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Fundamentals of Contemporary Financial Management

by: Moyer, R. Charles; McGuigan, James R.; Rao, Ramesh P.

Fundamentals of Contemporary Financial Management

by: Moyer, R. Charles; McGuigan, James R.; Rao, Ramesh P.

ISBN 13:
9780324406368
ISBN 10:
0324406363
Edition: 2nd
Format: Paperback
Copyright: 03/01/2006
Publisher: Cengage Learning

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Summary

This text is a streamlined text for basic financial management. It provides a brief introduction to financial management, incorporating shareholder wealth maximization and cash flow management focus, with emphasis on international financial management and ethical behavior of managers. In addition, the text provides many worked-out spreadsheet examples to provide an even greater applications approach to financial management.

Preface

xxii

PART 1 INTRODUCTION

(62)

The Role And Objective Of Financial Management

(27)

Chapter Objectives

(1)

Primary Goal of the Firm: Maximizing Shareholder Wealth

(3)

The Problem with Profit Maximization

(1)

Determinants of Value

(1)

Divergent Objectives and Agency Problems

(4)

Agency Problems

(2)

Finance & The Real World: Maximizing Shareholder Wealth by Downsizing?

(1)

Business Ethics and Financial Management

(2)

Comprehension Check Questions

(1)

Forms of Business Organization

(4)

Sole Proprietorship

(1)

Partnership

(1)

Corporation

(1)

Other Types of Business Organizations

(2)

Comprehension Check Questions

(1)

The Financial Management Function

(3)

Financial Management and Other Disciplines

(1)

Accounting

(1)

Economics

(1)

Marketing, Production, Quantitative Methods, Information Systems, and Human Resources

(1)

Comprehension Check Questions

(1)

Career Opportunities in Finance

(4)

Professional Finance Affiliations and Certifications

(2)

Organization of the Textbook

(1)

Parts of the Textbook

(1)

Summary

(2)

Questions and Topics for Discussion

(1)

The Business Environment

(34)

Chapter Objectives

(1)

Aspects of the Business Environment

(1)

Financial Markets

(12)

Primary Markets

(4)

Secondary Markets

(5)

Derivative Markets

(1)

Regulation of Financial Markets

(3)

Finance & The Real World: Congress Cracks Down on Corporate Swindlers

(1)

Comprehension Check Questions

(1)

Market Efficiency

(2)

Weak-form Efficiency

(1)

Semistrong-form Efficiency

(1)

Strong-form Efficiency

(1)

Comprehension Check Questions

(1)

Reading the Wall Street Journal

(7)

Understanding Corporate Bond Quotations

(2)

Understanding Stock and Bond Market Averages

(3)

Comprehension Check Questions

(1)

Calculating Holding Period Returns

(3)

Comprehension Check Questions

(1)

Historical Record of Capital Market Returns

(1)

Summary

(5)

Questions and Topics for Discussion

(1)

Self-Test Problems

(1)

Problems

(4)

PART 2 FINANCIAL PERFORMANCE AND FINANCIAL PLANNING

(102)

Review Of Financial Statements

(37)

Chapter Objectives

(1)

The Accounting Function

(1)

The Annual Report

(2)

Comprehension Check Questions

(1)

The Balance Sheet

(8)

Assets

(4)

Liabilities

(2)

Stockholders' Equity

(1)

Comprehension Check Questions

(1)

The Income Statement

(3)

Sales

(1)

Cost of Operations

(1)

Operating Expenses

(1)

Nonoperating Expenses

(1)

Income Tax

(1)

Net Earnings

(1)

Statement of Retained Earnings and Statement of Shareholders' Equity

(2)

Comprehension Check Questions

(1)

The Statement of Cash Flows

(4)

Comprehension Check Questions

(1)

Limitations of Financial Statements

(3)

Finance & The Real World: How to Distort the Books Enron Style

(2)

Comprehension Check Questions

(1)

Federal Income Taxes for Corporations

(3)

Corporate Income Taxes

(1)

Loss Carrybacks and Carryforwards

(1)

Comprehension Check Questions

(1)

Summary

(11)

Questions and Topics for Discussion

(1)

Self-Test Problems

(2)

Problems

(7)

Evaluation Of Firm Performance

101

(41)

Chapter Objectives

102

(1)

Purpose of Financial Ratios

102

(1)

Interpreting Financial Ratios

103

(1)

Comprehension Check Questions

103

(1)

Basic Categories of Financial Ratios

103

(17)

