Corporate Finance: Principles and Practice [Team-IRA]

Front Cover
Half Title
Title Page
Copyright Page
About the authors
Contents
Preface
Acknowledgements
1 The finance function
	Learning objectives
	Introduction
	1.1 Two key concepts in corporate finance
	1.2 The role of the Financial Manager
	1.3 Corporate objectives
	1.4 How is shareholder wealth maximised?
	1.5 Agency theory
	1.6 Corporate governance
	1.7 Conclusion
	Key points
	Self-test questions
	Questions for review
	Questions for discussion
	References
	Recommended reading
2 Capital markets, market efficiency and ratio analysis
	Learning objectives
	Introduction
	2.1 Sources of business finance
	2.2 Capital markets
	2.3 Capital market efficiency
	2.4 Assessing financial performance
	2.5 Conclusion
	Key points
	Self-test questions
	Questions for review
	Questions for discussion
	References
	Recommended reading
3 Short-term finance and working capital management
	Learning objectives
	Introduction
	3.1 The objectives of working capital management
	3.2 Working capital policies
	3.3 Working capital and the cash conversion cycle
	3.4 Overtrading
	3.5 Managing inventory
	3.6 Managing cash
	3.7 Managing trade receivables
	3.8 Conclusion
	Key points
	Self-test questions
	Questions for review
	Questions for discussion
	References
	Recommended reading
4 Long-term finance: Equity finance
	Learning objectives
	Introduction
	4.1 Equity finance
	4.2 The Stock Exchange
	4.3 Rights issues
	4.4 Scrip issues, share splits, scrip dividends and share repurchases
	4.5 Preference shares
	4.6 Conclusion
	Key points
	Self-test questions
	Questions for review
	Questions for discussion
	References
	Recommended reading
5 Long-term finance: Debt finance, hybrid finance and leasing
	Learning objectives
	Introduction
	5.1 Bonds, loan notes, loan stock and debentures
	5.2 Bank and institutional debt
	5.3 International debt finance
	5.4 Convertible bonds
	5.5 Warrants
	5.6 Valuing fixed interest bonds
	5.7 Valuing convertible bonds
	5.8 Leasing
	5.9 Evaluating the financial effects of financing choices
	5.10 Conclusion
	Key points
	Self-test questions
	Questions for review
	Questions for discussion
	References
	Recommended reading
6 An overview of investment appraisal methods
	Learning objectives
	Introduction
	6.1 The payback method
	6.2 The return on capital employed method
	6.3 The net present value method
	6.4 The internal rate of return method
	6.5 Comparing the NPV and IRR methods
	6.6 The profitability index and capital rationing
	6.7 The discounted payback method
	6.8 Conclusion
	Key points
	Self-test questions
	Questions for review
	Questions for discussion
	References
	Recommended reading
7 Investment appraisal: applications and risk
	Learning objectives
	Introduction
	7.1 Relevant project cash flows
	7.2 Taxation and capital investment decisions
	7.3 Inflation and capital investment decisions
	7.4 Investment appraisal and risk
	7.5 Appraisal of foreign direct investment
	7.6 Empirical investigations of investment appraisal
	7.7 Conclusion
	Key points
	Self-test questions
	Questions for review
	Questions for discussion
	References
	Recommended reading
8 Portfolio theory and the capital asset pricing model
	Learning objectives
	Introduction
	8.1 The measurement of risk
	8.2 The concept of diversification
	8.3 Investor attitudes to risk
	8.4 Markowitz's portfolio theory
	8.5 Introduction to the capital asset pricing model
	8.6 Using the CAPM to value shares
	8.7 Empirical tests of the CAPM
	8.8 Conclusion
	Key points
	Self-test questions
	Questions for review
	Questions for discussion
	References
	Recommended reading
9 The cost of capital and capital structure
	Learning objectives
	Introduction
	9.1 Calculating the cost of individual sources of finance
	9.2 Calculating the weighted average cost of capital
	9.3 Average and marginal cost of capital
	9.4 The CAPM and investment appraisal
	9.5 Practical problems with calculating WACC
	9.6 WACC in the real world
	9.7 The cost of capital for foreign direct investment
	9.8 Gearing: Its measurement and significance
	9.9 The concept of an optimal capital structure
	9.10 The traditional approach to capital structure
	9.11 Miller and Modigliani (I): Net income approach
	9.12 Miller and Modigliani (II): Corporate tax
	9.13 Market imperfections
	9.14 Miller and personal taxation
	9.15 Pecking order theory
	9.16 Conclusion: Does an Optimal Capital Structure Exist?
	Key points
	Self-test questions
	Questions for review
	Questions for discussion
	References
	Recommended reading
10 Dividend policy
	Learning objectives
	Introduction
	10.1 Dividends: Operational and practical issues
	10.2 The effect of dividends on shareholder wealth
	10.3 Dividend irrelevance
	10.4 Dividend relevance
	10.5 Dividend relevance or irrelevance?
	10.6 Dividend policies
	10.7 Alternatives to cash dividends
	10.8 Empirical evidence on dividend policy
	10.9 Conclusion
	Key points
	Self-test questions
	Questions for review
	Questions for discussion
	References
	Recommended reading
11 Mergers and takeovers
	Learning objectives
	Introduction
	11.1 The terminology of mergers and takeovers
	11.2 Justifications for acquisitions
	11.3 Trends in takeover activity
	11.4 Target company valuation
	11.5 The financing of acquisitions
	11.6 Strategic and tactical issues
	11.7 Divestment
	11.8 Private equity
	11.9 Empirical research on acquisitions
	11.10 Conclusion
	Key points
	Self-test questions
	Questions for review
	Questions for discussion
	References
	Recommended reading
12 Risk management
	Learning objectives
	Introduction
	12.1 Interest and exchange rate risk
	12.2 Internal risk management
	12.3 External risk management
	12.4 Futures contracts
	12.5 Options
	12.6 Swaps
	12.7 Issues in interest and exchange risk management
	12.8 Political risk
	12.9 Conclusion
	Key points
	Self-test questions
	Questions for review
	Questions for discussion
	References
	Recommended reading
Answers to self-test questions
Glossary
Present value tables
Index
Publisher's acknowledgements
Back Cover