Analytical Corporate Finance (Springer Texts in Business and Economics)

Preface to the Second Edition
	A Modern Approach
	An Innovative Pedagogy
	A Selected Audience
Addendum to the Preface
Acknowledgments
Contents
1: Basic Concepts
	1.1 The Corporation
		1.1.1 Organizational Forms
		1.1.2 The Corporate Objective
	1.2 Financial Statement Analysis
		1.2.1 Balance Sheet
		1.2.2 Income Statement
		1.2.3 Cash Flow Statement
		1.2.4 Pro-Forma Statements
	1.3 Arbitrage
		1.3.1 The Law of One Price
		1.3.2 Forms of Arbitrage
	1.4 Summary
	Problems
	Case 1.1: Pro-Forma Statements
		Projectcast Ltd
			The Case
			Questions
	References
2: Valuation Tools
	2.1 The Time Value of Money
		2.1.1 The Rules of Time Travel
		2.1.2 Valuation of Cash Flow Streams
		2.1.3 Annuities and Perpetuities
	2.2 Interest Rates
		2.2.1 Types of Interest Rates
		2.2.2 Compounding Frequencies
		2.2.3 Drivers of Interest Rates
	2.3 Present Value Calculation
		2.3.1 Net Present Value
		2.3.2 Internal Rate of Return
		2.3.3 Growing Cash Flows
	2.4 Summary
	Problems
	Case 2.1: Time Value of Money
		Lottery in the USA
			The Case
			Questions
	References
3: The Relationship Between Risk and Return
	3.1 Expected Return and Volatility
		3.1.1 The Portfolio Return
		3.1.2 Volatility and Correlation
		3.1.3 Maximum Likelihood Methods
			Snapshot 3.1: Risk and Return in Excel
		3.1.4 The Risk/Return Trade-Off
		3.1.5 Optimal Portfolios
		3.1.6 The Market Price of Risk
			Snapshot 3.2: Portfolio Optimization in Excel
	3.2 The Capital Asset Pricing Model
		3.2.1 Model Assumptions
		3.2.2 The Security Market Line
		3.2.3 Beyond CAPM
	3.3 Summary
	Problems
	Appendix: Liquidity CAPM
	Case Study 3.1: Risk and Return
		Financo Ltd
			The Case
			Questions
	References
4: Business Analysis
	4.1 Capital Budgeting Decision Rules
		4.1.1 The Net Present Value Rule
		4.1.2 The Internal Rate of Return Rule
		4.1.3 The Payback Rule
		4.1.4 Profitability Index Rule
	4.2 Project Valuation
		4.2.1 Scenario Analysis
		4.2.2 Decision Trees
		4.2.3 Simulations
	4.3 Subdisciplines of Business Analysis
		4.3.1 Enterprise Analysis
		4.3.2 Business Requirements Analysis
		4.3.3 Analysis Techniques
	4.4 Project Finance
		4.4.1 Project Finance vs. Corporate Finance
		4.4.2 Project Risks
		4.4.3 Project Finance and Development
	4.5 Summary
	Problems
	Case 4.1: Net Present Value
		Voltoncamp Ltd
			The Case
			Questions
	References
5: Debt Valuation
	5.1 Bond Markets
		5.1.1 Bond Fundamentals
		5.1.2 Bond Types
		5.1.3 Knowing the Risks
	5.2 The Price/Yield Relationship
		5.2.1 Bond Prices and Yields
		5.2.2 Yield Curve
		5.2.3 Duration and Convexity
	5.3 The Term Structure of Interest Rates
		5.3.1 Brownian Motion
		5.3.2 Single-Factor Models
		5.3.3 Multifactor Models
	5.4 Summary
	Problems
	Appendix 5.1: Principal Component Analysis of the Term Structure
	References
6: Equity Valuation
	6.1 The Stock Market
		6.1.1 Market Microstructure
		6.1.2 Funding vs. Market Liquidity
	6.2 Common Equity
		6.2.1 Dividend Discount Models
		6.2.2 Discounted Free Cash Flow Models
		6.2.3 Relative Valuation Models
	6.3 Special Issuances
		6.3.1 Preferred Stocks
		6.3.2 Warrants
		6.3.3 Convertibles
	6.4 Summary
	Problems
	References
7: Capital Structure
	7.1 The Modigliani-Miller Theorems
		7.1.1 The Irrelevance of Capital Structure
		7.1.2 The Weighted Average Cost of Capital
	7.2 Payout Policy
		7.2.1 Dividends vs. Share Repurchase
