Corporate finance

Cover
Title
Copyright
About the Authors
Preface
Pedagogy
Comprehensive Teaching and Learning Package
Acknowledgments
Brief Contents
Contents
PART I: Overview
	Chapter 1 Introduction to Corporate Finance
		1.1 What Is Corporate Finance?
			The Balance Sheet Model of the Firm
			The Financial Manager
		1.2 The Corporate Firm
			The Sole Proprietorship
			The Partnership
			The Corporation
			A Corporation by Another Name
		1.3 The Importance of Cash Flows
			Identification of Cash Flows
			Timing of Cash Flows
			Risk of Cash Flows
		1.4 The Goal of Financial Management
			Possible Goals
			The Goal of the Financial Manager
			A More General Goal
		1.5 The Agency Problem and Control of the Corporation
			Agency Relationships
			Management Goals
			Do Managers Act in the Stockholders' Interests?
			Stakeholders
		1.6 Regulation
			The Securities Act of 1933 and the Securities Exchange Act of 1934
			Sarbanes-Oxley
			Summary and Conclusions
			Concept Questions
	Chapter 2 Financial Statements and Cash Flow
		2.1 The Balance Sheet
			Liquidity
			Debt versus Equity
			Value versus Cost
		2.2 The Income Statement
			Generally Accepted Accounting Principles
			Noncash Items
			Time and Costs
		2.3 Taxes
			Corporate and personal Tax Rates
			Average versus Marginal Tax Rates
		2.4 Net Working Capital
		2.5 Cash Flow of the Firm
		2.6 The Accounting Statement of Cash Flows
			Cash Flow from Operating Activities
			Cash Flow from Investing Activities
			Cash Flow from Financing Activities
		2.7 Cash Flow Management
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Excel Master It! Problem
			Mini Case: Cash Flows at Warf Computers, Inc.
	Chapter 3 Financial Statements Analysis and Financial Models
		3.1 Financial Statements Analysis
			Standardizing Statements
			Common-Size Balance Sheets
			Common-Size Income Statements
		3.2 Ratio Analysis
			Short-Term Solvency or Liquidity Measures
			Long-Term Solvency Measures
			Asset Management or Turnover Measures
			Profitability Measures
			Market Value Measures
		3.3 The DuPont Identity
			A Closer Look at ROE
			Problems with Financial Statement Analysis
		3.4 Financial Models
			A Simple Financial Planning Model
			The Percentage of Sales Approach
		3.5 External Financing and Growth
			The Relationship Between EFN and Growth
			Financial Policy and Growth
			A Note about Sustainable Growth Rate Calculations
		3.6 Some Caveats Regarding Financial Planning Models
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Excel Master It! Problem
			Mini Case: Ratios and Financial Planning at East Coast Yachts
PART II: Valuation and Capital Budgeting
	Chapter 4 Discounted Cash Flow Valuation
		4.1 Valuation: The One-Period Case
		4.2 The Multiperiod Case
			Future Value and Compounding
			The Power of Compounding: A Digression
			Present Value and Discounting
			Finding the Number of Periods
			The Algebraic Formula
		4.3 Compounding Periods
			Distinction between Annual Percentage Rate and Effective Annual Rate
			Compounding over Many Years
			Continuous Compounding
		4.4 Simplifications
			Perpetuity
			Growing Perpetuity
			Annuity
			Growing Annuity
		4.5 Loan Amortization
		4.6 What Is a Firm Worth?
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Excel Master It! Problem
			Mini Case: The MBA Decision
			Appendix 4A: Net Present Value: First Principles of Finance
			Appendix 4B: Using Financial Calculators
	Chapter 5 Net Present Value and Other Investment Rules
		5.1 Why Use Net Present Value?
		5.2 The Payback Period Method
			Defining the Rule
			Problems with the Payback Method
			Managerial Perspective
			Summary of Payback
		5.3 The Discounted Payback Period Method
		5.4 The Internal Rate of Return
		5.5 Problems with the IRR Approach
			Definition of Independent and Mutually Exclusive Projects
			Two General Problems Affecting Both Independent and Mutually Exclusive Projects
			The Modified Internal Rate of Return (MIRR)
			Problems Specific to Mutually Exclusive Projects
			Redeeming Qualities of IRR
			A Test
		5.6 The Profitability Index
			Calculation of Profitability Index
		5.7 The Practice of Capital Budgeting
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Excel Master It! Problem
			Mini Case: Bullock Gold Mining
	Chapter 6 Making Capital Investment Decisions
		6.1 Incremental Cash Flows: The Key to Capital Budgeting
			Cash Flows—Not Accounting Income
			Sunk Costs
			Opportunity Costs
			Side Effects
			Allocated Costs
		6.2 The Baldwin Company: An Example
			An Analysis of the Project
			Which Set of Books?
