Handbook of Corporate Finance: A Business Companion to Financial Markets, Decisions and Techniques

About

Features

·         Value-based management is increasingly talked about but little understood. This book provides a through grounding.

·         Mergers and the problem of merger failure (i.e. acquiring shareholders losing out) is discussed along with remedies

·         The proper use of derivatives as tools helping the business control risk, rather than increase it, is explained in easy to follow and practically-oriented fashion.

·         Modern investment appraisal techniques are contrasted with the rules of thumb frequently employed.

• An overview of modern financial markets and instruments with insight into the benefits brought by effective exploitation of the markets and perils of ignoring the needs of the finance providers is displayed.

Description

The imperatives of modern business mean that, sooner or later, every executive will have to get to grips with finance. Its terms, its tools, its techniques.

Corporate finance touches every aspect of your business: from deciding which capital expenditure projects are worthy of backing for tomorrow, to the immediate and daily challenge of managing business units for shareholder value. Finance is the framework for corporate decisions and the language of corporate decision-makers.  Fluency in finance will serve you and your business well.

Sample Content

Table of Contents

The book will be structured around the four key financial issues facing management:

• In what projects are we going to invest our shareholders money (capex)?

• How do we create and measure shareholder value creation?

• What type of finance should we raise?

• How do we manage financial risk?

Contents

Introduction

• Overview of the book
• Enthusiasm for financial knowledge
• The four key issues
• Outline

Chapter 1. What are we aiming at?

• The objective of the firm
• Variety of objectives: those admitted to (and those kept quiet)
• Why should we aim for shareholder wealth?
• What is shareholder wealth?
• Profit maximisation is not the same as shareholder wealth maximisation
• Getting manager¿s objectives aligned with shareholder¿s objectives

PART 1 ¿ WHAT INVESTMENTS SHOULD WE MAKE?

Chapter 2. State-of-the-art project assessment techniques

• How do you know whether an investment generates value for shareholders?
• Time is money
• Discounted cash flow
• State-of-the-art technique 1: net present value
• State-of-the-art technique 2: internal rate of return
• So which is better: NPV or IRR?

Appendix 2.1 Mathematical tools for finance

Simple and compound interest

Present value

Determining the interest rate

The investment period

Annuities

Perpetuities

Chapter 3. Traditional appraisal techniques

• What businesses actually use
• Payback
• Accounting rate of return
• Why internal rate of return is still popular

Chapter 4. Investment decision-making in real organisations

• The managerial art of investment selection
  • Strategy

• Social context

• Expense

• Stifling the entrepreneurial spirit

• Intangible benefits

• The stages of investment decisions
  • Generation of ideas
  • Development and classification
  • Screening
  • Appraisal
  • Report and authorisation
  • Implementation
  • Post completion audit

Chapter 5. Allowing for risk

• What is risk?
• Adjusting for risk through the discount rate
• Sensitivity analysis
• Scenario analysis
• Probability analysis
• Standard deviation
• What risk techniques do managers actually use?

PART 2 SHAREHOLDER VALUE

Chapter 6. Value managed companies versus earnings managed companies

• The pervasiveness of the value approach
• Case studies: FT100 companies creating value and destroying value
• Why shareholder value?
• Earnings-based management¿s failings:

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