Financial Management

George E. Pinches

Publisher: HarperCollins, 1994, 1042 pages

ISBN: 0-06-502470-2

Keywords: Finance

Last modified: April 11, 2011, 2:57 p.m.

Are you charged up for change? In Financial Management, George E. Pinches looks at the challenges of unremitting change in the financial environment of the firm. This new text gears readers up with the following:

  • Consistent framework for solving problems that is based on seven fundamental concepts: maximization of market value of the firm, market efficiencies, agency theory, cash flows, time value of money and net present value, risk and return, and options and financial risk management.
  • Highly motivating Executive Overviews at the beginning of each part that provide practical insights into the financial management of real companies.
  • Step-by-step examples that illustrate each calculation so that readers can see how to use the tools of the decision-making process.
  • Coverage of international financial management which appears in two separate chapters and in select chapters where appropriate.
  • Learning aids including Executive Summaries, step-by-step calculations, numerical demonstrations, Concept Review Questions, Concept Review Problems, problem sets, and mini-cases
  • Part I: Foundations of Financial Management
    1. Why Financial Management Matters
      • What is Financial Management?
      • Key Ideas You Need to Understand
      • Financial Management and the Firm
      • The Financial Manager
    2. Value Creation and Time Value
      • Investment Decision Making
      • Value Creation
      • Time Value of Money
    3. Valuation of Bonds And Stocks
      • The Financial System
      • Determining Bond Values and Yields
      • Determining Common Stock Values
      • The Present Value of Growth Opportunities
      • Returns and Risk
      • Appendix 3A: The Term Structure of Interest Rates
    4. Risk and Return
      • Measuring Risk
      • Portfolio Risk and Diversification
      • Riskless Borrowing and Lending
      • More on the Capital Asset Pricing Model
      • The Efficient Market Hypothesis
      • Arbitrage Pricing Theory
      • Appendix 4A: Calculating Covariances and Correlations
    5. Options
      • The Basics of Options
      • Valuing European Call Options
      • Put Options
      • Stock is Just a Call Option
  • Part II: Long-Term Investment Decisions
    1. The Opportunity Cost of Capital
      • What is the Firm's Opportunity Cost of Capital?
      • Calculating Costs and Financing Proportions
      • Estimating the Opportunity Cost of Capital
      • Estimating PepsiCo's Opportunity Cost of Capital
      • Divisional and Project Specific Opportunity Costs
      • Was the Cost of Capital Lower in Japan?
    2. Capital Budgeting Techniques
      • Capital Budgeting and the Value of the Firm
      • The Capital Budgeting Process
      • Selecting Capital Budgeting Projects
      • Some Complications
    3. Capital Budgeting Applications
      • Estimating Cash Flows
      • Expansion Projects
      • Replacement Decisions
      • More on Cash Flow Estimation
      • Capital Rationing
    4. Risk And Capital Budgeting
      • Risk and Strategic Decisions
      • Opportunity Cost of Capital for Capital Budgeting Decisions
      • Information About the Riskiness of Projects
    5. Value Creation from Capital Budgeting
      • What Leads to Positive NPVs?
      • Abandoning Now Versus Continuing to Own
      • Call Options in Capital Investment Decisions
      • Put Options in Capital Investment Decisions
      • Some Final Thoughts
  • Part III: Capital Structure and Dividend Decisions
    1. Capital Structure Theory
      • Capital Structure and the Value of the Firm
      • Corporate Taxes and the Deductibility of Interest
      • Personal Taxes and Other Tax Related Impacts
      • Transaction Costs and Capital Structure Decisions
      • Impact on Capital Investment Decisions
      • Appendix 11A: Value of the Levered Firm
    2. Capital Structure Applications
      • Capital Structure Theory and Practice
      • Debt/Equity Ratios in Practice
      • Using Modigliani and Miller to Identify Factors Affecting Capital Strcuture Decisions
      • Other Considerations
      • Setting a Firm's Debt/Equity Ratio
      • Appendix 12A: Business Risk, Financial Risk, and EPS
    3. Dividend Policy
      • Dividends and Financing