		7.2.2 Modigliani-Miller Revisited
	7.3 Modern Theories of Capital Structure
		7.3.1 Static Trade-Off Theory and the Pecking Order Hypothesis
		7.3.2 Adjusted Present Value
		7.3.3 Tax-Based Theories of Capital Structure
	7.4 Summary
	Problems
	Appendix 7.1: Risk-Adjusted Return on Capital
	Case 7.1: Capital Structure
	References
8: Company Valuation
	8.1 CAPM Parameter Estimation
		8.1.1 The Risk-Free Rate
		8.1.2 The Risk Premium
		8.1.3 The Beta
	8.2 Valuation of Private Firms
		8.2.1 The Cost of Capital
		8.2.2 Beta Estimation
		8.2.3 Growth and Terminal Value
	8.3 A Real Case: The IPO of Facebook
		8.3.1 The Road to the IPO
		8.3.2 The Firm´s Fundamentals
		8.3.3 After the IPO
	8.4 Summary
	Problems
	Case 8.1: Company Valuation
	References
9: Financial and Real Options
	9.1 Basic Concepts
		9.1.1 Financial Derivatives
		9.1.2 Option Structure and Payout
		9.1.3 Strategies and Combinations
	9.2 Option Valuation
		9.2.1 Binomial Trees
		9.2.2 Black-Scholes-Merton Model
		9.2.3 The Greeks
	9.3 Real Options
		9.3.1 Types of Real Options
		9.3.2 Valuation Methods
	9.4 Summary
	Problems
	References
10: Long-Term Financing
	10.1 Early-Stage Funding
		10.1.1 Angel Investors
		10.1.2 Venture Capital
		10.1.3 Private Equity
	10.2 Initial Public Offering
		10.2.1 Types of Offering
		10.2.2 IPO Underpricing
	10.3 Debt Financing
		10.3.1 Types of Debt
		10.3.2 Loans vs. Bonds
		10.3.3 Leasing
	10.4 Summary
	Problems
	References
11: Working Capital Management
	11.1 Structure of Working Capital
		11.1.1 Current Assets and Liabilities
		11.1.2 Conversion Cycles
		11.1.3 Significance of Short-Term Financing
	11.2 Receivables and Payables
		11.2.1 Accounts Receivable
		11.2.2 Accounts Payable
	11.3 Inventory Management
		11.3.1 Definition and Purpose
		11.3.2 Inventory Models
	11.4 Cash and Liquidity Management
		11.4.1 The Management of Cash
		11.4.2 Float Management and Collection
	11.5 Summary
	Problems
	Case 11.1: Conversion Cycles
	References
12: Financial Planning
	12.1 The Birth of Business
		12.1.1 Business Start-Up
		12.1.2 Rights
	12.2 Growth Management
		12.2.1 The Life Cycle of the Firm
		12.2.2 Short-Term Financial Planning
	12.3 Planning and Forecasting
		12.3.1 Basic Planning Rules
		12.3.2 The Process of Strategic Planning
	12.4 Summary
	Problems
	References
13: International Corporate Finance
	13.1 Internationalization
		13.1.1 International Trade
		13.1.2 Multinational Corporations
		13.1.3 Globalization and the Cost of Capital
	13.2 Variables Involved
		13.2.1 Exchange Rate
		13.2.2 Purchasing Power Parity
		13.2.3 Interest Rate Parity
	13.3 Foreign Exchange Markets
		13.3.1 Background
		13.3.2 Foreign Exchange Risk
		13.3.3 International Capital Budgeting
	13.4 Summary
	Problems
	References
14: Special Topics
	14.1 Mergers and Acquisitions
		14.1.1 Reasons for a Merger
			14.1.1.1 Rationales
			14.1.1.2 Drivers
		14.1.2 The Process of Merging and Acquiring
		14.1.3 Hostile Takeovers and Defense Strategies
	14.2 Corporate Governance
		14.2.1 Management Failures
		14.2.2 Postcrisis Perspectives
	14.3 Remuneration and Incentive Schemes
		14.3.1 Types of Scheme
		14.3.2 Stock Options vs. Stock Units
	14.4 Risk Management
		14.4.1 Corporate Risk
		14.4.2 From Identification to Mitigation
		14.4.3 Response Strategies
	14.5 Digital Transformation
		14.5.1 Fintech and Operations
	14.6 Summary
	Problems
	References
Index