دانلود کتاب Fundamentals of Corporate Finance, 11ce

فهرست مطالب :

Table of Contents and Preface
Cover Page
Title Page
Stephen A. Ross
Randolph W. Westerfield
Bradford D. Jordan
J. Ari Pandes
Thomas A. Holloway
Copyright
About the Authors
Stephen A. Ross
Randolph W. Westerfield
Bradford D. Jordan
J. Ari Pandes
Thomas A. Holloway
Brief Contents
Contents
Preface
Coverage
Learning Solutions
Real Financial Decisions
Application Tools
Study Aids
Award Winning Technology
Instructor Resources for Fundamentals of Corporate Finance, Eleventh Canadian Edition
Acknowledgements
Connect
Chapter 1: Introduction to Corporate Finance
Chapter 1 Introduction
1.1 Corporate Finance and the Financial Manager
What Is Corporate Finance?
The Financial Manager
Financial Management Decisions
1.2 Forms of Business Organization
Sole Proprietorship
Partnership
Corporation
Income Trust
Co-operative (Co-op)
1.3 The Goal of Financial Management
Possible Goals
The Goal of Financial Management
A More General Goal
1.4 The Agency Problem and Control of the Corporation
Agency Relationships
Management Goals
Do Managers Act in the Shareholders’ Interests?
Corporate Social Responsibility and Ethical Investing
1.5 Financial Markets and the Corporation
Cash Flows to and from the Firm
Money versus Capital Markets
Primary versus Secondary Markets
1.6 Financial Institutions
1.7 Trends in Financial Markets and Financial Management
1.8 Outline of the Text
Summary and Conclusions
Key Terms
Concepts Review and Critical Thinking Questions
Internet Application Questions
Chapter 2: Financial Statements, Cash Flow, and Taxes
Chapter 2 Introduction
2.1 Statement of Financial Position
Assets
Liabilities and Owners’ Equity
Net Working Capital
Liquidity
Debt versus Equity
Value versus Cost
2.2 Statement of Comprehensive Income
International Financial Reporting Standards (IFRS)
Non-Cash Items
Time and Costs
2.3 Cash Flow
Cash Flow from Assets
Cash Flow to Creditors and Shareholders
2.4 Taxes
Individual Tax Rates
Average versus Marginal Tax Rates
Taxes on Investment Income
Corporate Taxes
Taxable Income
Global Tax Rates
Capital Gains and Carry-Forward and Carry-Back
2.5 Capital Cost Allowance
Asset Purchases and Sales
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Chapter 3: Working with Financial Statements
Chapter 3 Introduction
3.1 Cash Flow and Financial Statements: A Closer Look
Sources and Uses of Cash
Statement of Cash Flows
3.2 Standardized Financial Statements
Common-Size Statements
Common–Base Year Financial Statements: Trend Analysis
3.3 Ratio Analysis
Short-Term Solvency or Liquidity Measures
Other Liquidity Ratios
Long-Term Solvency Measures
Asset Management, or Turnover, Measures
Profitability Measures
Market Value Measures
3.4 The Du Pont Identity
3.5 Using Financial Statement Information
Why Evaluate Financial Statements?
Choosing a Benchmark
Problems with Financial Statement Analysis
Summary and Conclusions
Key Terms
Chapter Review Problems And Self-Test
Answers to Self-Test Problems
Concept Review And Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Chapter 4: Long-Term Financial Planning and Corporate Growth
Chapter 4 Introduction
4.1 What Is Financial Planning?
Growth as a Financial Management Goal
Dimensions of Financial Planning
What Can Planning Accomplish?
