Lessons in corporate finance : a case studies approach to financial tools, financial policies, and valuation

Cover
Title Page
Copyright
Contents
About the Authors
Acknowledgments
Preface
Chapter 1 Introduction
	Two Markets: Product and Capital
	The Basics: Tools and Techniques
	A Diagram of Corporate Finance
	A Brief History of Modern Finance
	Reading This Book
Part One Financial Health of a Firm and Cash Flow Management
	Chapter 2 Determining a Firm's Financial Health (PIPES-A)
		The Conversation with the Banker Is Like a Job Interview
		Starting with the Product Market Strategy
		Is PIPES Profitable?
		Doing the Math
		Sources and Uses of Funds
		Ratio Analysis
		The Cash Cycle
		Summary
	Chapter 3 Pro Forma Forecasts (PIPES-B)
		First, Let's Take a Closer Look at Ratio Analysis
		Pro Forma Forecasts
		Circular Relationships
		Back to (Forecasting) the Future
		Projecting Out to 2018 and 2019
		Evaluating the Loan
		Summary
		Appendix 3A: Accounting Is Not Economic Reality
	Chapter 4 The Impact of Seasonality on a Firm's Funding (PIPES-C)
		Monthly Pro Forma Income Statements
		Monthly Pro Forma Balance Sheets
		A Different Picture of the Firm
		Summary
		Appendix 4A: PIPES Monthly Pro Forma Income Statements and Balance Sheets, 2018
		Appendix 4B: PIPES Monthly Pro Forma Income Statements and Balance Sheets, 2019
Part Two Firm Financing and Financial Policies
	Chapter 5 Why Financing Matters (Massey Ferguson)
		Product Market Position and Strategy
		Political Risk and Economies of Scale in Production
		Massey Ferguson, 1971–1976
		Sustainable Growth
		The Period after 1976
		Conrad Runs Away
		The Competitors
		Back to Massey
		Massey's Restructuring
		Postscript: What Happened to Massey
		Summary
		Appendix 5A: Massey Ferguson Financial Statements
	Chapter 6 An Introduction to Capital Structure Theory
		Optimal Capital Structure
		M&M and Corporate Finance
		Taxes
		Costs of Financial Distress
		The Textbook View of Capital Structure
		The Cost of Capital
		Summary
	Chapter 7 Capital Structure Decisions (Marriott Corporation and Gary Wilson)
		Capital Structure
		The Cost of Capital
		How Firms Set Capital Structure in Practice
		Corporate Financial Policies
		Sustainable Growth and Excess Cash Flow
		What to Do with Excess Cash?
		Summary
		Appendix 7A: Marriott Corporation Income Statements and Balance Sheets
		Appendix 7B: Marriott Corporation Selected Ratios
	Chapter 8 Investment Decisions (Marriott Corporation and Gary Wilson)
		What Is the Correct Price?
		How Should Marriott Buy Its Shares?
		The Loan Covenants
		The Impact of the Product Market on Financial Policies
		The Capital Market Impact and the Future
		Summary
	Chapter 9 Financial Policy Decisions (AT&T: Before and After the 1984 Divestiture)
		Background on AT&T
		M&M and the Practice of Corporate Finance
		Old (pre-1984) AT&T
		New (post-1984) AT&T
		Summary
		Appendix 9A: Development of AT&T Pro Formas, 1984–1988 (Expected-Case)
	Chapter 10 The Impact of Operating Strategy on Corporate Finance Policy (MCI)
		A Brief Summary
		A Brief History of MCI
		Convertible Preferred Stock and Convertible Bonds
		Interest Rates and Debt Ratios
		Leases
		Financing Needs of the New MCI
		MCI's Financing Choice
		MCI Postscript
		Summary
		Appendix 10A: Development of MCI's Pro Formas, 1984–1988
	Chapter 11 Dividends and Stock Repurchases (Apple Inc.)
		The Theory of Dividend Policy
		Empirical Evidence
		Apple Inc. and the Decision on Whether to Pay Dividends
		What Did Apple Do about Dividends?
