities, Refunding Operations, and Other Topics
      • The Decision to Go Public
      • The Decision to List
      • Procedures for Selling New Common Stock
      • Advantages and Disadvantages of Financing with Common Stock
      • Securities Regulations and the Investment Banking Process
      • Recent Innovations in Types of Bonds
      • Advantages and Disadvantages of Long-Term Debt
      • Factors That Influence Long-Term Financing Decisions
      • Refunding Operations
      • Summary
    2. Lease Financing
      • The Two Parties to Leasing
      • Types of Leases
      • Tax Effects
      • Financial Statement Effects
      • Evaluation by the Lessee
      • Evaluation by the Lessor
      • Other Issues in Lease Analysis
      • Other Reasons for Leasing
      • Summary
      • Extensions
    3. Hybrid Financing: Preferred Stock, Warrants, and Convertibles
      • Preferred Stock
      • Warrants
      • Convertibles
      • A Final Comparison of Warrants and Convertibles
      • Other Topics in Hybrid Financing
      • Summary
      • Extensions
  • Part VII: Working Capital Management
    1. Current Asset Management
      • Working Capital Terminology
      • Alternative Current Asset Investment Policies
      • Box: EVA and Working Capital
      • The Concept of Zero Working Capital
      • Cash Management
      • Box: American Standard Embraces Demand Flow Management
      • The Cash Budget
      • Cash Management Techniques
      • Marketable Securities
      • Inventory
      • Inventory Costs
      • Inventory Control Systems
      • Box: Keeping Inventory Lean
      • Receivables Management
      • Credit Policy
      • Setting the Credit Period and Standards
      • Setting the Collection Policy
      • Cash Discounts
      • Other Factors Influencing Credit Policy
      • Summary
    2. Short-Term Financing
      • Alternative Current Asset Financing Policies
      • Advantages and Disadvantages of Short-Term Financing
      • Sources of Short-Term Financing
      • Accruals
      • Accounts Payable (Trade Credit)
      • Short-Term Bank Loans
      • The Cost of Bank Loans
      • Box: The Travails of Jamesway
      • Choosing a Bank
      • Commercial Papers
      • Use of Securities in Short-Term Financing
      • Summary
    3. Working Capital Management: Extensions
      • The Cash Conversion Cycle
      • Setting the Target Cash Balance
      • Accounting for Inventory
      • The Economic Ordering Quantity (EOQ) Model
      • EOQ Model Extensions
      • The Payments Pattern Approach to Monitoring Receivables
      • Analyzing Proposed Changes in Credit Policy
      • Summary
  • Part VIII: Special Topics
    1. Derivatives and Risk Management
      • Reasons to Manage Risk
      • Background on Derivatives
      • Box: Orange County Blues
      • Options
      • Introduction to Option Pricing Models
      • The Black-Scholes Option Pricing Model (OPM)
      • Other Types of Derivatives
      • Risk Management
      • Fundamentals of Risk Management
      • Box: Microsoft's Goal: Manage Every Risk!
      • Box: Baring and Sumitomo Suffer Large Losses in the Derivative Marfket
      • Using Derivatives to Reduce Risks
      • Summary
      • Extensions
    2. Bankruptcy, Reorganization, and Liquidation
      • Financial Distress and Its Consequences
      • Issues Facing a Firm in Financial Distress
      • Settlements without Going through Formal Bankruptcy
      • Federal Bankruptcy Law
      • Reorganization in Bankruptcy
      • Liquidation in Bankruptcy
      • Other Motivations for Bankruptcy
      • Some Criticisms of Bankruptcy Laws
      • Other Topics in Bankruptcy
      • Summary
      • Extensions
    3. Mergers, LBOs, Divestures, and Holding Companies
      • Rationale for Mergers
      • Types of Mergers
      • Level of Merger Activity
      • Hostile versus Friendly Takeovers
      • Merger Regulation
      • Merger Analysis
      • Box: When You Merge You Combine More Than Just Financial Statements
      • Structuring the Takeover Bid
      • Accounting Treatment for Mergers
      • Analysis for a "True Consolidation"
      • The Role of Investment Bankers
      • Who Wins: The Empirical Evidence
      • Corporate Alliances
      • Leveraged Buyouts
      • Divestitures
      • Box: Governments Are Divesting State-Owned Businesses to Spur Economic Efficiency
      • Holding Companies
      • Box: Merging as a Means of Exiting a Closely Held Business
      • Summary
    4. Multinational Financial Management
      • Multination, or Global, Corporations
      • Multinational versus Domestic Financial Management
      • Exchange Rates
      • The International Monetary
      • System
      • Trading in Foreign Exchange
      • Interest Rate Parity
      • Purchasing Power Parity
      • Box: Hungry for a Big Mac? Go to China!
      • Inflation, Interest Rates, and Exchange Rates
      • International Money and Capital Markets
      • Multinational Capital Budgeting
      • International Capital Structures
      • Multinational Working Capital Management
      • Summary
    5. Pension Plan Management
      • The Role and Scope of Pension Plan Management
      • Three Types of Pension Plans
      • Key Terms and Concepts
      • Pension Fund Mathematics: Defined Benefit Plans
      • Risk Inherent in Pension Plans
      • Illustrations of a Defined Benefit versus a Defined Contribution Plan
      • Defined Benefit versus Defined Contribution Plan: The Employee Choice
      • Developing a Plan Strategy
      • Pension Fund Investment Performance
      • "Tapping" Pension Fund Assets
      • Retiree Health Benefits
      • Summary
  • Appendixes
    • Appendix A: Mathematical Tables
    • Solutions to Self-Test Problems
    • Answers to End-of-Chapter Problems
    • Selected Equations and Data

Reviews:

Financial Management

by Roland Buresund — last modified 2011-06-27 03:35

Rating: ******* (Good)

Good reference. Recommended.
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