4.2 Financial Planning Models: A First Look
A Financial Planning Model: The Ingredients
A Simple Financial Planning Model
4.3 The Percentage of Sales Approach
An Illustration of the Percentage of Sales Approach
4.4 External Financing and Growth
External Financing Needed and Growth
Internal Growth Rate
Financial Policy and Growth
Determinants of Growth
A Note on Sustainable Growth Rate Calculations
4.5 Some Caveats on Financial Planning Models
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Appendix 4A
A Financial Planning Model for the Hoffman Company
Appendix Questions and Problems
Appendix 4B
Derivation of the Sustainable Growth Formula
Chapter 5: Introduction to Valuation: The Time Value of Money
Chapter 5 Introduction
5.1 Future Value and Compounding
Investing for a Single Period
Investing for More than One Period
A Note on Compound Growth
5.2 Present Value and Discounting
The Single-Period Case
Present Values for Multiple Periods
5.3 More on Present and Future Values
Present versus Future Value
Determining the Discount Rate
Finding the Number of Periods
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Chapter 6: Discounted Cash Flow Valuation
Chapter 6 Introduction
6.1 Future and Present Values of Multiple Cash Flows
Future Value with Multiple Cash Flows
Present Value with Multiple Cash Flows
A Note on Cash Flow Timing
6.2 Valuing Level Cash Flows: Annuities and Perpetuities
Present Value for Annuity Cash Flows
Future Value for Annuities
A Note on Annuities Due
Perpetuities
Growing Perpetuities
Formula for Present Value of Growing Perpetuity
Growing Annuity
Formula for Present Value of Growing Annuity
6.3 Comparing Rates: The Effect of Compounding
Effective Annual Rates and Compounding
Calculating and Comparing Effective Annual Rates
Mortgages
EARs and APRs
Taking It to the Limit: A Note on Continuous Compounding
6.4 Loan Types and Loan Amortization
Pure Discount Loans
Interest-Only Loans
Amortized Loans
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Appendix 6A
Proof of Annuity Present Value Formula
Chapter 7: Interest Rates and Bond Valuation
Chapter 7 Introduction
7.1 Bonds and Bond Valuation
Bond Features and Prices
Bond Values and Yields
Interest Rate Risk
Finding the Yield to Maturity
7.2 More on Bond Features
Is It Debt or Equity?
Long-Term Debt: The Basics
The Indenture
7.3 Bond Ratings
7.4 Some Different Types of Bonds
Financial Engineering
Stripped Bonds
Floating-Rate Bonds
Other Types of Bonds
7.5 Bond Markets
How Bonds Are Bought and Sold
Bond Price Reporting
A Note on Bond Price Quotes
Bond Funds
Bonds and Restructuring
7.6 Inflation and Interest Rates
Real versus Nominal Rates
The Fisher Effect
Inflation and Present Values
7.7 Determinants of Bond Yields
The Term Structure of Interest Rates
Bond Yields and the Yield Curve: Putting It All Together
Conclusion
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Appendix 7A
Managing Interest Rate Risk
Duration
Appendix Questions and Problems
Appendix 7B
Callable Bonds and Bond Refunding
The Call Provision
Cost of the Call Provision
Value of the Call Provision
The Refunding Issue
When Should Firms Refund Callable Bonds?
Interest Savings on New Issue
NPV for the Refunding Operation
Should Firms Issue Callable Bonds?
Appendix Review Problems and Self-Test
Answers to Appendix Self-Test Problems
Appendix Questions and Problems
Chapter 8: Stock Valuation
Chapter 8 Introduction
8.1 Common Stock Valuation
Common Stock Cash Flows
Common Stock Valuation: Some Special Cases
Changing the Growth Rate
Components of the Required Return
8.2 Common Stock Features
Shareholders’ Rights
Dividends
Classes of Stock
8.3 Preferred Stock Features
Stated Value
Cumulative and Non-Cumulative Dividends
Is Preferred Stock Really Debt?
Preferred Stock and Taxes
Beyond Taxes
8.4 Stock Market Reporting
Growth Opportunities
Application: The Price–Earnings Ratio
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Appendix 8A
Corporate Voting
Cumulative Voting
Straight Voting
Proxy Voting
Appendix Review Problem and Self-Test
Answer to Appendix Self-Test Problem
Appendix Question and Problem
Chapter 9: Net Present Value and Other Investment Criteria
Chapter 9 Introduction
9.1 Net Present Value
The Basic Idea
Estimating Net Present Value
9.2 The Payback Rule
Defining the Rule
Analyzing the Payback Period Rule
Redeeming Qualities
Summary of the Rule
The Discounted Payback Rule
9.3 The Average Accounting Return
Analyzing the Average Accounting Return Method
9.4 The Internal Rate of Return
Problems with the IRR
Redeeming Qualities of the IRR
9.5 The Profitability Index
9.6 The Practice of Capital Budgeting
9.7 Capital Rationing
Soft Rationing
Hard Rationing
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Internet Application Questions
Appendix 9A
The Modified Internal Rate of Return
Method 1: The Discounting Approach
Method 2: The Reinvestment Approach
Method 3: The Combination Approach
MIRR or IRR: Which Is Better?