			A Note about Net Working Capital
			A Note about Depreciation
			Interest Expense
		6.3 Alternative Definitions of Operating Cash Flow
			The Top-Down Approach
			The Bottom-Up Approach
			The Tax Shield Approach
			Conclusion
		6.4 Some Special Cases of Discounted Cash Flow Analysis
			Evaluating Cost-Cutting Proposals
			Setting the Bid Price
			Investments of Unequal Lives: The Equivalent Annual Cost Method
		6.5 Inflation and Capital Budgeting
			Interest Rates and Inflation
			Cash Flow and Inflation
			Discounting: Nominal or Real?
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Excel Master It! Problems
			Mini Case: Bethesda Mining Company
	Chapter 7 Risk Analysis, Real Options, and Capital Budgeting
		7.1 Sensitivity Analysis, Scenario Analysis, and Break-Even Analysis
			Sensitivity Analysis and Scenario Analysis
			Break-Even Analysis
		7.2 Monte Carlo Simulation
			Step 1: Specify the Basic Model
			Step 2: Specify a Distribution for Each Variable in the Model
			Step 3: The Computer Draws One Outcome
			Step 4: Repeat the Procedure
			Step 5: Calculate NPV
		7.3 Real Options
			The Option to Expand
			The Option to Abandon
			Timing Options
		7.4 Decision Trees
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Excel Master It! Problem
			Mini Case: Bunyan Lumber, LLC
	Chapter 8 Interest Rates and Bond Valuation
		8.1 Bonds and Bond Valuation
			Bond Features and Prices
			Bond Values and Yields
			Interest Rate Risk
			Finding the Yield to Maturity: More Trial and Error
			Zero Coupon Bonds
		8.2 Government and Corporate Bonds
			Government Bonds
			Corporate Bonds
			Bond Ratings
		8.3 Bond Markets
			How Bonds Are Bought and Sold
			Bond Price Reporting
			A Note on Bond Price Quotes
		8.4 Inflation and Interest Rates
			Real versus Nominal Rates
			Inflation Risk and Inflation-Linked Bonds
			The Fisher Effect
		8.5 Determinants of Bond Yields
			The Term Structure of Interest Rates
			Bond Yields and the Yield Curve: Putting It All Together
			Conclusion
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Excel Master It! Problem
			Mini Case: Financing East Coast Yachts's Expansion Plans with a Bond Issue
	Chapter 9 Stock Valuation
		9.1 The Present Value of Common Stocks
			Dividends versus Capital Gains
			Valuation of Different Types of Stocks
		9.2 Estimates of Parameters in the Dividend Discount Model
			Where Does g Come From?
			Where Does R Come From?
			A Healthy Sense of Skepticism
			Dividends or Earnings: Which to Discount?
			The No-Dividend Firm
		9.3 Comparables
			Price-Earnings Ratio
			Enterprise Value Ratios
		9.4 Valuing Stocks Using Free Cash Flows
		9.5 The Stock Markets
			Dealers and Brokers
			Organization of the NYSE
			Types of Orders
			NASDAQ Operations
			Stock Market Reporting
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Excel Master It! Problem
			Mini Case: Stock Valuation at Ragan Engines
PART III: Risk Chapter
	Chapter 10 Lessons from Market History
		10.1 Returns
			Dollar Returns
			Percentage Returns
		10.2 Holding Period Returns
		10.3 Return Statistics
		10.4 Average Stock Returns and Risk-Free Returns
		10.5 Risk Statistics
			Variance
			Normal Distribution and Its Implications for Standard Deviation
		10.6 More on Average Returns
			Arithmetic versus Geometric Averages
			Calculating Geometric Average Returns
			Arithmetic Average Return or Geometric Average Return?
