Intermediate Financial Management

ISBN-10: 032431986X
ISBN-13: 9780324319866
Edition: 9th 2007 (Revised)
List price: $285.95
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Description: "Why aren't you using the ONLY book expressly written for your Intermediate/Advanced Corporate Finance course?" This comprehensive text contains enough background material to refresh and reinforce earlier courses in corporate finance while still  More...

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Book details

List price: $285.95
Edition: 9th
Copyright year: 2007
Publisher: Cengage South-Western
Publication date: 3/29/2006
Binding: Hardcover
Pages: 1072
Size: 8.50" wide x 10.25" long x 1.50" tall
Weight: 4.730
Language: English

"Why aren't you using the ONLY book expressly written for your Intermediate/Advanced Corporate Finance course?" This comprehensive text contains enough background material to refresh and reinforce earlier courses in corporate finance while still providing enough advanced material to stimulate the most advanced learner. The predominant strengths of clarity, current coverage, and friendliness to learner and instructors continue in this new edition. The instructor's resources enable outstanding easy prep and presentations.

Dr. Eugene F. Brigham is Graduate Research Professor Emeritus at the University of Florida, where he has taught since 1971. Dr. Brigham received his M.B.A. and Ph.D. from the University of California-Berkeley and his undergraduate degree from the University of North Carolina. Prior to joining the University of Florida, Dr. Brigham held teaching positions at the University of Connecticut, the University of Wisconsin, and the University of California-Los Angeles. Dr. Brigham has served as president of the Financial Management Association and has written many journal articles on the cost of capital, capital structure, and other aspects of financial management. He has authored or co-authored ten textbooks on managerial finance and managerial economics that are used at more than 1,000 universities in the United States and have been translated into 11 languages worldwide. He has testified as an expert witness in numerous electric, gas, and telephone rate cases at both federal and state levels. He has served as a consultant to many corporations and government agencies, including the Federal Reserve Board, the Federal Home Loan Bank Board, the U.S. Office of Telecommunications Policy, and the RAND Corporation. Dr. Brigham continues to teach, consult, and complete research in addition to his academic writing. He spends his spare time on the golf course, enjoying time with his family and dogs, and tackling outdoor adventure activities, such as biking through Alaska.

Dr. Phillip R. Daves is Associate Professor of Finance at the University of Tennessee in Knoxville. His research interests encompass health care finance, asset pricing, derivative securities, and dividend policy. He has published papers in THE JOURNAL OF FINANCE, THE INTERNATIONAL JOURNAL OF FINANCE, APPLIED FINANCIAL ECONOMICS, JOURNAL OF FINANCIAL PRACTICE AND EDUCATION, and THE JOURNAL OF FINANCIAL AND STRATEGIC DECISIONS. Dr. Daves' special interests in teaching include health care finance, investments, financial management, and asset pricing--which he teaches at the undergraduate, M.B.A., and Ph.D. levels. Consulting for a range of large and small companies as well as the state of Tennessee, he focuses on business valuation, compensation, value based management, and health care policy. He received his B.A. in economics from Davidson College, his M.S. in mathematics, and his Ph.D. in finance from the University of North Carolina at Chapel Hill.