Appendix Questions and Problems
Mini Case
Chapter 10: Making Capital Investment Decisions
Chapter 10 Introduction
10.1 Project Cash Flows: A First Look
Relevant Cash Flows
The Stand-Alone Principle
10.2 Incremental Cash Flows
Sunk Costs
Opportunity Costs
Side Effects
Net Working Capital
Financing Costs
Inflation
Capital Budgeting and Business Taxes in Canada
Other Issues
10.3 Pro Forma Financial Statements and Project Cash Flows
Getting Started: Pro Forma Financial Statements
Project Cash Flows
Project Total Cash Flow and Value
10.4 More on Project Cash Flow
A Closer Look at Net Working Capital
Depreciation and Capital Cost Allowance
An Example: The Majestic Mulch and Compost Company (MMCC)
10.5 Alternative Definitions of Operating Cash Flow
The Bottom-up Approach
The Top-down Approach
The Tax Shield Approach
Conclusion
10.6 Applying the Tax Shield Approach to the Majestic Mulch and Compost Company Project
Present Value of the Tax Shield on CCA
Salvage Value versus UCC
10.7 Some Special Cases of Discounted Cash Flow Analysis
Evaluating Cost-Cutting Proposals
Replacing an Asset
Evaluating Equipment with Different Lives
Setting the Bid Price
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Appendix 10A
More on Inflation and Capital Budgeting
Appendix Question and Problem
Appendix 10B
Capital Budgeting with Spreadsheets
Appendix 10C
Deriving the Tax Shield on CCA Formula
Chapter 11: Project Analysis and Evaluation
Chapter 11 Introduction
11.1 Evaluating NPV Estimates
The Basic Problem
Projected versus Actual Cash Flows
Forecasting Risk
Sources of Value
11.2 Scenario and Other What-If Analyses
Getting Started
Scenario Analysis
Sensitivity Analysis
Simulation Analysis
11.3 Break-Even Analysis
Fixed and Variable Costs
Accounting Break-Even
Accounting Break-Even: A Closer Look
Uses for the Accounting Break-Even
11.4 Operating Cash Flow, Sales Volume, and Break-Even
Accounting Break-Even and Cash Flow
Cash Flow and Financial Break-Even Points
11.5 Operating Leverage
The Basic Idea
Implications of Operating Leverage
Measuring Operating Leverage
Operating Leverage and Break-Even
11.6 Managerial Options
Contingency Planning
The Option to Expand
The Option to Abandon
The Option to Wait
The Tax Option
Options in Capital Budgeting: An Example
Strategic Options
Conclusion
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concept Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Chapter 12: Lessons from Capital Market History
Chapter 12 Introduction
12.1 Returns
Dollar Returns
Percentage Returns
12.2 The Historical Record
A First Look
A Closer Look
12.3 Average Returns: The First Lesson
Calculating Average Returns
Average Returns: The Historical Record
Risk Premiums
The First Lesson
12.4 The Variability of Returns: The Second Lesson
Frequency Distributions and Variability
The Historical Variance and Standard Deviation
The Historical Record
Normal Distribution
Value at Risk
The Second Lesson
2008: The Bear Growled and Investors Howled
Using Capital Market History
12.5 More on Average Returns
Arithmetic versus Geometric Averages
Calculating Geometric Average Returns
Arithmetic Average Return or Geometric Average Return?
12.6 Capital Market Efficiency
Price Behaviour in an Efficient Market
The Efficient Markets Hypothesis
Market Efficiency—Forms and Evidence
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concept Review and Critical Thinking Questions
Questions and Problems
Mini Case
Chapter 13: Return, Risk, and the Security Market Line
Chapter 13 Introduction
13.1 Expected Returns and Variances
Expected Return
Calculating the Variance
13.2 Portfolios
Portfolio Weights
Portfolio Expected Returns
Portfolio Variance
Portfolio Standard Deviation and Diversification
The Efficient Set
Correlations in the Financial Crisis of 2007–2009
13.3 Announcements, Surprises, and Expected Returns
Expected and Unexpected Returns
Announcements and News
13.4 Risk: Systematic and Unsystematic
Systematic and Unsystematic Risk
Systematic and Unsystematic Components of Return
13.5 Diversification and Portfolio Risk
The Effect of Diversification: Another Lesson from Market History
The Principle of Diversification
Diversification and Unsystematic Risk
Diversification and Systematic Risk
Risk and the Sensible Investor
13.6 Systematic Risk and Beta
The Systematic Risk Principle
Measuring Systematic Risk
Portfolio Betas
13.7 The Security Market Line
Beta and the Risk Premium
Calculating Beta
The Security Market Line
13.8 Arbitrage Pricing Theory And Empirical Models
