Includes index.

Machine generated contents note: pt. 1 Introduction to Managerial Finance -- 1.The Role of Managerial Finance -- Facebook---In No Hurry to Go Public -- 1.1.Finance and Business -- What is Finance? -- Career Opportunities in Finance -- Legal Forms of Business Organization -- Focus on Practice: Professional Certifications in Finance -- Why Study Managerial Finance? -- Review Questions -- 1.2.Goal of the Firm -- Maximize Shareholder Wealth -- Maximize Profit? -- What About Stakeholders? -- The Role of Business Ethics -- Review Questions -- Focus on Ethics: Will Google Live Up to Its Motto? -- 1.3.Managerial Finance Function -- Organization of the Finance Function -- Relationship to Economics -- Relationship to Accounting -- Primary Activities of the Financial Manager -- Review Questions -- 1.4.Governance and Agency -- Corporate Governance -- The Agency Issue -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problem -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- 2.The Financial Market Environment -- JPMorgan Chase & Co---Cut to the Chase -- 2.1.Financial Institutions and Markets -- Financial Institutions -- Commercial Banks, Investment Banks, and the Shadow Banking System -- Financial Markets -- The Relationship Between Institutions and Markets -- The Money Market -- The Capital Market -- Focus on Practice: Berkshire Hathaway---Can Buffett Be Replaced? -- Focus on Ethics: The Ethics of Insider Trading -- Review Questions -- 2.2.The Financial Crisis -- Financial Institutions and Real Estate Finance -- Falling Home Prices and Delinquent Mortgages -- Crisis of Confidence in Banks -- Spillover Effects and the Great Recession -- Review Questions -- 2.3.Regulation of Financial Institutions -- Regulations Governing Financial Institutions -- Regulations Governing Financial Markets -- Review Questions -- 2.4.Business Taxes -- Ordinary Income -- Capital Gains -- Review Questions -- Summary -- Opner-in-Review -- Self-Test Problem -- Warm-Up Exercises -- Problems -- Spreadsheet Exercises -- Intogrative Caso 1 Merit Enterprise Corp -- pt. 2 Financial Tools -- 3.Financial Statements and Ratio Analysis -- Abercrombie & Fitch---The Value of Casual Luxury -- 3.1.The Stockholders' Report -- The Letter to Stockholders -- Global Focus: More Countries Adopt International Financial Reporting Standards -- The Four Key Financial Statements -- Focus on Ethics: Taking Earnings Reports at Face Value -- Notes to the Financial Statements -- Consolidating International Financial Statements -- Review Questions -- 3.2.Using Financial Ratios -- Interested Parties -- Types of Ratio Comparisons -- Cautions About Using Ratio Analysis -- Categories of Financial Ratios -- Review Questions -- 3.3.Liquidity Ratios -- Current Ratio -- Quick (Acid-Test) Ratio -- Review Questions -- 3.4.Activity Ratios -- Inventory Turnover -- Average Collection Period -- Average Payment Period -- Total Asset Turnover -- Review Question -- 3.5.Debt Ratios -- Debt Ratio -- Times Interest Earned Ratio -- Fixed-Payment Coverage Ratio -- Review Questions -- 3.6.Profitability Ratios -- Common-Size Income Statements -- Gross Profit Margin -- Operating Profit Margin -- Net Profit Margin -- Earnings Per Share (EPS) -- Return on Total Assets (ROA) -- Return on Common Equity (ROE) -- Review Questions -- 3.7.Market Ratios -- Price/Earnings (P/E) Ratio -- Market/Book (M/B) Ratio -- Review Question -- 3.8.A Complete Ratio Analysis -- Summarizing All Ratios -- Dupont System of Analysis -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- 4.Cash Flow and Financial Planning -- Apple---Investors Want Apple to Take a Bite Out of its Cash Hoard -- 4.1.Analyzing the Firm's Cash Flow -- Depreciation -- Depreciation Methods -- Developing the Statement of Cash Flows -- Free Cash Flow -- Focus on Practice: Free Cash Flow at Cisco Systems -- Review Questions -- 4.2.The Financial Planning Process -- Long-Term (Strategic) Financial Plans -- Short-Term (Operating) Financial Plans -- Focus on