Preface
Fundamental Concepts
An Overview of Financial Management
About Using the Text
Beginning-of-Chapter Questions
The Basic Goal: Creating Stockholder Value
Agency Relationships
Transparency in Financial Reporting
Market Interest Rates
A Preview of What's Ahead
ThomsonNOW Resources
Summary
Risk and Return: Part I
Beginning-of-Chapter Questions
Investment Returns
Box: Corporate Valuation and Risk
Stand-Alone Risk
Box: The Trade-Off between Risk and Return
Risk in a Portfolio Context
Box: The Benefits of Diversifying Overseas
Calculating Beta Coefficients
The Relationship between Risk and Rates of Return
Some Concerns about Beta and the CAPM
Summary
Risk and Return: Part II
Beginning-of-Chapter Questions
Measuring Portfolio Risk
Box: Corporate Valuation and Risk
Efficient Portfolios
Choosing the Optimal Portfolio
The Basic Assumptions of the Capital Asset Pricing Model
The Capital Market Line and the Security Market Line
Calculating Beta Coefficients
Empirical Tests of the CAPM
Arbitrage Pricing Theory
The Fama-French Three-Factor Model
An Alternative Theory of Risk and Return: Behavioral Finance
Summary
Bond Valuation
Beginning-of-Chapter Questions
Who Issues Bonds?
Box: Corporate Valuation and Risk
Key Characteristics of Bonds
Bond Valuation
Bond Yields
Box: Drinking Your Coupons
Bonds with Semiannual Coupons
Assessing the Risk of a Bond
Default Risk
Bond Markets
Summary
Basic Stock Valuation
Beginning-of-Chapter Questions
Legal Rights and Privileges of Common Stockholders
Box: Corporate Valuation and Stock Risk
Types of Common Stock
The Market for Common Stock
Box: Rational Exuberance?
Common Stock Valuation
Constant Growth Stocks
Expected Rate of Return on a Constant Growth Stock
Valuing Stocks That Have a Nonconstant Growth Rate
Stock Valuation by the Free Cash Flow Approach
Market Multiple Analysis
Stock Market Equilibrium
Actual Stock Prices and Returns
Preferred Stock
Box: A Nation of Traders
Summary
Financial Options
Beginning-of-Chapter Questions
Financial Options
Box: Reporting Employee Stock Options
Introduction to Option Pricing Models: The Binomial Approach
The Black-Scholes Option Pricing Model (OPM)
Box: Taxes and Stock Options
The Valuation of Put Options
Applications of Option Pricing in Corporate Finance
Summary
Accounting for Financial Management
Beginning-of-Chapter Questions
Financial Statements and Reports
Box: Corporate Valuation and Financial Statements
The Balance Sheet
The Income Statement
Statement of Retained Earnings
Net Cash Flow
Box: Financial Analysis on the Internet
Statement of Cash Flows
Modifying Accounting Data for Managerial Decisions
Box: Financial Bamboozling: How to Spot It
MVA and EVA
The Federal Income Tax System
Summary
Analysis of Financial Statements
Beginning-of-Chapter Questions
Ratio Analysis
Box: Corporate Valuation and Analysis of Financial Statements
Liquidity Ratios
Asset Management Ratios
Debt Management Ratios
Profitability Ratios
Box: International Accounting Differences Create Headaches for Investors
Market Value Ratios
Trend Analysis, Common Size Analysis, and Percent Change Analysis
Tying the Ratios Together: The Du Pont Equation
Comparative Ratios and "Benchmarking"
Uses and Limitations of Ratio Analysis
Box: Ratio Analysis in the Internet Age
Looking beyond the Numbers
Summary
Corporate Valuation
Financial Planning and Forecasting Financial Statements
Beginning-of-Chapter Questions
Overview of Financial Planning
Box: Corporate Valuation and Financial Planning
Sales Forecast
Financial Statement Forecasting: The Percent of Sales Method
The AFN Formula
Forecasting Financial Requirements When the Balance Sheet Ratios Are Subject to Change
Summary
Determining the Cost of Capital
Beginning-of-Chapter Questions
The Weighted Average Cost of Capital
Box: Corporate Valuation and the Cost of Capital
Cost of Debt, r[subscript d] (1-T)
Cost of Preferred Stock, r[subscript ps]
Cost of Common Stock, r[subscript s]
The CAPM Approach
Dividend-Yield-Plus-Growth-Rate, or Discounted Cash Flow (DCF), Approach
Bond-Yield-Plus-Risk-Premium Approach
Comparison of the CAPM, DCF, and Bond-Yield-Plus-Risk-Premium Methods
Composite, or Weighted Average, Cost of Capital, WACC
Box: Global Variations in the Cost of Capital
Factors That Affect the Weighted Average Cost of Capital
Adjusting the Cost of Capital for Risk
Techniques for Measuring Divisional Betas
Estimating the Cost of Capital for Individual Projects
Adjusting the Cost of Capital for Flotation Costs
Some Problem Areas in Cost of Capital
Four Mistakes to Avoid
Summary
Corporate Value and Value-Based Management
Beginning-of-Chapter Questions