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Internet Application Questions
Appendix 13A
Derivation of the Capital Asset Pricing Model
Appendix Question and Problem
Chapter 14: Cost of Capital
Chapter 14 Introduction
14.1 The Cost of Capital: Some Preliminaries
Required Return versus Cost of Capital
Financial Policy and Cost of Capital
14.2 The Cost of Equity
The Dividend Growth Model Approach
The SML Approach
The Cost of Equity in Rate Hearings
14.3 The Costs of Debt and Preferred Stock
The Cost of Debt
The Cost of Preferred Stock
14.4 The Weighted Average Cost of Capital
The Capital Structure Weights
Taxes and the Weighted Average Cost of Capital
Solving the Warehouse Problem and Similar Capital Budgeting Problems
Performance Evaluation: Another Use of the WACC
14.5 Divisional and Project Costs of Capital
The SML and the WACC
Divisional Cost of Capital
The Pure Play Approach
The Subjective Approach
14.6 Company Valuation With the WACC
14.7 Flotation Costs and the Weighted Average Cost of Capital
The Basic Approach
Flotation Costs and NPV
Internal Equity and Flotation Costs
14.8 Calculating WACC for Loblaw
Estimating Financing Proportions
Market Value Weights for Loblaw
Cost of Debt
Cost of Preferred Shares
Cost of Common Stock
CAPM
Dividend Valuation Model Growth Rate
Loblaw’s WACC
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Appendix 14A
Adjusted Present Value
All-Equity Value
Additional Effects of Debt
Flotation Costs
Tax Subsidy
Non-Market Rate Financing
APV and Beta
No Taxes
Corporate Taxes
The Project Is Not Scale Enhancing
Comparison of WACC and APV
Appendix Questions and Problems
Appendix 14B
Economic Value Added and the Measurement of Financial Performance
Calculating Economic Value Added
Some Caveats on EVA
Appendix Questions and Problems
Chapter 15: Raising Capital
Chapter 15 Introduction
15.1 The Financing Life Cycle of a Firm: Early-Stage Financing and Venture Capital
Venture Capital
Some Venture Capital Realities
Choosing a Venture Capitalist
Conclusion
15.2 The Public Issue
15.3 The Basic Procedure for a New Issue
Securities Registration
Exempt Securities and Crowdfunding
Alternative Issue Methods
15.4 The Cash Offer
Types of Underwriting
Bought Deal
Dutch Auction Underwriting
The Selling Period
The Overallotment Option
Lockup Agreements
The Quiet Periods
The Investment Dealers
15.5 IPOs and Underpricing
IPO Underpricing: The 1999–2000 Experience
Evidence on Underpricing
Why Does Underpricing Exist?
15.6 New Equity Sales and the Value of the Firm
15.7 The Cost of Issuing Securities
IPOs in Practice: The Case of Seven Generations Energy
15.8 Rights
The Mechanics of a Rights Offering
Number of Rights Needed to Purchase a Share
The Value of a Right
Theoretical Value of a Right
Ex Rights
Value of Rights after Ex-Rights Date
The Underwriting Arrangements
Effects on Shareholders
Cost of Rights Offerings
15.9 Dilution
Dilution of Proportionate Ownership
Dilution of Value: Book versus Market Values
15.10 Issuing Long-Term Debt
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Chapter 16: Financial Leverage and Capital Structure Policy
Chapter 16 Introduction
16.1 The Capital Structure Question
Firm Value and Stock Value: An Example
Capital Structure and the Cost of Capital
16.2 The Effect of Financial Leverage
The Basics of Financial Leverage
Corporate Borrowing and Homemade Leverage
16.3 Capital Structure and the Cost of Equity Capital
M&M Proposition I: The Pie Model
The Cost of Equity and Financial Leverage: M&M Proposition II
Business and Financial Risk
16.4 M&M Propositions I and II with Corporate Taxes
The Interest Tax Shield
Taxes and M&M Proposition I
Taxes, the WACC, and Proposition II
16.5 Bankruptcy Costs
Direct Bankruptcy Costs
Indirect Bankruptcy Costs
Agency Costs of Equity
16.6 Optimal Capital Structure
The Static Theory of Capital Structure
Optimal Capital Structure and the Cost of Capital
Optimal Capital Structure: A Recap
Capital Structure: Some Managerial Recommendations
16.7 The Pie Again
The Extended Pie Model
Marketed Claims versus Non-Marketed Claims
16.8 The Pecking-Order Theory
Internal Financing and the Pecking Order
Implications of the Pecking Order
16.9 Observed Capital Structures
16.10 Long-Term Financing Under Financial Distress and Bankruptcy
Liquidation and Reorganization
Agreements to Avoid Bankruptcy
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Appendix 16A
Capital Structure and Personal Taxes
Value of the Firm with Personal and Corporate Taxes
Appendix Questions and Problems
Appendix 16B
Derivation of Proposition II (Equation 16.4)