		10.7 The U.S. Equity Risk Premium: Historical and International Perspectives
		10.8 2008: A Year of Financial Crisis
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Excel Master It! Problem
			Mini Case: A Job at East Coast Yachts
	Chapter 11 Return, Risk, and the Capital Asset Pricing Model
		11.1 Individual Securities
		11.2 Expected Return, Variance, and Covariance
			Expected Return and Variance
			Covariance and Correlation
		11.3 The Return and Risk for Portfolios
			The Expected Return on a Portfolio
			Variance and Standard Deviation of a Portfolio
		11.4 The Efficient Set for Two Assets
		11.5 The Efficient Set for Many Securities
			Variance and Standard Deviation in a Portfolio of Many Assets
		11.6 Diversification
			The Anticipated and Unanticipated Components of News
			Risk: Systematic and Unsystematic
			The Essence of Diversification
			The Effect of Diversification: Another Lesson from Market History
		11.7 Riskless Borrowing and Lending
			The Optimal Portfolio
		11.8 Market Equilibrium
			Definition of the Market Equilibrium Portfolio
			Definition of Risk When Investors Hold the Market Portfolio
			The Formula for Beta
			A Test
		11.9 Relationship between Risk and Expected Return (CAPM)
			Expected Return on the Market
			Expected Return on an Individual Security
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Excel Master It! Problem
			Mini Case: A Job at East Coast Yachts, Part 2
			Appendix 11A: Is Beta Dead?
	Chapter 12 An Alternative View of Risk and Return
		12.1 Systematic Risk and Betas
		12.2 Portfolios and Factor Models
			Portfolios and Diversification
		12.3 Betas, Arbitrage, and Expected Returns
			The Linear Relationship
			The Market Portfolio and the Single Factor
		12.4 The Capital Asset Pricing Model and the Arbitrage Pricing Theory
			Differences in Pedagogy
			Differences in Application
		12.5 Empirical Approaches to Asset Pricing
			Empirical Models
			Style Portfolios
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Excel Master It! Problem
			Mini Case: The Fama-French Multifactor Model and Mutual Fund Returns
	Chapter 13 Risk, Cost of Capital, and Valuation
		13.1 The Cost of Capital
		13.2 Estimating the Cost of Equity Capital with the CAPM
			The Risk-Free Rate
			Market Risk Premium
		13.3 Estimation of Beta
			Real-World Betas
			Stability of Beta
			Using an Industry Beta
		13.4 Determinants of Beta
			Cyclicality of Revenues
			Operating Leverage
			Financial Leverage and Beta
		13.5 The Dividend Discount Model Approach
			Comparison of DDM and CAPM
		13.6 Cost of Capital for Divisions and Projects
		13.7 Cost of Fixed Income Securities
			Cost of Debt
			Cost of Preferred Stock
		13.8 The Weighted Average Cost of Capital
		13.9 Valuation with WACC
			Project Evaluation and the WACC
			Firm Valuation with the WACC
		13.10 Estimating Eastman Chemical's Cost of Capital
		13.11 Flotation Costs and the Weighted Average Cost of Capital
			The Basic Approach
			Flotation Costs and NPV
			Internal Equity and Flotation Costs
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Mini Case: Cost of Capital for Swan Motors
			Appendix 13A: Economic Value Added and the Measurement of Financial Performance
PART IV: Capital Structure and Dividend Policy
	Chapter 14 Efficient Capital Markets and Behavioral Challenges
		14.1 Can Financing Decisions Create Value?
		14.2 A Description of Efficient Capital Markets
			Foundations of Market Efficiency
		14.3 The Different Types of Efficiency
			The Weak Form
			The Semistrong and Strong Forms
			Some Common Misconceptions about the Efficient Market Hypothesis
		14.4 The Evidence
			The Weak Form
			The Semistrong Form
			The Strong Form
		14.5 The Behavioral Challenge to Market Efficiency
			Rationality
			Independent Deviations from Rationality
			Arbitrage
		14.6 Empirical Challenges to Market Efficiency
		14.7 Reviewing the Differences
		14.8 Implications for Corporate Finance
			1. Accounting Choices, Financial Choices, and Market Efficiency
			2. The Timing Decision
			3. Speculation and Efficient Markets
			4. Information in Market Prices
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Mini Case: Your 401(k) Account at East Coast Yachts
	Chapter 15 Long-Term Financing
		15.1 Some Features of Common and Preferred Stocks
			Common Stock Features
			Preferred Stock Features
		15.2 Corporate Long-Term Debt
			Is It Debt or Equity?