Comprehension Check Questions

105

(1)

Liquidity Ratios

105

(5)

Comprehension Check Questions

110

(1)

Financial Leverage Management Ratios

110

(3)

Profitability Ratios

113

(2)

Market-based Ratios

115

(1)

Comprehension Check Questions

116

(1)

Summary of Financial Ratio Analysis

117

(1)

Trend Analysis

117

(3)

Finance & The Real World: Assessment of Financial Performance

120

(1)

Analysis of Profitability: A Comprehensive Framework

120

(3)

Return on Investment

120

(1)

Return on Stockholders' Equity

121

(2)

Recent Innovation in Performance Measurement: Economic Value Added (EVA®)---An Alternative Measure of Performance

123

(1)

Common-Size Financial Statements

124

(3)

Comprehension Check Questions

127

(1)

Sources of Comparative Financial Data

127

(2)

A Word of Caution about Ratio Analysis

129

(2)

Comprehension Check Questions

131

(1)

Summary

131

(11)

Questions and Topics for Discussion

132

(1)

Self-Test Problems

132

(2)

Problems

134

(8)

Long-Term and Short-Term Planning

142

(23)

Chapter Objectives

144

(1)

Pro Forma Statements

144

(8)

Comprehension Check Questions

150

(2)

Cash Budgeting

152

(3)

Risk Analysis and Financial Planning

155

(1)

Computerized Financial Forecasting and Planning Models

156

(1)

Comprehension Check Questions

157

(1)

Summary

157

(8)

Questions and Topics for Discussion

159

(1)

Self-Test Problems

159

(1)

Problems

160

(5)

PART 3 DETERMINANTS OF VALUATION

165

(136)

The Time Value of Money

166

(46)

Chapter Objectives

167

(1)

Summary of Notation

167

(1)

The Use of Financial Calculators and Spreadsheets

168

(1)

Spreadsheet Solution

168

(1)

The Concepts of Interest, Future Value, and Present Value

169

(1)

Comprehension Check Questions

170

(1)

Future Value of a Single Cash Flow

170

(7)

Compound Interest and Future Value

174

(2)

Solving for the Number of Periods

176

(1)

Comprehension Check Questions

177

(1)

Present Value of a Single Cash Flow

177

(3)

Solving for the Discount Rate

179

(1)

Comprehension Check Questions

180

(1)

Future Value of a Stream of Cash Flows

180

(8)

Comprehension Check Questions

188

(1)

Present Value of a Stream of Cash Flows

188

(8)

Present Value of an Uneven Stream

188

(1)

Present Value of an Annuity

189

(1)

Present Value of an Annuity Due

190

(3)

Solving for the Discount Rate, Annuity, or Length of Annuity

193

(1)

Present Value of a Deferred Annuity

194

(1)

Present Value of a Perpetuity

195

(1)

Comprehension Check Questions

196

(1)

Effect of Compounding Periods on Present and Future Values

196

(2)

Effect of Compounding Periods on Future and Present Values of Annuities

198

(1)

Effective Rate of Return

199

(2)

Comprehension Check Questions

200

(1)

Application of Present Values and Future Values to Special Situations

201

(3)

Loan Amortization Problem

201

(1)

Finance & The Real World: Reversing Your Mortgage

202

(1)

Calculating Growth Rates

202

(2)

Comprehension Check Questions

204

(1)

Summary

204

(8)

Questions and Topics for Discussion

205

(1)

Self-Test Problems

206

(1)

Problems

206

(6)

Analysis of Risk and Return

212

(31)

Chapter Objectives

213

(1)

Financial Market Historical Returns

213

(1)

The Meaning of Risk

214

(2)

Risk Measurement for an Individual Asset

216

(8)

Probability Distribution

216

(7)

Comprehension Check Questions

223

(1)

Risk of an Asset in a Portfolio Context

224

(8)

Calculating Portfolio Returns

224

(1)

Total Risk, Systematic Risk, and Unsystematic Risk

224

(2)

Diversification and Portfolio Risk

226

(2)

The Relevant Risk

228

(4)

Relationship Between Required Rate of Return and Risk

232

(11)

The Security Market Line

232

(1)

Comprehension Check Questions

232

(3)

Criticisms of the CAPM and a Discussion of Some New Models

235

(1)

Comprehension Check Questions

236

(1)

Summary

236

(1)

Questions and Topics for Discussion

237

(1)

Self-Test Problems

238

(1)

Problems

238

(5)

Bonds and Other Sources of Debt

243

(35)