Chapter 17: Dividends and Dividend Policy
Chapter 17 Dividends and Dividend Policy
17.1 Cash Dividends and Dividend Payment
Cash Dividends
Standard Method of Cash Dividend Payment
Dividend Payment: A Chronology
More on the Ex-Dividend Date
17.2 Does Dividend Policy Matter?
An Illustration of the Irrelevance of Dividend Policy
17.3 Real-World Factors Favouring a Low Payout
Taxes
Some Evidence on Dividends and Taxes in Canada
Flotation Costs
Dividend Restrictions
17.4 Real-World Factors Favouring a High Payout
Desire for Current Income
Uncertainty Resolution
Tax and Legal Benefits from High Dividends
Conclusion
17.5 A Resolution of Real-World Factors?
Information Content of Dividends
Dividend Signalling in Practice
The Clientele Effect
17.6 Establishing a Dividend Policy
Residual Dividend Approach
Dividend Stability
A Compromise Dividend Policy
Some Survey Evidence on Dividends
17.7 Stock Repurchase: An Alternative to Cash Dividends
Cash Dividends versus Repurchase
Real-World Considerations in a Repurchase
Share Repurchase and EPS
17.8 Stock Dividends and Stock Splits
Some Details on Stock Splits and Stock Dividends
Value of Stock Splits and Stock Dividends
Reverse Splits
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Chapter 18: Short-Term Finance and Planning
Chapter 18 Introduction
18.1 Tracing Cash and Net Working Capital
Activities that Increase Cash
Activities that Decrease Cash
18.2 The Operating Cycle and the Cash Cycle
Defining the Operating and Cash Cycles
Calculating the Operating and Cash Cycles
Interpreting the Cash Cycle
18.3 Some Aspects of Short-Term Financial Policy
The Size of the Firm’s Investment in Current Assets
Alternative Financing Policies for Current Assets
Which Financing Policy Is Best?
Current Assets and Liabilities in Practice
18.4 The Cash Budget
Sales and Cash Collections
Cash Outflows
The Cash Balance
18.5 A Short-Term Financial Plan
Short-Term Planning and Risk
18.6 Short-Term Borrowing
Operating Loans
Letters of Credit
Secured Loans
Factoring
Securitized Receivables—A Financial Innovation
Inventory Loans
Trade Credit
Money Market Financing
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Internet Application Questions
Chapter 19: Cash and Liquidity Management
Chapter 19 Introduction
19.1 Reasons for Holding Cash
Speculative and Precautionary Motives
The Transaction Motive
Costs of Holding Cash
Cash Management versus Liquidity Management
19.2 Determining the Target Cash Balance
The Basic Idea
Other Factors Influencing the Target Cash Balance
19.3 Understanding Float
Disbursement Float
Collection Float and Net Float
Float Management
Accelerating Collections
Over-the-Counter Collections
Controlling Disbursements
19.4 Investing Idle Cash
Temporary Cash Surpluses
Characteristics of Short-Term Securities
Some Different Types of Money Market Securities
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Appendix 19A
Cash Management Models
The BAT Model
The Miller–Orr Model: A More General Approach
Appendix Review Problem and Self-Test
Answers to Appendix Self-Test Problem
Appendix Questions and Problems
Chapter 20: Credit and Inventory Management
Chapter 20 Introduction
20.1 Credit and Receivables
Components of Credit Policy
The Cash Flows from Granting Credit
The Investment in Receivables
20.2 Terms of the Sale
Why Trade Credit Exists
The Basic Form
The Credit Period
Cash Discounts
Credit Instruments
20.3 Analyzing Credit Policy
Credit Policy Effects
Evaluating a Proposed Credit Policy
20.4 Optimal Credit Policy
The Total Credit Cost Curve
Organizing the Credit Function
20.5 Credit Analysis
When Should Credit Be Granted?
Credit Information
Credit Evaluation and Scoring
20.6 Collection Policy
Monitoring Receivables
Collection Effort
Credit Management in Practice
20.7 Inventory Management
The Financial Manager and Inventory Policy
Inventory Types
Inventory Costs
20.8 Inventory Management Techniques
The ABC Approach
The Economic Order Quantity (EOQ) Model
Extensions to the EOQ Model
Managing Derived-Demand Inventories
Materials Requirements Planning (MRP)
Just-In-Time Inventory
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Appendix 20A
More on Credit Policy Analysis
Two Alternative Approaches
Discounts and Default Risk
Appendix Review Problems and Self-Test
Answers to Appendix Self-Test Problems
Appendix Questions and Problems
Chapter 21: International Corporate Finance
Chapter 21 Introduction
21.1 Terminology
21.2 Foreign Exchange Markets and Exchange Rates
Exchange Rates
Types of Transactions
21.3 Purchasing Power Parity
Absolute Purchasing Power Parity
Relative Purchasing Power Parity
Currency Appreciation and Depreciation
21.4 Interest Rate Parity, Unbiased Forward Rates, and the Generalized Fisher Effect
Covered Interest Arbitrage
Interest Rate Parity (IRP)