		What Happened Next
		Summary
	Chapter 12 A Continuation of Capital Structure Theory
		The Tax Shield of Debt
		The Costs of Financial Distress
		Transaction Costs, Asymmetric Information, and Agency Costs
		Asymmetric Information and Firm Financing
		Agency Costs: Manager Behavior and Capital Structure
		Leverage and Agency Conflicts Between Equity and Debt Holders
		Start with the Amount of Financing Required
		Summary
	Chapter 13 Restructuring and Bankruptcy: When Things Go Wrong (Avaya Holdings)
		When Things Go Wrong
		The Key Economic Principle of Bankruptcy Is to Save Viable Firms
		When Should a Firm File for Bankruptcy?
		The Rules of Bankruptcy
		Maintaining the Value of a Firm in Bankruptcy
		Avaya Emerges from Bankruptcy
		Summary
		Appendix 13.A: The Creditors Coordination Problem
Part Three Investments and Valuation
	Chapter 14 The Time Value of Money: Discounting and Net Present Values
		The Time Value of Money
		Net Present Value (NPV)
		Payback
		Projects with Unequal Lives
		Perpetuities
		Summary
	Chapter 15 Valuation and Cash Flows (Sungreen A)
		Investment Decisions
		How to Value a Project
		The Weighted Average Cost of Capital (WACC)
		Terminal Values
		Summary
	Chapter 16 Valuation (Sungreen B)
		Sungreen's Projected Cash Flows
		The Weighted Average Cost of Capital (WACC)
		Twin Firms
		The Cost of Equity
		The Cost of Debt
		The Final Valuation
		Strategic Analysis
		Summary
	Chapter 17 Valuation Nuances
		Cash Flow Nuances
		Cost of Capital Nuances
		Nuances on Calculating the Cost of Equity: Levering and Unlevering Beta
		Separating Cash Flows and Terminal Values
		Nuances of Terminal Value Methods
		Other Valuation Techniques: DCF Variations
		Real Options (aka Strategic Choices)
		Summary
	Chapter 18 Leveraged Buyouts and Private Equity Financing (Congoleum)
		Congoleum: A Short History
		Leading up to the LBO: What Makes a Firm a Good LBO Target?
		Details of the Deal
		Postscript: What Happened to LBOs?
		Summary
		The World Keeps Changing
		Appendix 18A: Congoleum's Pro Formas with and without the LBO
		Appendix 18B: Highlights of the Lazard Fairness Opinion
	Chapter 19 Mergers and Acquisitions: Strategic Issues (The Dollar Stores)
		The Three Main Competitors
		Recent History
		Shopping a Firm/Finding a Buyer
		Summary
	Chapter 20 Valuing an Acquisition: Free Cash Flows to the Firm (The Dollar Stores)
		The Bid for Family Dollar
		Free Cash Flows to the Firm
		Estimating the Cost of Capital
		Discounted Cash Flows
		Terminal Values
		The Three Pieces
		Summary
		Appendix 20A: Family Dollar Pro Forma Financial Statements with Authors' Constant Debt Ratio
	Chapter 21 Understanding Free Cash Flows (The Dollar Stores)
		Comparing the Free-Cash-Flows Formulas
		Back to Discount Rates
		On to Free Cash Flows to Equity
		Discounting the Free Cash Flows to Equity
		Summary
		Appendix 21A: Family Dollar Pro Forma Free Cash Flows to Equity with Constant Debt Ratio
	Chapter 22 Mergers and Acquisitions: Execution (The Dollar Stores)
		The Time Line
		Managerial Discretion
		Activist Shareholders
		The Federal Trade Commission (FTC)
		Shareholder Lawsuits
		The Vote
		Summary
		Appendix 22.A: Key Events in the Bidding for Family Dollar, 2014–2015
	Chapter 23 Review
		Chapters 2–4: Cash Flow Management—Financial Tools
		Chapters 5–13: Financing Decisions and Financial Policies
		Chapters 14–22: Valuation
		Tools and Concepts Discussed in This Book
		Finance as Art, Not Science
		Bottom Lines
		An Intelligent Approach to Finance
		Keeping Current
		Larry's Last (Really a True) Story
		Paul's Theory of Pies
		Rules to Live By
Glossary
Index
EULA