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Preface | |
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The Healthcare Environment | |
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Introduction to Healthcare Finance | |
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Defining Healthcare Finance | |
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Purpose of the Book | |
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The Role of Finance in Health Services Organizations | |
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The Structure of the Finance Department | |
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Health Services Settings | |
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Regulatory and Legal Issues | |
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Current Challenges | |
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Organization of the Book | |
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How to use this Book | |
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The Financial Environment | |
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Alternative Forms of Ownership | |
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Organization Goals | |
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Tax Laws | |
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Third-Party Payers | |
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Managed Care Plans | |
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Alternative Reimbursement Methods | |
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Financial Accounting | |
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Financial Accounting Basics and the Income Statement | |
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Historical Foundations of Financial Accounting | |
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The Users of Financial Accounting Information | |
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Regulation and Standards in Financial Accounting | |
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Basic Concepts of Financial Accounting | |
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Accounting Methods: Cash Versus Accrual | |
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Recording and Compiling Accounting Data | |
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Income Statement Basics | |
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Revenues | |
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Expenses | |
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Net Income | |
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Net Income Versus Cash Flow | |
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Income Statements of Investor-Owned Firms | |
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A Look Ahead: Using Income Statement Data in Financial Statement Analysis | |
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The Balance Sheet and Statement of Cash Flows | |
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Balance Sheet Basics | |
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Assets | |
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Liabilities | |
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Equity | |
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Fund Accounting | |
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The Statement of Cash Flows | |
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Transactions | |
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Another Look Ahead: Using Balance Sheet Data in Financial Statement Analysis | |
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Managerial Accounting | |
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Managerial Accounting Basics, Cost Behavior, and Profit Analysis | |
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The Basics of Managerial Accounting | |
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Cost Classifications: Fixed and Variable | |
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Cost Behavior | |
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Cost Classifications: Semi Fixed | |
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Profit (CVP) Analysis | |
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Breakeven Analysis | |
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Operating Leverage | |
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Profit Analysis in a Discounted Fee-for-Service Environment | |
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Profit Analysis in a Capitated Environment | |
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The Impact of Cost Structure on Financial Risk | |
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Cost Allocation | |
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Direct Versus Indirect (Overhead) Costs | |
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Introduction to Cost Allocation | |
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Cost Allocation Basics | |
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Cost Allocation Methods | |
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Direct Method Illustration | |
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Changing to a Better Cost Driver | |
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Step-Down Method Illustration | |
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Activity-Based Costing | |
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Final Thoughts on Cost Allocation | |
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Pricing and Service Decisions | |
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Healthcare Providers and the Power to Set Prices | |
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Price Setting Strategics | |
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Target Costing | |
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Setting Prices on Individual Services | |
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Setting Prices Under Capitation | |
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Setting Managed Care Plan Premium Rated | |
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Using Relative Value Unites (RVUs) to Set Prices | |
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Making Service Decisions (Contract Analysis) | |
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Planning and Budgeting | |
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The Planning Process | |
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Operational Planning | |
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Introduction to Budgeting | |
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Budget Types | |
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Budget Decisions | |
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Constructing a Simple Operating Budget | |
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Variance Analysis | |
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The Cash Budget | |
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Basic Financial Management Concepts | |
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Time Value Analysis | |
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Time Lines | |
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Future Value of a Lump Sum (Compounding) | |
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Present Value of a Lump Sum (Discounting) | |
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Opportunity Costs | |
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Solving for Interest Rate and Time | |
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Annuities | |
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Perpetuities | |
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Uneven Cash Flow Streams | |
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Using Time Value Analysis to Measure Return on Investment (ROI) | |
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Semiannual and Other Compounding Periods | |
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Amortized Loans | |
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Financial Risk and Required Return | |
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The Many Faces of Financial Risk | |
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Introduction to Financial Risk | |
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Risk Aversion | |
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Probability Distributions | |