			Long-Term Debt: The Basics
			The Indenture
		15.3 Some Different Types of Bonds
			Floating-Rate Bonds
			Other Types of Bonds
		15.4 Bank Loans
		15.5 International Bonds
		15.6 Patterns of Financing
		15.7 Recent Trends in Capital Structure
			Which Are Best: Book or Market Values?
			Summary and Conclusions
			Concept Questions
			Questions and Problems
	Chapter 16 Capital Structure
		16.1 The Capital Structure Question and the Pie Theory
		16.2 Maximizing Firm Value versus Maximizing Stockholder Interests
		16.3 Financial Leverage and Firm Value: An Example
			Leverage and Returns to Shareholders
			The Choice between Debt and Equity
			A Key Assumption
		16.4 Modigliani and Miller: Proposition II (No Taxes)
			Risk to Equityholders Rises with Leverage
			Proposition II: Required Return to Equityholders Rises with Leverage
			MM: An Interpretation
		16.5 Taxes
			The Basic Insight
			Present Value of the Tax Shield
			Value of the Levered Firm
			Expected Return and Leverage under Corporate Taxes
			The Weighted Average Cost of Capital, WACC, and Corporate Taxes
			Stock Price and Leverage under Corporate Taxes
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Mini Case: Stephenson Real Estate Recapitalization
	Chapter 17 Capital Structure
		17.1 Costs of Financial Distress
			Bankruptcy Risk or Bankruptcy Cost?
		17.2 Description of Financial Distress Costs
			Direct Costs of Financial Distress: Legaland Administrative Costs of Liquidation or Reorganization
			Indirect Costs of Financial Distress
			Agency Costs
		17.3 Can Costs of Debt Be Reduced?
			Protective Covenants
			Consolidation of Debt
		17.4 Integration of Tax Effects and Financial Distress Costs
			Pie Again
		17.5 Signaling
		17.6 Shirking, Perquisites, and Bad Investments: A Note on Agency Cost of Equity
			Effect of Agency Costs of Equity on Debt-Equity Financing
			Free Cash Flow
		17.7 The Pecking-Order Theory
			Rules of the Pecking Order
			Implications
		17.8 Personal Taxes
			The Basics of Personal Taxes
			The Effect of Personal Taxes on Capital Structure
		17.9 How Firms Establish Capital Structure
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Mini Case: McKenzie Corporation's Capital Budgeting
			Appendix 17A: Some Useful Formulas of Financial Structure
			Appendix 17B: The Miller Model and the Graduated Income Tax
	Chapter 18 Valuation and Capital Budgeting for the Levered Firm
		18.1 Adjusted Present Value Approach
		18.2 Flow to Equity Approach
			Step 1: Calculating Levered Cash Flow (LCF)
			Step 2: Calculating RS
			Step 3: Valuation
		18.3 Weighted Average Cost of Capital Method
		18.4 A Comparison of the APV, FTE, and WACC Approaches
			A Suggested Guideline
		18.5 Valuation When the Discount Rate Must Be Estimated
		18.6 APV Example
		18.7 Beta and Leverage
			The Project Is Not Scale Enhancing
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Mini Case: The Leveraged Buyout of Cheek Products, Inc.