Forward Rates and Future Spot Rates
Putting It All Together
21.5 International Capital Budgeting
Method 1: The Home Currency Approach
Method 2: The Foreign Currency Approach
Unremitted Cash Flows
21.6 Financing International Projects
The Cost of Capital for International Firms
International Diversification and Investors
Sources of Short- and Intermediate-Term Financing
21.7 Exchange Rate Risk
Transaction Exposure
Economic Exposure
Translation Exposure
Managing Exchange Rate Risk
21.8 Political and Governance Risks
Corporate Governance Risk
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Chapter 22: Leasing
Chapter 22 Introduction
22.1 Leases and Lease Types
Leasing versus Buying
Operating Leases
Financial Leases
22.2 Accounting and Leasing
22.3 Taxes, Canada Revenue Agency (CRA), and Leases
22.4 The Cash Flows from Leasing
The Incremental Cash Flows
22.5 Lease or Buy?
A Preliminary Analysis
NPV Analysis
A Misconception
Asset Pool and Salvage Value
22.6 A Leasing Paradox
Resolving the Paradox
Leasing and Capital Budgeting
22.7 Reasons for Leasing
Good Reasons for Leasing
Bad Reasons for Leasing
Other Reasons for Leasing
Leasing Decisions in Practice
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Chapter 23: Mergers and Acquisitions
Chapter 23 Introduction
23.1 The Legal Forms of Acquisitions
Merger or Consolidation
Acquisition of Stock
Acquisition of Assets
Acquisition Classifications
A Note on Takeovers
Alternatives to Merger
23.2 Taxes and Acquisitions
Determinants of Tax Status
Taxable versus Tax-Free Acquisitions
23.3 Accounting for Acquisitions
23.4 Gains from Acquisition
Synergy
Revenue Enhancement
Cost Reductions
Tax Gains
Changing Capital Requirements
Avoiding Mistakes
A Note on Inefficient Management and Opportunistic Takeover Offers
The Negative Side of Takeovers
23.5 Some Financial Side Effects of Acquisitions
Earnings Per Share (EPS) Growth
Diversification
23.6 The Cost of an Acquisition
Case I: Cash Acquisition
Case II: Stock Acquisition
Cash versus Common Stock
23.7 Defensive Tactics
The Control Block and the Corporate Charter
Repurchase/Standstill Agreements
Exclusionary Offers and Dual-Class Stock
Share Rights Plans
Going Private and Leveraged Buyouts
LBOs to Date: The Record
Other Defensive Devices and Jargon of Corporate Takeovers
23.8 Some Evidence on Acquisitions
23.9 Divestitures and Restructurings
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Chapter 24: Enterprise Risk Management
Chapter 24 Introduction
24.1 Insurance
24.2 Managing Financial Risk
The Impact of Financial Risk: The Credit Crisis of 2007–09
The Risk Profile
Reducing Risk Exposure
Hedging Short-Term Exposure
Cash Flow Hedging: A Cautionary Note
Hedging Long-Term Exposure
Conclusion
24.3 Hedging with Forward Contracts
Forward Contracts: The Basics
The Payoff Profile
Hedging with Forwards
24.4 Hedging with Futures Contracts
Trading in Futures
Futures Exchanges
Hedging with Futures
24.5 Hedging with Swap Contracts
Currency Swaps
Interest Rate Swaps
Commodity Swaps
The Swap Dealer
Interest Rate Swaps: An Example
Credit Default Swaps (CDS)
24.6 Hedging with Option Contracts
Option Terminology
Options versus Forwards
Option Payoff Profiles
Option Hedging
Hedging Commodity Price Risk with Options
Hedging Exchange Rate Risk with Options
Hedging Interest Rate Risk with Options
Actual Use of Derivatives
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Chapter 25: Options and Corporate Securities
Chapter 25 Introduction
25.1 Options: The Basics
Puts and Calls
Stock Option Quotations
Option Payoffs
Put Payoffs
Long-Term Options
25.2 Fundamentals of Option Valuation
Value of a Call Option at Expiration
The Upper and Lower Bounds on a Call Option’s Value
A Simple Model: Part I
Four Factors Determining Option Values
25.3 Valuing a Call Option
A Simple Model: Part II
The Fifth Factor
A Closer Look