Chapter Objectives

244

(1)

Definition of Long-term Debt and Bonds

244

(1)

Types of Long-term Bonds

244

(2)

Features of Long-term Bonds

246

(3)

Coupon Rate

246

(1)

Maturity

247

(1)

Call Feature and Bond Refunding

247

(1)

Put Feature

247

(1)

Sinking Fund

248

(1)

Equity-Linked Debt

248

(1)

Comprehension Check Questions

249

(1)

Bond Ratings

249

(1)

Indenture

250

(4)

Covenants

250

(3)

Trustees

253

(1)

Comprehension Check Questions

254

(1)

Bond Valuation

254

(3)

Using the Capitalization of Cash Flow Method

254

(2)

Semiannual Interest Payments

256

(1)

Bond Pricing Principles

257

(3)

Yield to Maturity

260

(3)

Comprehension Check Questions

262

(1)

Key Determinants of Bond Yields

263

(5)

Risk-Free Rate of Return

263

(1)

Risk Premium

264

(4)

Comprehension Check Questions

268

(1)

Other Sources of Debt

268

(4)

Leasing

268

(1)

Finance & The Real World: When Stocks Went South, Bonds Boomed

269

(1)

Advantages

270

(1)

Disadvantages

271

(1)

Term Loans

271

(1)

Comprehension Check Questions

272

(1)

Summary

272

(6)

Questions and Topics for Discussion

273

(1)

Self-Test Problems

274

(1)

Problems

274

(4)

Common Stocks and Preferred Stocks

278

(23)

Chapter Objectives

279

(1)

Common Stock

279

(12)

Stockholders' Rights

279

(2)

Comprehension Check Questions

281

(1)

Valuation of Common Stock

281

(2)

Constant Growth Dividend Valuation Model

283

(3)

Comprehension Check Questions

286

(1)

Insights from the Constant Growth Dividend Valuation Model

286

(1)

Limitations of the Constant Growth Dividend Valuation Model

287

(1)

Other Models of Valuation

288

(1)

Common Stock Valuation and Accounting

289

(1)

Comprehension Check Questions

290

(1)

Finance & The Real World: Preferring Dividends

291

(1)

Preferred Stock

291

(3)

Features of Preferred Stock

292

(1)

Valuation of Preferred Stock

293

(1)

Comprehension Check Questions

293

(1)

Summary

294

(7)

Questions and Topics for Discussion

295

(1)

Self-Test Problems

296

(1)

Problem

296

(5)

PART 4 THE CAPITAL INVESTMENT DECISION

301

(60)

Capital Budgeting and Cash Flow Analysis

302

(26)

Chapter Objectives

304

(1)

Principles of Estimating Cash Flows

305

(2)

Comprehension Check Questions

307

(1)

Estimating Project Cash Flows

307

(13)

Estimating Cash Flows for a New Business

308

(6)

Comprehension Check Questions

314

(1)

Calculating Cash Flows for an Asset Replacement Project

314

(6)

Comprehension Check Questions

320

(1)

Interest Charges and Net Cash Flows

320

(1)

Problems in Cash Flow Estimation

320

(1)

Comprehension Check Questions

321

(1)

Summary

321

(7)

Questions and Topics for Discussion

321

(1)

Self-Test Problems

322

(1)

Problems

322

(6)

Capital Budgeting Decision Criteria and Risk Analysis

328

(33)

Chapter Objectives

329

(1)

Some Terms and Concepts in Capital Budgeting

329

(1)

Cost of Capital

329

(1)

How Projects Are Classified

329

(1)

Availability of Funds

330

(1)

Decision Models for Evaluating Capital Expenditures

330

(13)

Net Present Value

330

(3)

Internal Rate of Return

333

(4)

Net Present Value versus Internal Rate of Return: The Reinvestment Rate Assumption

337

(2)

Comprehension Check Questions

339

(1)

Profitability Index

339

(1)

Payback Period

340

(2)

Comprehension Check Questions

342

(1)

Adjusting for Risk

343

(1)

Amazon no longer offers textbook rentals. We do!

Fundamentals of Contemporary Financial Management

Fundamentals of Contemporary Financial Management

9780324406368

0324406363

Summary

Table of Contents

Supplemental Materials

Write a Review

Amazon no longer offers textbook rentals. We do!

Fundamentals of Contemporary Financial Management

Fundamentals of Contemporary Financial Management

9780324406368

0324406363

Summary

Table of Contents

Supplemental Materials

Write a Review

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