			Appendix 18A: The Adjusted Present Value Approach to Valuing Leveraged Buyouts
	Chapter 19 Dividends and Other Payouts
		19.1 Different Types of Payouts
		19.2 Standard Method of Cash Dividend Payment
		19.3 The Benchmark Case: An Illustration of the Irrelevance of Dividend Policy
			Current Policy: Dividends Set Equal to Cash Flow
			Alternative Policy: Initial Dividend Is Greater Than Cash Flow
			The Indifference Proposition
			Homemade Dividends
			A Test
			Dividends and Investment Policy
		19.4 Repurchase of Stock
			Dividend versus Repurchase: Conceptual Example
			Dividends versus Repurchases: Real-World Considerations
		19.5 Personal Taxes, Dividends, and Stock Repurchases
			Firms without Sufficient Cash to Pay a Dividend
			Firms with Sufficient Cash to Pay a Dividend
			Summary of Personal Taxes
		19.6 Real-World Factors Favoring a High-Dividend Policy
			Desire for Current Income
			Behavioral Finance
			Agency Costs
			Information Content of Dividends and Dividend Signaling
		19.7 The Clientele Effect: A Resolution of Real-World Factors?
		19.8 What We Know and Do Not Know about Dividend Policy
			Corporate Dividends Are Substantial
			Fewer Companies Pay Dividends
			Corporations Smooth Dividends
			Some Survey Evidence about Dividends
		19.9 Putting It All Together
		19.10 Stock Dividends and Stock Splits
			Some Details about Stock Splits and Stock Dividends
			Value of Stock Splits and Stock Dividends
			Reverse Splits
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Mini Case: Electronic Timing, Inc.
	Chapter 20 Raising Capital
		20.1 Early-Stage Financing and Venture Capital
			Venture Capital
			Stages of Financing
			Some Venture Capital Realities
			Venture Capital Investments and Economic Conditions
		20.2 The Public Issue
			Direct Listing
			Crowdfunding
			Initial Coin Offerings (ICOs)
		20.3 Alternative Issue Methods
		20.4 The Cash Offer
			Investment Banks
			The Offering Price
			Underpricing: A Possible Explanation
			Evidence on Underpricing
			The Partial Adjustment Phenomenon
		20.5 The Announcement of New Equity and the Value of the Firm
		20.6 The Cost of New Issues
			The Costs of Going Public: A Case Study
		20.7 Rights
			The Mechanics of a Rights Offering
			Subscription Price
			Number of Rights Needed to Purchase a Share
			Effect of Rights Offering on Price of Stock
			Effects on Shareholders
			The Underwriting Arrangements
		20.8 The Rights Puzzle
		20.9 Dilution
			Dilution of Percentage Ownership
			Dilution of Stock Price
			Dilution of Book Value
			Dilution of Earnings Per Share
			Conclusion
		20.10 Shelf Registration
		20.11 Issuing Long-Term Debt
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Mini Case: East Coast Yachts Goes Public
	Chapter 21 Leasing
		21.1 Types of Leases
			The Basics
			Operating Leases
			Financial Leases
		21.2 Accounting and Leasing
		21.3 Taxes, the IRS, and Leases
		21.4 The Cash Flows of Leasing
			A Note about Taxes
		21.5 A Detour for Discounting and Debt Capacity with Corporate Taxes
			Present Value of Riskless Cash Flows
			Optimal Debt Level and Riskless Cash Flows
		21.6 NPV Analysis of the Lease-versus-Buy Decision
			The Discount Rate
		21.7 Debt Displacement and Lease Valuation
			The Basic Concept of Debt Displacement
			Optimal Debt Level in the Xomox Example
		21.8 Does Leasing Ever Pay? The Base Case
		21.9 Reasons for Leasing
			Good Reasons for Leasing
			Bad Reasons for Leasing
		21.10 Some Unanswered Questions
			Are the Uses of Leases and Debt Complementary?
			Why Are Leases Offered by Both Manufacturers and Third-Party Lessors?
			Why Are Some Assets Leased More Than Others?
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Mini Case: The Decision to Lease or Buy at Warf Computers
			Appendix 21A: APV Approach to Leasing
PART VI: Options, Futures, and Corporate Finance
	Chapter 22 Options and Corporate Finance
		22.1 Options
		22.2 Call Options
			The Value of a Call Option at Expiration
		22.3 Put Options
			The Value of a Put Option at Expiration
		22.4 Selling Options
		22.5 Option Quotes
		22.6 Combinations of Options
		22.7 Valuing Options
			Bounding the Value of a Call
			The Factors Determining Call Option Values
			A Quick Discussion of Factors Determining Put Option Values
		22.8 An Option Pricing Formula
			A Two-State Option Model
			The Black-Scholes Model
		22.9 Stocks and Bonds as Options
			The Firm Expressed in Terms of Call Options
			The Firm Expressed in Terms of Put Options
			A Resolution of the Two Views
			A Note about Loan Guarantees
		22.10 Options and Corporate Decisions: Some Applications
			Mergers and Diversification
			Options and Capital Budgeting
		22.11 Investment in Real Projects and Options
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Excel Master It! Problem
			Mini Case: Clissold Industries Options
	Chapter 23 Options and Corporate Finance: Extensions and Applications
		23.1 Executive Stock Options
			Why Options?
