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Fundamentals of Corporate Finance Brealey

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Описание

Contents

section 1 1

The Firm and the Financial Manager 3

Organizing a Business 4

Sole Proprietorships 4 Partnerships 5 Corporations 5

Hybrid Forms of Business Organization 6

The Role of the Financial Manager 7

The Capital Budgeting Decision 8 The Financing Decision 9

Financial Institutions and Markets 10

Financial Institutions 10 Financial Markets 11 Other Functions of Financial Markets and Institutions 12

Who Is the Financial Manager? 13

Careers in Finance 15

Goals of the Corporation 17 Shareholders Want Managers to Maximize Market Value 17

Ethics and Management Objectives 19 Do Managers Really Maximize Firm Value? 21 Snippets of History 25

Summary 25

Related Web Links 28 Key Terms 28 Quiz 28

Practice Problems 29 Solutions to Self-Test Questions 31

The Time Value of Money 33

Future Values and Compound Interest 34

Present Values 38

Finding the Interest Rate 44

Multiple Cash Flows 46

Future Value of Multiple Cash Flows 46 Present Value of Multiple Cash Flows 49

Level Cash Flows: Perpetuities and Annuities 50

How to Value Perpetuities 50 How to Value Annuities 51 Annuities Due 54 Future Value of an Annuity 57

Inflation and the Time Value of Money 61

Real versus Nominal Cash Flows 61 Inflation and Interest Rates 63 Valuing Real Cash Payments 65 Real or Nominal? 67

Effective Annual Interest Rates 67

Summary 69

Related Web Links 69 Key Terms 70 Quiz 70

Practice Problems 72 Challenge Problems 75 Solutions to Self-Test Questions 77 Minicase 79

Financial Planning 81

What Is Financial Planning? 82

Financial Planning Focuses on the Big Picture 83 Financial Planning Is Not Just Forecasting 84 Three Requirements for Effective Planning 84

Financial Planning Models 86

Components of a Financial Planning Model 87 An Example of a Planning Model 88 An Improved Model 89

Planners Beware 93

Pitfalls in Model Design 93

The Assumption in Percentage of Sales Models 94

The Role of Financial Planning Models 95

External Financing and Growth 96

Summary 100

Related Web Links 101 Key Terms 101 Quiz 101

Practice Problems 102 Challenge Problems 106 Solutions to Self-Test Questions 106

appendix A 109

Financial Statement Analysis 133

Financial Ratios 134

Leverage Ratios 138 Liquidity Ratios 139 Efficiency Ratios 141 Profitability Ratios 143

The Du Pont System 145

Other Financial Ratios 146

Using Financial Ratios 147

Choosing a Benchmark 147

Measuring Company Performance 150 The Role of Financial Ratios 151

Summary 153

Related Web Links 155 Key Terms 155 Quiz 155

Practice Problems 157 Challenge Problem 158 Solutions to Self-Test Questions 159 Minicase 160

Accounting and Finance 111

The Balance Sheet 112

Book Values and Market Values 115

The Income Statement 117

Profits versus Cash Flow 118

The Statement of Cash Flows 119 Accounting for Differences 121

Taxes 123

Corporate Tax 123 Personal Tax 125

Summary 126

Related Web Links 127 Key Terms 127 Quiz 127

Practice Problems 128 Challenge Problem 131 Solutions to Self-Test Questions 131

section 2 163

Working Capital Management and Short-Term Planning 165

Working Capital 167

The Components of Working Capital 167 Working Capital and the Cash Conversion Cycle 168 The Working Capital Trade-Off 171

Links between Long-Term and Short-Term Financing 172

Tracing Changes in Cash and Working Capital 175

Cash Budgeting 177

Forecast Sources of Cash 177 Forecast Uses of Cash 179 The Cash Balance 179

A Short-Term Financing Plan 180

Options for Short-Term Financing 180 Evaluating the Plan 184

Sources of Short-Term Financing 185

Bank Loans 185 Commercial Paper 186 Secured Loans 186

The Cost of Bank Loans 187

Simple Interest 187

Discount Interest 188

Interest with Compensating Balances 189

Summary 190

Related Web Links 191 Key Terms 191 Quiz 191

Practice Problems 192 Challenge Problem 194 Solutions to Self-Test Questions 195 Minicase 197

Cash and Inventory Management 201

Cash Collection, Disbursement, and Float 202

Float 203 Valuing Float 204

Managing Float 205

Speeding Up Collections 206 Controlling Disbursements 209 Electronic Funds Transfer 210

Inventories and Cash Balances 211

Managing Inventories 212 Managing Inventories of Cash 215 Uncertain Cash Flows 216

Cash Management in the Largest Corporations 217 Investing Idle Cash: The Money Market 218

Summary 219

Related Web Links 220 Key Terms 220 Quiz 220

Practice Problems 221 Challenge Problem 224 Solutions to Self-Test Questions 224

Credit Management and Collection 227

Terms of Sale 229 Credit Agreements 231

section 3 253

Credit Analysis 232

Financial Ratio Analysis 233 Numerical Credit Scoring 233 When to Stop Looking for Clues 234

The Credit Decision 236

Credit Decisions with Repeat Orders 23 7

Some General Principles 238

Collection Policy 239

Bankruptcy 240

Bankruptcy Procedures 241

The Choice between Liquidation and

Reorganization 242

Summary 244