25.4 Employee Stock Options
ESO Features
ESO Repricing
25.5 Equity as a Call Option on the Firm’s Assets
Case I: The Debt Is Risk-Free
Case II: The Debt Is Risky
25.6 Warrants
The Difference between Warrants and Call Options
Warrants and the Value of the Firm
25.7 Convertible Bonds
Features of a Convertible Bond
Value of a Convertible Bond
25.8 Reasons for Issuing Warrants and Convertibles
The Free Lunch Story
The Expensive Lunch Story
A Reconciliation
25.9 Other Options
The Call Provision on a Bond
Put Bonds
The Overallotment Option
Insurance and Loan Guarantees
Managerial Options
Summary and Conclusions
Key Terms
Chapter Review Problems and Self-Test
Answers to Self-Test Problems
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Appendix 25A
The Black–Scholes Option Pricing Model
Appendix Review Problems and Self-Test
Answers to Appendix Self-Test Problems
Appendix Questions and Problems
Chapter 26: Behavioural Finance: Implications for Financial Management
Chapter 26 Introduction
26.1 Introduction to Behavioural Finance
26.2 Biases
Overconfidence
Overoptimism
Confirmation Bias
26.3 Framing Effects
Loss Aversion
House Money
26.4 Heuristics
The Affect Heuristic
The Representativeness Heuristic
Representativeness and Randomness
The Gambler’s Fallacy
26.5 Behavioural Finance and Market Efficiency
Limits to Arbitrage
Bubbles and Crashes
26.6 Market Efficiency and the Performance of Professional Money Managers
Summary and Conclusions
Key Terms
Concepts Review and Critical Thinking Questions
Questions and Problems
Mini Case
Internet Application Questions
Appendix A: Mathematical Tables
Appendix A
Mathematical Tables
Appendix B: Answers to Selected End-of-Chapter Problems
Appendix B
Answers to Selected End-of-Chapter Problems
Formula Sheet
Formula Sheet
Accessibility Content: Text Alternatives for Images
Figure 1.1 Text Alternative (Chapter 1)
Figure 1.2 Text Alternative (Chapter 1)
Figure 1.3 Text Alternative (Chapter 1)
Figure 1.4. Text Alternative (Chapter 1)
Figure 2.1. Text Alternative (Chapter 2)
Figure 4.1. Text Alternative (Chapter 4)
A time line. Text Alternative (Chapter 5)
Figure 5.1. Text Alternative (Chapter 5)
Figure 5.2. Text Alternative (Chapter 5)
Present Values Graphic Text Alternative (Chapter 5)
Spreadsheet strategies Graphic Text Alternative (Chapter 5)
Figure 6.1. Text Alternative (Chapter 6)
Figure 6.3. Text Alternative (Chapter 6)
Figure 6.4. Text Alternative (Chapter 6)
Figure 6.5. Text Alternative (Chapter 6)
Figure 6.6. Text Alternative (Chapter 6)
Spreadsheet strategies Graphic Text Alternative (Chapter 6)
Spreadsheet strategies Graphic Text Alternative (Chapter 6)
Spreadsheet strategies Graphic Text Alternative (Chapter 6)
Figure 7.2. Text Alternative (Chapter 7)
Figure 7.3. Text Alternative (Chapter 7)
Spreadsheet strategies Graphic Text Alternative (Chapter 7)
Spreadsheet strategies Text Alternative (Chapter 7)
Figure 7.5. Text Alternative (Chapter 7)
Figure 7.6. Text Alternative (Chapter 7)
Figure 9.1. Text Alternative (Chapter 9)
Spreadsheet strategies Graphic Text Alternative (Chapter 9)
Figure 9.4. Text Alternative (Chapter 9)
Spreadsheet strategies Graphic Text Alternative (Chapter 9)
Figure 9.6. Text Alternative (Chapter 9)
Figure 9.7. Text Alternative (Chapter 9)
Spreadsheet strategies Graphic Text Alternative (Chapter 9)
Figure 11.1. Text Alternative (Chapter 11)
Figure 11.2. Text Alternative (Chapter 11)
Figure 11.3. Text Alternative (Chapter 11)
Figure 11.4. Text Alternative (Chapter 11)
Figure 11.5. Text Alternative (Chapter 11)
Figure 12.1. Text Alternative (Chapter 12)
Figure 12.2. Text Alternative (Chapter 12)
Figure 12.3. Text Alternative (Chapter 12)
Figure 12.4. Text Alternative (Chapter 12)
Figure 12.5. Text Alternative (Chapter 12)
Figure 12.6. Text Alternative (Chapter 12)
Figure 12.7. Text Alternative (Chapter 12)
Figure 13.1. Text Alternative (Chapter 13)