			Valuing Executive Compensation
		23.2 Valuing a Start-Up
		23.3 More about the Binomial Model
			Heating Oil
		23.4 Shutdown and Reopening Decisions
			Valuing a Gold Mine
			The Abandonment and Opening Decisions
			Valuing the Simple Gold Mine
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Mini Case: Exotic Cuisines' Employee Stock Options
	Chapter 24 Warrants and Convertibles
		24.1 Warrants
		24.2 The Difference between Warrants and Call Options
			How the Firm Can Hurt Warrant Holders
		24.3 Warrant Pricing and the Black-Scholes Model
		24.4 Convertible Bonds
		24.5 The Value of Convertible Bonds
			Straight Bond Value
			Conversion Value
			Option Value
		24.6 Reasons for Issuing Warrants and Convertibles
			Convertible Debt versus Straight Debt
			Convertible Debt versus Common Stock
			The "Free Lunch" Story
			The "Expensive Lunch" Story
			A Reconciliation
		24.7 Why Are Warrants and Convertibles Issued?
			Matching Cash Flows
			Risk Synergy
			Agency Costs
			Backdoor Equity
		24.8 Conversion Policy
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Mini Case: S&S Air's Convertible Bond
	Chapter 25 Derivatives and Hedging Risk
		25.1 Derivatives, Hedging, and Risk
		25.2 Forward Contracts
		25.3 Futures Contracts
		25.4 Hedging
		25.5 Interest Rate Futures Contracts
			Pricing of Treasury Bonds
			Pricing of Forward Contracts
			Futures Contracts
			Hedging in Interest Rate Futures
		25.6 Duration Hedging
			The Case of Zero Coupon Bonds
			The Case of Two Bonds with the Same Maturity but with Different Coupons
			Duration
			Matching Liabilities with Assets
		25.7 Swaps Contracts
			Interest Rate Swaps
			Currency Swaps
			Credit Default Swaps
			Exotics
		25.8 Actual Use of Derivatives
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Mini Case: Williamson Mortgage, Inc.
	Chapter 26 Short-Term Finance and Planning
		26.1 Tracing Cash and Net Working Capital
		26.2 The Operating Cycle and the Cash Cycle
			Defining the Operating and Cash Cycles
			The Operating Cycle and the Firm's Organization Chart
			Calculating the Operating and Cash Cycles
			Interpreting the Cash Cycle
			A Look at Operating and Cash Cycles
		26.3 Some Aspects of Short-Term Financial Policy
			The Size of the Firm's Investment in Current Assets
			Alternative Financing Policies for Current Assets
			Which Is Best?
		26.4 Cash Budgeting
			Cash Outflow
			The Cash Balance
		26.5 The Short-Term Financial Plan
			Unsecured Loans
			Secured Loans
			Other Sources
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Excel Master It! Problem
			Mini Case: Keafer Manufacturing Working Capital Management
	Chapter 27 Cash Management
		27.1 Reasons for Holding Cash
			The Speculative and Precautionary Motives
			The Transaction Motive
			Compensating Balances
			Costs of Holding Cash
			Cash Management versus Liquidity Management
		27.2 Understanding Float
			Disbursement Float
			Collection Float and Net Float
			Float Management
			Electronic Data Interchange and Check 21: The End of Float?
		27.3 Cash Collection and Concentration
			Components of Collection Time
			Cash Collection
			Lockboxes
			Cash Concentration
			Accelerating Collections: An Example
		27.4 Managing Cash Disbursements
			Increasing Disbursement Float
			Controlling Disbursements
		27.5 Investing Idle Cash
			Temporary Cash Surpluses
			Characteristics of Short-Term Securities
			Some Different Types of Money Market Securities
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Mini Case: Cash Management at Richmond Corporation
			Appendix 27A: Determining the Target Cash Balance
			Appendix 27B: Adjustable Rate Preferred Stock, Auction Rate Preferred Stock, and Floating-Rate Certificates of Deposit
	Chapter 28 Credit and Inventory Management
		28.1 Credit and Receivables
			Components of Credit Policy
			The Cash Flows from Granting Credit
			The Investment in Receivables
		28.2 Terms of the Sale
			The Basic Form
			The Credit Period
			Cash Discounts
			Credit Instruments
		28.3 Analyzing Credit Policy
			Credit Policy Effects
			Evaluating a Proposed Credit Policy
		28.4 Optimal Credit Policy
			The Total Credit Cost Curve
			Organizing the Credit Function
		28.5 Credit Analysis
			When Should Credit Be Granted?
