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2023 | Buch

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Corporate Finance for Business

The Essential Concepts

verfasst von: Ronny Manos, Keith Parker, D. R. Myddelton

Verlag: Springer International Publishing

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

Taking a concise approach to the key concepts of finance, this textbook clearly focuses on the most relevant issues around financial management, which will be of interest to business managers, students and anyone who wishes to understand the basics of finance. Covering cash and working capital, capital project appraisal, risk and uncertainty, financial markets, the cost of capital, mergers and acquisitions and valuation, financial concepts are applied to the business world using real life examples. This text is both international and contemporary in outlook, reflecting the financial environment in which all businesses operate.

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Inhaltsverzeichnis

Frontmatter

Introduction

Frontmatter

Chapter 1. Cash and Working Capital

Abstract

Even a profitable business, one whose revenues are higher than the costs borne in generating those revenues, can fail because of bad cash management—that is, not having enough cash to meet its liabilities as they fall due. Indeed, many of the businesses which went bankrupt during the COVID-19 and other crises were profitable when they collapsed. But another aspect of bad cash management is when the firm has lots of cash sitting idle, rather than being invested in profitable projects. This chapter reviews cash and cash management. We also look at the components of working capital and how they impact upon cash.

Ronny Manos, Keith Parker, D. R. Myddelton

Chapter 2. Basic Capital Project Appraisal

Abstract

This chapter introduces key concepts in corporate finance, such as the ‘time value of money’ and discounting. It discusses the meaning of the net present value and internal rate of return and shows how to calculate them. Other investment appraisal tools are also described.

Ronny Manos, Keith Parker, D. R. Myddelton

Chapter 3. More on Capital Projects

Abstract

This chapter considers some of the more complex issues of capital investment appraisal. Topics covered include: how to deal with working capital; taxation; inflation; and how to compare projects of unequal length. We also look at why projects end and how to assess the success or failure of a project after it has finished.

Ronny Manos, Keith Parker, D. R. Myddelton

Chapter 4. Risk and Uncertainty

Abstract

All companies are subject to risk. When it comes to project appraisal, we can deal with the fact that there is uncertainty regarding future cashflows by calculating their expected value (providing we know or can estimate the probabilities of the different possible outcomes). In addition, we could adjust the discount rate to allow for risk. Also, to help in managerial decision-making under risk, there are tools such as decision trees, sensitivity analysis and scenario planning. To mitigate risk, including foreign exchange risk, we can use derivatives such as futures and options, which are examined in the chapter.

Ronny Manos, Keith Parker, D. R. Myddelton

An Introduction to the Financing Decision

Frontmatter

Chapter 5. Corporate Borrowing

Abstract

Borrowing is an important source of finance for companies, big and small. In this chapter we introduce you to the varied world of debt. We look at the key features of debt, how it is classified, risk reduction strategies that borrowers and lenders follow, and how to value debt that is traded on capital markets.

Ronny Manos, Keith Parker, D. R. Myddelton

Chapter 6. Ordinary Share Capital

Abstract

In this chapter, we consider ordinary share capital. We start by looking at the key terms and the nature of ordinary shares. We look at the risk and return involved and discuss stock markets and their indices. Lastly, we explain how shares are issued and traded, including more complex issues such as short selling.

Ronny Manos, Keith Parker, D. R. Myddelton

Chapter 7. Cost of Capital

Abstract

This very important chapter has as its purpose the explanation of how to work out a company’s weighted average cost of capital, which is the discount rate that should be used in evaluating its projects of average risk. We introduce two key concepts in finance, the Capital Asset Pricing Model (CAPM) and the Dividend Growth Model (DGM), and look at the strengths and weaknesses of both.

Ronny Manos, Keith Parker, D. R. Myddelton

Chapter 8. Capital Structure and Dividend Policy

Abstract

This chapter deals with the vexed question of the balance between debt and equity and whether it might be possible to minimize a company’s weighted average cost of capital by changing this mix. The other, related, question, is what proportion of net profits to pay out as dividends. Together these two questions make up the financing decision the company faces.

Ronny Manos, Keith Parker, D. R. Myddelton

Chapter 9. Valuing Companies

Abstract

Here we look at the three main techniques for valuing companies: the assets basis, the use of price/earnings multiples, and discounted cash flows. We also look at mergers and acquisitions – the reasons for them and why the succeed or fail.

Ronny Manos, Keith Parker, D. R. Myddelton

Chapter 10. Putting It All Together

Abstract

The aim of this concluding chapter is to summarize the main points of the textbook and to show how the financing and investment decisions interact.

Ronny Manos, Keith Parker, D. R. Myddelton

Backmatter

Titel: Corporate Finance for Business
verfasst von: Ronny Manos
Keith Parker
D. R. Myddelton
Copyright-Jahr: 2023
Verlag: Springer International Publishing
Electronic ISBN: 978-3-030-92419-5
Print ISBN: 978-3-030-92418-8
DOI: https://doi.org/10.1007/978-3-030-92419-5