Ethics: How Much Is a CEO Worth? -- Review Questions -- 4.3.Cash Planning: Cash Budgets -- The Sales Forecast -- Preparing the Cash Budget -- Evaluating the Cash Budget -- Coping with Uncertainty in the Cash Budget -- Cash Flow within the Month -- Review Questions -- 4.4.Profit Planning: Pro Forma Statement -- Preceding Year's Financial Statements -- Sales Forecast -- Review Question -- 4.5.Preparing the Pro Forma Income Statement -- Considering Types of Costs and Expenses -- Review Questions -- 4.6.Preparing the Pro Forma Balance Sheet -- Review Questions -- 4.7.Evaluation of Pro Forma Statements -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- 5.Time Value of Money -- Eli Lilly and Company---Riding the Pipeline -- 5.1.The Role of Time Value in Finance -- Future Value versus Present Value -- Computational Tools -- Basic Patterns of Cash Flow -- Review Questions -- 5.2.Single Amounts -- Future Value of a Single Amount -- Present Value of a Single Amount -- Review Questions -- 5.3.Annuities -- Types of Annuities -- Finding the Future Value of an Ordinary Annuity -- Finding the Present Value of an Ordinary Annuity -- Finding the Future Value of an Annuity Due -- Finding the Present Value of an Annuity Due -- Finding the Present Value of a Perpetuity -- Review Questions -- 5.4.Mixed Streams -- Future Value of a Mixed Stream -- Present Value of a Mixed Stream -- Review Question -- 5.5.Compounding Interest More Frequentily Than Annually -- Semiannual Compounding -- Quarterly Compounding -- A General Equation for Compounding More Frequently Than Annually -- Using Computational Tools for Compounding More Frequently Than Annually -- Continuous Compounding -- Nominal and Effective Annual Rates of Interest -- Focus on Ethics: How Fair Is "Check into Cash"? -- Review Questions -- 5.6.Special Applications of Time Value -- Determining Deposits Needed to Accumulate a Future Sum -- Loan Amortization -- Focus on Practice: New Century Brings Trouble for Subprime Mortgages -- Finding Interest or Growth Rates -- Finding an Unknown Number of Periods -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- Integrative Case 2 Track Software, Inc. -- pt. 3 Valuation of Securities -- 6.Interest Rates and Bond Valuation -- The Federal Debt---A Huge Appetite for Money -- 6.1.Interest Rates and Required Returns -- Interest Rate Fundamentals -- Focus on Practice: Bonds Adjust for Inflation -- Term Structure of Interest Rates -- Risk Premiums: Issuer and Issue Characteristics -- Review Questions -- 6.2.Corporate Bonds -- Legal Aspects of Corporate Bonds -- Cost of Bonds to the Issuer -- General Features of a Bond Issue -- Bond Yields -- Bond Prices -- Bond Ratings -- Focus on Ethics: Can We Trust the Bond Raters? -- Common Types of Bonds -- International Bond Issues -- Review Questions -- 6.3.Valuation Fundamentals -- Key Inputs -- Basic Valuation Model -- Review Questions -- 6.4.Bond Valuation -- Bond Fundamentals -- Basic Bond Valuation -- Bond Value Behavior -- Yield to Maturity (YTM) -- Semiannual Interest and Bond Values -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- 7.Stock Valuation -- A123 Systems Inc.---Going Green to Find Value -- 7.1.Differences between Debt and Equity -- Voice in Management -- Claims on Income and Assets -- Maturity -- Tax Treatment -- Review Questions -- 7.2.Common and Preferred Stock -- Common Stock -- Preferred Stock -- Issuing Common Stock -- Review Questions -- 7.3.Common Stock Valuation -- Market Efficiency -- The Efficient-Market Hypothesis -- Focus on Practice: Understanding Human Behavior Helps Us Understand Investor Behavior -- Basic Common Stock Valuation Equation -- Free Cash Flow Valuation Model -- Other Approaches to Common Stock Valuation -- Focus on Ethics: Psst---Have You Heard Any Good Quarterly Earnings Forecasts Lately? -- Review Questions -- 7.4.Decision Making and Common Stock Value -- Changes in Expected Dividends -- Changes in Risk -- Combined Effect -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- Integrative