Figure 13.2. Text Alternative (Chapter 13)
Figure 13.3. Text Alternative (Chapter 13)
Figure 13.4. Text Alternative (Chapter 13)
Figure 13.5. Text Alternative (Chapter 13)
Figure 13.6. Text Alternative (Chapter 13)
Figure 13.7. Text Alternative (Chapter 13)
Figure 13.8A. Text Alternative (Chapter 13)
Figure 13.8B. Text Alternative (Chapter 13)
Figure 13.8C. Text Alternative (Chapter 13)
Figure 13.9. Text Alternative (Chapter 13)
Figure 13.10. Text Alternative (Chapter 13)
Figure 13.11. Text Alternative (Chapter 13)
Figure 13A.1. Text Alternative (Chapter 13A)
Figure 13A.2. Text Alternative (Chapter 13A)
Figure 14.1. Text Alternative (Chapter 14)
Figure 14.2. Text Alternative (Chapter 14)
Figure 15.1. Text Alternative (Chapter 15)
Figure 15.2. Text Alternative (Chapter 15)
Figure 15.3. Text Alternative (Chapter 15)
Figure 16.1. Text Alternative (Chapter 16)
Figure 16.3. Text Alternative (Chapter 16)
Figure 16.4. Text Alternative (Chapter 16)
Figure 16.5. Text Alternative (Chapter 16)
Figure 16.6. Text Alternative (Chapter 16)
Figure 16.7. Text Alternative (Chapter 16)
Figure 16.8. Text Alternative (Chapter 16)
Figure 16.9. Text Alternative (Chapter 16)
Figure 16A.1. Text Alternative (Chapter 16)
Figure 17.1. Text Alternative (Chapter 17)
Figure 17.3 Text Alternative (Chapter 17)
Figure 17.4. Text Alternative (Chapter 17)
Figure 17.5. Text Alternative (Chapter 17)
Figure 17.6. Text Alternative (Chapter 17)
Figure 17.7. Text Alternative (Chapter 17)
Figure 18.1. Text Alternative (Chapter 18)
Figure 18.2. Text Alternative (Chapter 18)
Figure 18.3. Text Alternative (Chapter 18)
Figure 18.4. Text Alternative (Chapter 18)
Figure 18.5. Text Alternative (Chapter 18)
Figure 18.6. Text Alternative (Chapter 18)
Table 18.4 Graphic Text Alternative (Chapter 18)
Table 18.7 Graphic Text Alternative (Chapter 18)
Table 18.8 Graphic Text Alternative (Chapter 18)
Figure 18.7. Text Alternative (Chapter 18)
Figure 19.1. Text Alternative (Chapter 19)
Figure 19.2. Text Alternative (Chapter 19)
Figure 19.3. Text Alternative (Chapter 19)
Figure 19.4. Text Alternative (Chapter 19)
Figure 19.5. Text Alternative (Chapter 19)
Figure 19.6. Text Alternative (Chapter 19)
In a previous chapter Graphic Text Alternative (Chapter 20)
Figure 20.1. Text Alternative (Chapter 20)
Figure 20.3. Text Alternative (Chapter 20)
Figure 20.4. Text Alternative (Chapter 20)
Figure 20.5. Text Alternative (Chapter 20)
Figure 20.6. Text Alternative (Chapter 20)
Figure 20.7. Text Alternative (Chapter 20)
Figure 22.1. Text Alternative (Chapter 22)
Example 22.3 Graphic Text Alternative (Chapter 22)
Figure 23.1. Text Alternative (Chapter 23)
Figure 23.2. Text Alternative (Chapter 23)
Figure 23.3. Text Alternative (Chapter 23)
Figure 24.1. Text Alternative (Chapter 24)
Figure 24.2. Text Alternative (Chapter 24)
Figure 24.3. Text Alternative (Chapter 24)
Figure 24.4. Text Alternative (Chapter 24)
Figure 24.5. Text Alternative (Chapter 24)
Figure 24.7. Text Alternative (Chapter 24)
Figure 24.8. Text Alternative (Chapter 24)
Figure 24.9. Text Alternative (Chapter 24)
Figure 24.10. Text Alternative (Chapter 24)
Figure 25.1. Text Alternative (Chapter 25)
Figure 25.2. Text Alternative (Chapter 25)
Figure 25.4. Text Alternative (Chapter 25)
Figure 25.5. Text Alternative (Chapter 25)
Figure 25.6. Text Alternative (Chapter 25)
Spreadsheet Graphic Text Alternative (Chapter 25)
Figure 26.1. Text Alternative (Chapter 26)
Figure 26.2. Text Alternative (Chapter 26)
Figure 26.3. Text Alternative (Chapter 26)
Figure 26.4. Text Alternative (Chapter 26)
Figure 26.5. Text Alternative (Chapter 26)
Figure 26.6. Text Alternative (Chapter 26)
Figure 26.7. Text Alternative (Chapter 26)
Figure 26.8. Text Alternative (Chapter 26)
Figure 26.9. Text Alternative (Chapter 26)
Figure 26.10. Text Alternative (Chapter 26)
Figure 26.11 Text Alternative (Chapter 26)