Overview of Corporate Valuation
Box: Corporate Valuation: Putting the Pieces Together
The Corporate Valuation Model
Value-Based Management
Corporate Governance and Shareholder Wealth
Box: Value-Based Management in Practice
Box: International Corporate Governance
Summary
Project Valuation
Capital Budgeting: Decision Criteria
Beginning-of-Chapter Questions
Overview of Capital Budgeting
Box: Corporate Valuation and Capital Budgeting
Project Classifications
Capital Budgeting Decision Rules
Comparison of the NPV and IRR Methods
Modified Internal Rate of Return (MIRR)
Profitability Index
Conclusions on Capital Budgeting Methods
Business Practices
The Post-Audit
Box: How Does Industry Evaluate Projects?
Special Applications of Cash Flow Evaluation
The Optimal Capital Budget
Summary
Capital Budgeting: Estimating Cash Flows and Analyzing Risk
Beginning-of-Chapter Questions
Estimating Cash Flows
Box: Corporate Valuation, Cash Flows, and Risk Analysis
Identifying the Relevant Cash Flows
Tax Effects
Evaluating Capital Budgeting Projects
Adjusting for Inflation
Project Risk Analysis: Techniques for Measuring Stand-Alone Risk
Box: Capital Budgeting Practices in the Asia/Pacific Region
Box: High-Tech CFOs
Project Risk Conclusions
Incorporating Project Risk into Capital Budgeting
Managing Risk through Phased Decisions: Decision Trees
Introduction to Real Options
Summary
Real Options
Beginning-of-Chapter Questions
Valuing Real Options
Box: Corporate Valuation and Real Options
The Investment Timing Option: An Illustration
The Growth Option: An Illustration
Box: Growth Options at Dot-Com Companies
Concluding Thoughts on Real Options
Summary
Strategic Financing Decisions
Capital Structure Decisions: Part I
Beginning-of-Chapter Questions
A Preview of Capital Structure Issues
Box: Corporate Valuation and the Cost of Capital
Business and Financial Risk
Capital Structure Theory
Box: Yogi Berra on the MM Proposition
Capital Structure Evidence and Implications
Estimating the Optimal Capital Structure
Box: Taking a Look at Global Capital Structures
Summary
Capital Structure Decisions: Part II
Beginning-of-Chapter Questions
Capital Structure Theory: Arbitrage Proofs of the Modigliani-Miller Models
Box: Corporate Valuation: Capital Structure Decisions
Introducing Personal Taxes: The Miller Model
Criticisms of the MM and Miller Models
An Extension to the MM Model
Risky Debt and Equity as an Option
Capital Structure Theory: Our View
Summary
Distributions to Shareholders: Dividends and Repurchases
Beginning-of-Chapter Questions
Box: Corporate Valuation and Distributions to Shareholders
The Level of Distributions and Firm Value
Box: Dividend Yields around the World
Clientele Effect
Information Content, or Signaling, Hypothesis
Implications for Dividend Stability
Setting the Target Distribution Level: The Residual Distribution Model
Distributions in the Form of Dividends
Distributions through Stock Repurchases
Comparison of Dividends and Repurchases
Other Factors Influencing Distributions
Overview of the Distribution Policy Decision
Stock Splits and Stock Dividends
Dividend Reinvestment Plans
Summary
Tactical Financing Decisions
Initial Public Offerings, Investment Banking, and Financial Restructuring
Beginning-of-Chapter Questions
The Financial Life Cycle of a Startup Company
Box: Corporate Valuation, IPOs, and Financial Restructuring
The Decision to Go Public: Initial Public Offerings
The Process of Going Public
Equity Carve-Outs: A Special Type of IPO
Non-IPO Investment Banking Activities
The Decision to Go Private
Managing the Maturity Structure of Debt
Refunding Operations
Box: TVA Ratchets Down Its Interest Expenses
Managing the Risk Structure of Debt
Box: Bowie Bonds Ch-Ch-Change Asset Securitization
Summary
Lease Financing
Beginning-of-Chapter Questions
The Two Parties to Leasing
Types of Leases
Box: Corporate Valuation and Lease Financing
Tax Effects
Financial Statement Effects
Evaluation by the Lessee
Evaluation by the Lessor
Other Issues in Lease Analysis
Box: Lease Securitization
Other Reasons for Leasing
Summary
Hybrid Financing: Preferred Stock, Warrants, and Convertibles
Beginning-of-Chapter Questions
Preferred Stock
Box: Corporate Valuation and Hybrid Financing
Box: Where's the Dividend?
Box: MIPS, QUIPS, TOPrS, and QUIDS: A Tale of Two Perspectives
Warrants
Convertibles
A Final Comparison of Warrants and Convertibles
Reporting Earnings When Warrants or Convertibles Are Outstanding
Summary
Working Capital Management
Working Capital Management
Beginning-of-Chapter Questions
The Cash Conversion Cycle
Box: Corporate Valuation and Working Capital Management
