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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 | |