			Credit Information
			Credit Evaluation and Scoring
		28.6 Collection Policy
			Monitoring Receivables
			Collection Effort
		28.7 Inventory Management
			The Financial Manager and Inventory Policy
			Inventory Types
			Inventory Costs
		28.8 Inventory Management Techniques
			The ABC Approach
			The Economic Order Quantity Model
			Extensions to the EOQ Model
			Managing Derived-Demand Inventories
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Mini Case: Credit Policy at Braam Industries
			Appendix 28A: More about Credit Policy Analysis
PART VIII: Special Topics
	Chapter 29 Mergers, Acquisitions, and Divestitures
		29.1 The Basic Forms of Acquisitions
			Merger or Consolidation
			Acquisition of Stock
			Acquisition of Assets
			A Classification Scheme
			A Note about Takeovers
		29.2 Synergy
		29.3 Sources of Synergy
			Revenue Enhancement
			Cost Reduction
			Tax Gains
			Reduced Capital Requirements
		29.4 Two Financial Side Effects of Acquisitions
			Earnings Growth
			Diversification
		29.5 A Cost to Stockholders from Reduction in Risk
			The Base Case
			Both Firms Have Debt
			How Can Shareholders Reduce Their Losses from the Coinsurance Effect?
		29.6 The NPV of a Merger
			Cash
			Common Stock
			Cash versus Common Stock
		29.7 Friendly versus Hostile Takeovers
		29.8 Defensive Tactics
			Deterring Takeovers before Being in Play
			Deterring a Takeover after the Company Is in Play
		29.9 Have Mergers Added Value?
			Returns to Bidders
			Target Companies
			The Managers versus the Stockholders
		29.10 The Tax Forms of Acquisitions
		29.11 Accounting for Acquisitions
		29.12 Going Private and Leveraged Buyouts
		29.13 Divestitures
			Sale
			Spin-Off
			Carve-Out
			Tracking Stocks
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Mini Case: The Birdie Golf-Hybrid Golf Merger
	Chapter 30 Financial Distress
		30.1 What Is Financial Distress?
		30.2 What Happens in Financial Distress?
		30.3 Bankruptcy Liquidation and Reorganization
			Bankruptcy Liquidation
			Bankruptcy Reorganization
		30.4 Private Workout or Bankruptcy: Which Is Best?
			The Marginal Firm
			Holdouts
			Complexity
			Lack of Information
		30.5 Prepackaged Bankruptcy
		30.6 Predicting Corporate Bankruptcy: The Z-Score Model
			Summary and Conclusions
			Concept Questions
			Questions and Problems
	Chapter 31 International Corporate Finance
		31.1 Terminology
		31.2 Foreign Exchange Markets and Exchange Rates
			Exchange Rates
		31.3 Purchasing Power Parity
			Absolute Purchasing Power Parity
			Relative Purchasing Power Parity
		31.4 Interest Rate Parity, Unbiased Forward Rates, and the International Fisher Effect
			Covered Interest Arbitrage
			Interest Rate Parity
			Forward Rates and Future Spot Rates
			Putting It All Together
		31.5 International Capital Budgeting
			Method 1: The Home Currency Approach
			Method 2: The Foreign Currency Approach
			Unremitted Cash Flows
			The Cost of Capital for International Firms
		31.6 Exchange Rate Risk
			Short-Term Exposure
			Long-Term Exposure
			Translation Exposure
			Managing Exchange Rate Risk
		31.7 Political Risk
			The Tax Cuts and Jobs Act of 2017
			Managing Political Risk
			Summary and Conclusions
			Concept Questions
			Questions and Problems
			Excel Master It! Problem
			Mini Case: East Coast Yachts Goes International
Appendix A: Mathematical Tables
Appendix B: Solutions to Selected End-of-Chapter Problems
Appendix C: Using the HP 10B and TI BA II Plus Financial Calculators
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Name Index
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Subject Index
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