Corporate Finance: theory and practice

Preface viii Frequently used symbols xii 1 What is Corporate finance? 1 Section 1 Financial Analysis? 15 Part One Fundamental Concepts in Financial Analysis 17 2 Cash Flow 19 3 Earnings 29 4 Capital Employed and Invested Capital 44 5 Walking Through from Earnings to Cash Flow 57 6 Getting to Grips with Consolidated Accounts 71 7 How to Cope with the Most Complex Points in Financial Accounts 88 Part Two Financial Analysis and Forecasting 115 8 How to Perform a Financial Analysis 117 9 Margin Analysis: Structure 141 10 Margin Analysis: Risks 164 11 Working Capital and Capital Expenditures 179 12 Financing 201 13 Return on Capital Employed and Return on Equity 216 14 Conclusion and Financial Analysis 235 Section II Investors and Markets 243 Part One Investment Decision Rules 245 15 The Financial Markets 247 16 The Time Value of Money and Net Present Value 267 17 The Internal Rate of Return 284 Part Two The Risk of Securities and the Required Rate of Return 297 18 Risk and Return 299 19 The Required Rate of Return 327 Part Three Financial Securities 345 20 Bonds 347 21 Other DEBT Products 369 22 Shares 384 23 Options 404 24 Hybrid Securities 425 25 Selling Securities 443 Section III Value 469 26 Value and Corporate Finance 471 27 Measuring Value Creation 490 28 Investment Criteria 508 29 The Cost of Capital 526 30 Risk and Investment Analysis 543 31 Valuation Techniques 555 Section IV Corporate Financial Policies 585 Part One Capital Structure Policies 587 32 Capital Structure and the Theory of Perfect Capital Markets 589 33 Capital Structure, Taxes and Organisation Theories 601 34 DEBT, Equity and Options Theory 618 35 Working Out Details: The Design of the Capital Structure 637 Part Two Equity Capital 657 36 Returning Cash to Shareholders 659 37 Distribution in Practice: Dividends and Share Buy-Backs 676 38 Share Issues 692 Part Three DEBT Capital 705 39 Implementing a DEBT Policy 707 Section V Financial Management 725 Part One Corporate Governance and Financial Engineering 727 40 Setting Up a Company or Financing Start-Ups 729 41 Choice of Corporate Structure 748 42 Initial Public Offerings (IPOs) 771 43 Corporate Governance 783 44 Taking Control of A Company 796 45 Mergers and Demergers 819 46 Leveraged Buyouts (LBOs) 836 47 Bankrupicy and Restructing 851 Part Two Managing Working Capital, Cash Flows, Financial Risks and Real Estate 863 48 Managing Working Capital 865 49 Cash Management 878 50 Managing Financial Risks 897 51 Managing Operational Real Estate 922 Epilogue - Finance and Strategy 935 Top 20 Largest Listed Companies 943 Contents 951 Index 961