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Expected and Realized Rated of Return | |
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Stand-Alone Risk | |
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Portfolio Risk and Return | |
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Measuring the Risk of Investments Held in Portfolios | |
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Portfolio Betas | |
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Relevance of the Risk Measures | |
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Interpretation of the Risk Measures | |
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The Relationship Between Risk and Required Return | |
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Long-Tern Financing | |
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Long-Term Debt Financing | |
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The Cost of Money | |
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Common Long-Term Debt Instruments | |
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Debt contracts | |
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Bond Ratings | |
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Credit Enhancement | |
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Interest Rate Components | |
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The Term Structure of Interest Rates | |
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Economic Factors That Influence Interest Rate Levels | |
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Debt Valuation | |
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Equity Financing | |
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Equity in For-Profit Business | |
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Types of Common Stock | |
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Procedures for Selling New Common Stock | |
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The Market for Common Stock | |
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Regulation of Securities Markers | |
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The Investment Banking Process | |
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Equity in Not-for-Profit Business | |
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Common Stock Valuation | |
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Security Market Equilibrium | |
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Informational Efficiency | |
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The Risk/Return Trade-Off | |
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Capital Structure and the Cost of Capital | |
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Capital Structure Basics | |
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Impact of Debt Financing on Accounting Risk and Return | |
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Capital Structure Theory | |
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Identifying the Optimal Capital Structure in Practice | |
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Not-for-Profit Businesses | |
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Cost of Capital Basics | |
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Cost of Debt Capital | |
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Cost of Equity Capital | |
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The Corporate Cost of Capital | |
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Cost of Capital Estimation for Small Businesses | |
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An Economic Interpretation of the Corporate Cost of Capital | |
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Capital Investment Decisions | |
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The Basics of Capital Budgeting | |
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Project Classification | |
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The Role of Financial Analysis in Healthcare Capital Budgeting | |
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Overview of Capital Budgeting Financial Analysis | |
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Cash Flow Estimation | |
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Cash Flow Estimation Example | |
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Breakeven Analysis | |
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Return on Investment (Profitability) Analysis | |
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Some Final Thoughts on Breakeven and Profitability Analyses | |
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Capital Budgeting in Not-for-Profit Businesses | |
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The Post-Audit | |
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Using Capital Budgeting Techniques in Other Contexts | |
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Project Risk Assessment and Incorporation | |
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Types of Project Risk | |
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Relationships Among Stand-Alone, Corporate, and Market Risk | |
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Risk Analysis Illustration | |
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Sensitivity Analysis | |
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Scenario Analysis | |
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Qualitative Risk Assessment | |
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Incorporating Risk into the Decision Process | |
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Marking the Final Decision | |
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Adjusting Cash Outflows for Risk | |
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Divisional Costs of Capital | |
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An Overview of the Capital Budgeting Decision Process | |
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Capital Rationing | |
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Other Topics | |
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Current Asset Management and Financing | |
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An Overview of Short-Tern Financial Management | |
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Current Asset Investment and Financing Policies | |
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Cash Management | |
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Marketable Securities Management | |
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Long-Tern Securities Management | |
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Receivables Management | |
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Supply Chain Management | |
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Short-Term Financing | |
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Financial Condition Analysis | |
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Financial Statements | |
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Financial Ratio Analysis | |
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Tying the Financial Ratios Together: Du Pont Analysis | |
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Other Analytical Techniques | |
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Operating Indicator Analysis | |
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Limitations of Financial Ratio and Operating Indicator Analysis | |
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Economic Value Added (EVA) | |
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Benchmarking | |
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Key Performance Indicators and Dashboards | |
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Lease Financing and Business Valuation | |
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Leasing Basics | |
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Tax Effects | |
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Financial Statement Effects | |
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Lease Evaluation | |
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Motivations for Leasing | |
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Business Valuation | |
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Glossary | |
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Index | |
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About the Author | |