Case 3 Encore International -- pt. 4 Risk and the Required Rate of Return -- 8.Risk and Return -- Mutual Funds---Fund's Returns Not Even Close to Average -- 8.1.Risk and Return Fundamentals -- Risk Defined -- Focus on Ethics: If It Seems Too Good to Be True Then It Probably Is -- Return Defined -- Risk Preferences -- Review Questions -- 8.2.Risk of a Single Asset -- Risk Assessment -- Risk Measurement -- Review Questions -- 8.3.Risk of a Portfolio -- Portfolio Return and Standard Deviation -- Correlation -- Diversification -- Correlation, Diversification, Risk, and Return -- International Diversification -- Global Focus: An International Flavor to Risk Reduction -- Review Questions -- 8.4.Risk and Return: The Capital Asset Pricing Model (CAPM) -- Types of Risk -- The Model: CAPM -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- 9.The Cost of Capital -- General Electric---Falling Short of Expectations -- 9.1.Overview of the Cost of Capital -- The Basic Concept -- Focus on Ethics: The Ethics of Profit -- Sources of Long-Term Capital -- Review Questions -- 9.2.Cost of Long-Term Debt -- Net Proceeds -- Before-Tax Cost of Debt -- After-Tax Cost of Debt -- Review Questions -- 9.3.Cost of Preferred Stock -- Preferred Stock Dividends -- Calculating the Cost of Preferred Stock -- Review Questions -- 9.4.Cost of Common Stock -- Finding the Cost of Common Stock Equity -- Stock Equity -- Cost of Retained Earnings -- Cost of New Issues of Common Stock -- Review Questions --

Contents note continued: 9.5.Weighted Average Cost of Capital -- Calculating Weighted Average Cost of Capital (WACC) -- Focus on Practice: Uncertain Times Make for an Uncertain Weighted Average Cost of Capital -- Weighting Schemes -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- Integrative Case 4 Eco Plastics Company -- pt. 5 Long-Term Investment Decisions -- 10.Capital Budgeting Techniques -- Genco Resources---The Gold Standard for Evaluating Gold Mines -- 10.1.Overview of Capital Budgeting -- Motives for Capital Expenditure -- Steps in the Process -- Basic Terminology -- Capital Budgeting Techniques -- Review Questions -- 10.2.Payback Period -- Decision Criteria -- Pros and Cons of Payback Analysis -- Focus on Practice: Limits on Payback Analysis -- Review Questions -- 10.3.Net Present Value (NPV) -- Decision Criteria -- NPV and the Profitability Index -- NPV and Economic Value Added -- Review Questions -- 10.4.Internal Rate of Return (IRR) -- Decision Criteria -- Calculating the IRR -- Review Questions -- 10.5.Comparing NPV and IRR Techniques -- Net Present Value Profiles -- Conflicting Rankings -- Which Approach Is Better? -- Focus on Ethics: Nonfinancial Considerations in Project Selection -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- 11.Capital Budgeting Cash Flows -- ExxonMobil---Maintaining Its Project Inventory -- 11.1.Relevant Cash Flows -- Major Cash Flow Components -- Focus on Ethics: A Question of Accuracy -- Expansion versus Replacement Decisions -- Sunk Costs and Opportunity Costs -- International Capital Budgeting and Long-Term Investments -- Review Questions -- Global Focus: Changes May Influence Future Investments in China -- 11.2.Finding the Initial Investment -- Installed Cost of New Asset -- After-Tax Proceeds from Sale of Old Asset -- Change in Net Working Capital -- Calculating the Initial Investment -- Review Questions -- 11.3.Finding the Operating Cash Inflows -- Interpreting the Term After-Tax -- Interpreting the Term Cash Inflows -- Interpreting the Term Incremental -- Review Questions -- 11.4.Finding the Terminal Cash Flow -- Proceeds from Sale of Assets -- Taxes on Sale of Assets -- Change in Net Working Capital -- Review Questions -- 11.5.Summarizing the Relevant Cash Flows -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- 12.Risk and Refinements in Capital Budgeting -- BP---Worst Case Scenario -- 12.1.Introduction to Risk in Capital Budgeting -- Review Questions -- 12.2.Behavioral Approaches for