      • Does Dividend Policy Matter? The Irrelevance Arguments
      • Why Do Firms Pay Cash Dividends?
      • Is There an Optimal Dividend Policy?
      • Dividend Policy in Practice
      • Dividend Payment Procedures
      • Stock Splits and Dividends
    4. The Interaction of Investment and Financing Decisions
      • Why Not Just Employ NPV as Before?
      • Adjusted Present Value
      • Flows-to-Equity
      • When Are Adjusted Discount Rate NPV, APV and FTE the Same?
      • Appendix 14A: Adjusted Present Value in an MM World
  • Part IV: Managing Long-Term Financing
    1. Raising Long-Term Funds
      • Raising External Long-Term Funds
      • Common Stock: RIghts and Privileges
      • Features of Common Stock
      • Common Stock Financing
      • Regulation of Public Issues
      • Venture Capital
    2. Liability Management
      • Long-Term Debt
      • Financing with Long-Term and Medium-Term Debt
      • Financing in the 1990s
      • Managing Long-Term Debt
      • Preferred Stock
      • Long-Term Financing and Financial Distress
      • Appendix 16A: Refunding a Bond or Preferred Stock Issue
    3. Warrants and Convertibles
      • Warrants
      • Convertibles
    4. Leasing
      • Leasing and the Firm
      • Setting Lease Rates
      • To Lease or Not to Lease?
      • Evaluation of Financial Leases
  • Part V: Short-Term Financial Management
    1. Short-Term Financial Management Policy
      • Managing Short-Term Assets and Liabilities
      • Liquidity and the Cash Cycle
      • Strategy for Current Assets and Current Liability Management
      • Putting It All Together
    2. Cash and Marketable Securities
      • The Cash Management Function
      • Cash Management Techniques
      • Advances in Payment and Information Systems
      • Determining the Daily Cash Balance
      • Management of the Marketable Securities Portfolio
    3. Accounts Receivable and Inventory
      • Receivables, Inventory, and the Firm
      • Credit and Collection Management
      • Inventory Management
    4. Short-Term Financing
      • Sources and Importance of Short-Term Financing
      • Accounts Payable, or Trade Credit
      • Unsecured Loans
      • Secured Loans
      • Choosing Among Short-Term Financing Sources
    5. Hedging Interest Rate Risk
      • Risk Management
      • Interest Rate Risk
      • Forwards and Futures
      • Hedging Using Forwards and Futures
      • Interest Rate Swaps
      • Using Options to Manage Interest Rate Risk
      • Growth and Regulation of the Derivatives Markets
  • Part VI: Financial Analysis and Planning
    1. Analyzing Accounting Statements
      • Different Statements for Different Purposes
      • The Basic Accounting Statements
      • Analysis of Accounting Statements
    2. Financial Planning and Forecasting
      • Cash Flow Analysis
      • Forecasting in Practice
      • Pro Forma Accounting Statements
      • Financial and Strategic Planning
  • Part VII: Additional Financial Management Decisions
    1. Mergers and Corporate Restructuring
      • The Market for Corporate Control
      • Reasons for Merging
      • Deciding Whether to Merge
      • Mechanics of a Merger
      • Defensive Tactics
      • Corporate Restructuring
    2. International Financial Management
      • Financial Management in an International Context
      • Foreign Exchange Rates
      • Capital Budgeting in an International Context
      • Capital Structure and Dividend Issues
      • International Financing Issues
      • Short-Term Financial Management in an International Context
      • International Accounting and Tax Issues
    3. Managing Foreign Exchange Risk
      • Risk Management
      • Identifying the Firm's Financial Risk Exposure
      • Operating, Investment, and Financing Approaches to Hedging Exchange Rate Risk
      • Hedging Using Forward Contracts
      • Hedging Using Futures Contracts
      • Hedging Using Swaps
      • Hedging Using Currency Options
    • Appendix A: Solution to Concept Review Problems
    • Appendix B: Financial Tables
    • Appendix C: Answers to Selected Problems


Financial Management

Reviewed by Roland Buresund

OK ***** (5 out of 10)

Last modified: April 11, 2011, 2:50 p.m.

Contains nearly everything you want to know about finances. The only problem is that you don't read this tomb volontarily.


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