Alternative Net Operating Working Capital Policies
Cash Management
Box: The Best at Managing Working Capital
The Cash Budget
Box: The Great Debate: How Much Cash Is Enough?
Cash Management Techniques
Inventory
Receivables Management
Box: Supply Chain Management
Accruals and Accounts Payable (Trade Credit)
Alternative Short-Term Financing Policies
Short-Term Investments: Marketable Securities
Short-Term Financing
Short-Term Bank Loans
Commercial Paper
Use of Security in Short-Term Financing
Summary
Providing and Obtaining Credit
Beginning-of-Chapter Questions
Credit Policy
Box: Corporate Valuation and Credit Policy
Setting the Credit Period and Standards
Setting the Collection Policy
Cash Discounts
Other Factors Influencing Credit Policy
The Payments Pattern Approach to Monitoring Receivables
Analyzing Proposed Changes in Credit Policy
Analyzing Proposed Changes in Credit Policy: Incremental Analysis
The Cost of Bank Loans
Choosing a Bank
Summary
Other Topics in Working Capital Management
Beginning-of-Chapter Questions
The Concept of Zero Working Capital
Box: Corporate Valuation and Working Capital Management
Setting the Target Cash Balance
Inventory Control Systems
Accounting for Inventory
The Economic Ordering Quantity (EOQ) Model
EOQ Model Extensions
Summary
Special Topics
Derivatives and Risk Management
Beginning-of-Chapter Questions
Reasons to Manage Risk
Box: Corporate Valuation and Risk Management
Background on Derivative
Derivatives in the News
Other Types of Derivatives
Risk Management
Fundamentals of Risk Management
Box: Microsoft's Goal: Manage Every Risk!
Using Derivatives to Reduce Risks
Box: Risk Management in the Cyber Economy
Summary
Bankruptcy, Reorganization, and Liquidation
Beginning-of-Chapter Questions
Financial Distress and Its Consequences
Box: Corporate Valuation and Bankruptcy
Issues Facing a Firm in Financial Distress
Settlements without Going through Formal Bankruptcy
Federal Bankruptcy Law
Reorganization in Bankruptcy
Liquidation in Bankruptcy
Other Motivations for Bankruptcy
Some Criticisms of Bankruptcy Laws
Other Topics in Bankruptcy
Summary
Mergers, LBOs, Divestitures, and Holding Companies
Beginning-of-Chapter Questions
Box: Corporate Valuation and Mergers
Rationale for Mergers
Types of Mergers
Level of Merger Activity
Hostile versus Friendly Takeovers
Merger Regulation
Overview of Merger Analysis
The Adjusted Present Value (APV) Approach
The Free Cash Flow to Equity (FCFE) Approach
Illustration of the Three Valuation Approaches
Setting the Bid Price
Analysis When There Is a Permanent Change in Capital Structure
Taxes and the Structure of the Takeover Bid
Box: Tempest in a Teapot?
Financial Reporting for Mergers
Analysis for a "True Consolidation"
The Role of Investment Bankers
Who Wins: The Empirical Evidence
Corporate Alliances
Leveraged Buyouts
Divestitures
Holding Companies
Summary
Multinational Financial Management
Beginning-of-Chapter Questions
Multinational, or Global, Corporations
Box: Corporate Valuation and Multinational Firms
Box: The Euro: What You Need to Know
Multinational versus Domestic Financial Management
Exchange Rates
The International Monetary System
Trading in Foreign Exchange
Interest Rate Parity
Box: Hungry for a Big Mac? Go to the Philippines!
Purchasing Power Parity
Inflation, Interest Rates, and Exchange Rates
International Money and Capital Markets
Multinational Capital Budgeting
Box: Stock Market Indices around the World
International Capital Structures
Multinational Working Capital Management
Summary
Appendixes
Mathematical Table
Answers to End-of-Chapter Problems
Selected Equations and Data
Glossary
Name Index
Subject Index
Web Chapters
Time Value of Money
Basic Financial Tools: A Review
Pension Plan Management
Financial Management in Not-for-Profit Businesses
Web Extensions
Continuous Distributions and Estimating Beta with a Calculator
Bond Risk, Duration, and Zero Coupon Bonds
Derivation of Valuation Equations
The Binomial Approach
Individual Taxes
Financing Feedbacks and Alternative Forecasting Techniques
Estimation Issues: Growth Rates and the Nonconstant Growth Model
The ARR Method, the EAA Approach, and the Marginal WACC
Replacement Project Analysis
Abandonment Options and Risk-Neutral Valuation
Degree of Leverage
Rights Offerings
Percentage Cost Analysis, Leasing Feedback, and Leveraged Leases
Calling Convertible Issues
Secured Short-Term Financing
Risk Management with Insurance and Bond Portfolio Immunization
Case Histories and Multiple Discriminant Analysis
Comparison of Alternative Valuation Models

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