Dealing with Risk -- Risk and Cash Inflows -- Scenario Analysis -- Simulation -- Focus on Practice: The Monte Carlo Method: The Forecast Is for Less Uncertainty -- Review Questions -- 12.3.International Risk Considerations -- Review Questions -- 12.4.Risk-Adjusted Discount Rates -- Determining Risk-Adjusted Discount Rates (RADRS) -- Focus on Ethics: Ethics and the Cost of Capital -- Applying RADRs -- Portfolio Effects -- RADRs in Practice -- Review Questions -- 12.5.Capital Budgeting Refinements -- Comparing Projects with Unequal Lives -- Recognizing Real Options -- Capital Rationing -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- Integrative Case 5 Lasting Impressions Company -- pt. 6 Long-Term Financial Decisions -- 13.Leverage and Capital Structure -- Genzyme Corp---Trading Equity for Debt -- 13.1.Leverage -- Breakeven Analysis -- Operating Leverage -- Focus on Practice: Adobe's Leverage -- Financial Leverage -- Total Leverage -- Focus on Ethics: Repo 105 -- Review Questions -- 13.2.The Firm's Capital Structure -- Types of Capital -- External Assessment of Capital Structure -- Capital Structure of Non-U.S. Firms -- Capital Structure Theory -- Optimal Capital Structure -- Review Questions -- 13.3.EBIT-EPS Approach to Capital Structure -- Presenting a Financing Plan Graphically -- Comparing Alternative Capital Structures -- Considering Risk in EBIT-EPS Analysis -- Basic Shortcoming of EBIT-EPS Analysis -- Review Questions -- 13.4.Choosing the Optimal Capital Structure -- Linkage -- Estimating Value -- Maximizing Value versus Maximizing EPS -- Some Other Important Considerations -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- 14.Payout Policy -- Best Buy---Paybock Time -- 14.1.The Basics of Payout Policy -- Elements of Payout Policy -- Trends in Earnings and Dividends -- Trends in Dividends and Share Repurchases -- Focus on Ethics: Are Buybacks Really a Bargain? -- Review Questions -- 14.2.The Mechanics of Payout Policy -- Cash Dividend Payment Procedures -- Share Repurchase Procedures -- Tax Treatment of Dividends and Repurchases -- Focus on Practice: Capital Gains and Dividend Tax Treatment Extended to 2010 -- Dividend Reinvestment Plans -- Stock Price Reactions to Corporate Payouts -- Review Questions -- 14.3.Relevance of Payout Policy -- Residual Theory of Dividends -- The Dividend Irrelevance Theory -- Arguments for Dividend Relevance -- Review Questions -- 14.4.Factors Affecting Dividend Policy -- Legal Constraints -- Contractual Constraints -- Growth Prospects -- Owner Considerations -- Market Considerations -- Market Considerations -- Review Questions -- 14.5.Types of Dividend Policies -- Constant-Payout-Ratio Dividend Policy -- Regular Dividend Policy -- Low-Regular-and-Extra Dividend Policy -- Review Questions -- 14.6.Other Forms of Dividends -- Stock Dividends -- Stock Splits -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- Integrative Case 6 O'Grady Apparel Company -- pt. 7 Short-Term Financial Decisions -- 15.Working Capital and Current Assets Management -- Cylec Industries---Focusing on Working Capital -- 15.1.Net Working Capital Fundamentals -- Working Capital Management -- Net Working Capital -- Trade-Off between Profitability and Risk -- Review Questions -- 15.2.Cash Conversion Cycle -- Calculating the Cash Conversion Cycle -- Funding Requirements of the Cash Conversion Cycle -- Strategies for Managing the Cash Conversion Cycle -- Review Questions -- 15.3.Inventory Management -- Differing Viewpoints about Inventory Level -- Common Techniques for Managing Inventory -- Focus on Practice: RFID: The Wave of the Future -- International Inventory Management -- Review Questions -- 15.4.Accounts Receivable Management -- Credit Selection and Standards -- Credit Terms -- Credit Monitoring -- Review Questions -- 15.5.Management of Receipts and Disbursements -- Float -- Speeding Up Collections -- Slowing Down Payments -- Focus on Ethics: Stretching Accounts Payable---Is It a Good Policy? -- Cash Concentration -- Zero-Balance Accounts -- Investing in Marketable Securities -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- 16.Current Liabilities Management -- Memorial Sloan-Keltering Cancer Center---Reducing Accounts Payable Expenses -- 16.1.Spontaneous Liabilities -- Accounts Payable Management -- Accruals -- Focus on Ethics: Accruals Management -- Review Questions -- 16.2.Unsecured Sources of Short-Term Loans -- Bank Loans -- Commercial Paper -- Focus on Practice: The Ebb and Flow of Commercial Paper -- International Loans -- Review Questions -- 16.3.Secured Sources of Short-Term Loans -- Characteristics of Secured Short-Term Loans -- Use of Accounts Receivable as Collateral -- Use of Inventory as Collateral -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- Integrative Case 7 Casa de Diseno -- pt. 8 Special Topics in Managerial Finance -- 17.Hybrid and Derivative Securities -- Boeing---"We'll Buy It, You Fly It" -- 17.1.Overview of Hybrids and Derivatives -- Review Questions -- 17.2.Leasing -- Types of Leases -- Leasing Arrangements -- Focus on Practice: Leases to Airlines End on a Sour Note -- Lease-versus-Purchase Decision -- Effects of Leasing on Future Financing -- Advantages and Disadvantages of Leasing -- Review Questions -- 17.3.Convertible Securities -- Types of Convertible Securities -- General Features of Convertibles -- Financing with Convertibles -- Determining the Value of a Convertible Bond -- Review Questions -- 17.4.Stock Purchase Warrants -- Key Characteristics -- Implied Price of an Attached Warrant -- Values of Warrants -- Review Questions -- 17.5.Options -- Calls and Puts -- Options Markets -- Options Trading -- Role of Call and Put Options in Fund Raising -- Focus on Ethics: Options Backdating -- Hedging Foreign-Currency Exposures with Options -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- 18.Mergers, LBOs, Divestitures, and Business Failure -- IMS Health, Inc---Creating Value by Going Private -- 18.1.Merger Fundamentals -- Terminology -- Motives for Merging -- Types of Mergers -- Review Questions -- 18.2.LBOs and Divestitures -- Leveraged Buyouts (LBOs) -- Divestitures -- Review Questions -- 18.3.Analyzing and Negotiating Mergers -- Valuing the Target Company -- Stock Swap Transactions -- Merger Negotiation Process -- Holding Companies -- International Mergers -- Review Questions -- Global Focus: International Mergers -- 18.4.Business Failure Fundamentals -- Types of Business Failure -- Major Causes of Business Failure -- Focus on Ethics: Too Big to Fail? -- Voluntary Settlements -- Review Questions -- 18.5.Reorganization and Liquidation in Bankruptcy -- Bankruptcy Legislation -- Reorganization in Bankruptcy (Chapter 11) -- Liquidation in Bankruptcy (Chapter 7) -- Review Questions -- Summary --

Contents note continued: Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- 19.International Managerial Finance -- General Electric---Establishing a Presence in China -- 19.1.The Multinational Company and Its Environment -- Key Trading Blocs -- GATT and the WTO -- Legal Forms of Business Organization -- Taxes -- Financial Markets -- Review Questions -- 19.2.Financial Statements -- Subsidiary Characterization and Functional Currency -- Translation of Individual Accounts -- Review Questions -- 19.3.Risk -- Exchange Rate Risks -- Political Risks -- Review Questions -- Focus on Ethics: Chiquita's Slippery Situation -- 19.4.Long-Term Investment and Financing Decisions -- Foreign Direct Investment -- Investment Cash Flows and Decisions -- Capital Structure -- Global Focus: Take on Overseas Assignment to Take a Step Up the Corporate Ladder -- Long-Term Debt -- Equity Capital -- Review Questions -- 19.5.Short-Term Financial Decisions -- Cash Management -- Credit and Inventory Management -- Review Questions -- 19.6.Mergers and Joint Ventures -- Review Questions -- Summary -- Opener-in-Review -- Self-Test Problems -- Warm-Up Exercises -- Problems -- Spreadsheet Exercise -- Integrative Case 8 Organic Solutions.