Handbook of corporate finance : a business companion to financial markets, decisions & techniques

著者

書誌事項

Handbook of corporate finance : a business companion to financial markets, decisions & techniques

Glen Arnold

Prentice Hall/Financial Times, 2005

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注記

Includes bibliographical references (p. [687]-701) and index

内容説明・目次

内容説明

The imperatives of modern business mean that, sooner or later, every executive will have to get to grips with finance. Its terms, its tools, its techniques. Corporate finance touches every aspect of your business: from deciding which capital expenditure projects are worthy of backing for tomorrow, to the immediate and daily challenge of managing business units for shareholder value. Finance is the framework for corporate decisions and the language of corporate decision-makers. Fluency in finance will serve you and your business well. The Handbook of Corporate Finance is the authoritative, comprehensive and crystal-clear companion to the everyday questions of business finance. In what projects will we best invest our shareholders money? How do we create and measure shareholder value? What type of finance should we raise? How can we measure and manage financial risk? These are challenges that every business faces, and questions that every executive will encounter. Knowing the answers to these questions will help you and your business to back the right choices, make the right decisions and deliver improved financial performance. These are the questions which The Handbook of Corporate Finance has been built to answer. Step-by-step, it will explain the principles and practices of corporate finance and the financial markets, with an emphasis on the terms you need to understand and the tools and techniques you need apply. Directed firmly at sounder judgment and sharper decision-making, it will guide you through key issues as it: * Provides a thorough grounding in value-based management; a frequently talked about but little understood concept. * Examines the essentials of mergers and acquisitions, and in particular, explore remedies for the problem of merger failure * Explores and explains the proper business use of derivatives as tools to help control risk, rather than increase it. * Introduces modern investment appraisal techniques, and contrast their application with frequently employed rules of thumb * Provides an overview of modern financial markets and instruments, with insights into the benefits brought by effective exploitation of those markets and perils of ignoring the needs of the finance providers The Handbook of Corporate Finance is here to help you to understand and apply the essentials of corporate finance with speed and confidence

目次

The book will be structured around the four key financial issues facing management: * In what projects are we going to invest our shareholders money (capex)? * How do we create and measure shareholder value creation? * What type of finance should we raise? * How do we manage financial risk? Contents Introduction * Overview of the book * Enthusiasm for financial knowledge * The four key issues * Outline Chapter 1. What are we aiming at? * The objective of the firm * Variety of objectives: those admitted to (and those kept quiet) * Why should we aim for shareholder wealth? * What is shareholder wealth? * Profit maximisation is not the same as shareholder wealth maximisation * Getting manager's objectives aligned with shareholder's objectives PART 1 -- WHAT INVESTMENTS SHOULD WE MAKE? Chapter 2. State-of-the-art project assessment techniques * How do you know whether an investment generates value for shareholders? * Time is money * Discounted cash flow * State-of-the-art technique 1: net present value * State-of-the-art technique 2: internal rate of return * So which is better: NPV or IRR? Appendix 2.1 Mathematical tools for finance Simple and compound interest Present value Determining the interest rate The investment period Annuities Perpetuities Chapter 3. Traditional appraisal techniques * What businesses actually use * Payback * Accounting rate of return * Why internal rate of return is still popular Chapter 4. Investment decision-making in real organisations * The managerial art of investment selection * Strategy * Social context * Expense * Stifling the entrepreneurial spirit * Intangible benefits * The stages of investment decisions * Generation of ideas * Development and classification * Screening * Appraisal * Report and authorisation * Implementation * Post completion audit Chapter 5. Allowing for risk * What is risk? * Adjusting for risk through the discount rate * Sensitivity analysis * Scenario analysis * Probability analysis * Standard deviation * What risk techniques do managers actually use? PART 2 SHAREHOLDER VALUE Chapter 6. Value managed companies versus earnings managed companies * The pervasiveness of the value approach * Case studies: FT100 companies creating value and destroying value * Why shareholder value? * Earnings-based management's failings: * Dicey accounting * Throwing money in * Ignoring the time value of money * Ignoring risk * ROCE has limitations * Focusing on earnings is not the same as value * How a business creates value * The five actions to create value Chapter 7. Strategic position * Strategic business unit management * Do we have any strong business franchises? * Industry attractiveness * The strength of our resources * The TRRACK system * The life cycle of value potential * Strategic choice * What use is the head office? Chapter 8. Value creation within strategic business units * Using cash flow to measure value * Shareholder value analysis * Economic profit * Economic value added (EVA) Chapter 9. Value measures for the entire firm * Total shareholder return * Wealth added index * Market value index * Market to book ratio Chapter 10. What is the company's cost of capital? * The required rate of return * The cost of equity capital * The capital asset pricing model * Gordon growth model * The cost of retained earnings * Debt capital * Preference shares * The weighted average cost of capital, WACC * What the WACC tells you * Applying WACC to strategic business units and projects * What do managers actually do? * Implementation issues * How large is the equity premium? * Which risk free rate? * How reliable are the CAPM and beta? * Fundamental beta Chapter 11. Mergers: impulse, regret and success * The merger decision * You say merger, I say acquisition * Types of merger * Merger statistics * What drives firms to merge? * Synergy * Market power * Economies of scale * Internalisation of transactions * Entering new markets and industries * Tax * Risk diversification * Bargain buying * Inefficient management * Managerial benefits * Hubris * Survival * Free cash flow * Third party motives * Do the shareholders of acquiring firms gain from mergers? * Managing mergers * The three stages of a merger * Problem areas in merger management * Why do mergers fail to generate value for acquiring shareholders? Chapter 12. The merger process * The City code on takeovers and mergers * Action before the bid * The bid * After the bid * Defence tactics * Paying for the targets shares: cash or shares? Chapter 13. Valuing companies * The two skills * Valuation using net asset value * Dividend valuation methods * How do you estimate future growth? * Price-earnings ratio methods * Valuation using cash flow * Owner earnings method * Valuing unquoted shares * Unusual companies * Managerial control changes the valuation Chapter 14. What pay-outs should we make to shareholders? * The other extreme * Some muddying factors * Clientele effects * Taxation * Information conveyance * Agency effects * Scrip dividends * Share buy-backs and special dividends * A round up of the arguments PART 3 -- FINANCE RAISING Chapter 15. Debt finance available to firms of all sizes * Bank finance * Attractive features * Overdraft * Term loans * Factors for a firm to consider * Cost * Security * Repayment terms * Trade credit * Factoring * Hire purchase * Leasing * Sale and leaseback Chapter 16. Debt finance from the financial markets * Bonds * Syndicated loans * Credit ratings * Mezzanine debt and high yield debt * Convertible bonds * International sources of debt finance * Foreign bonds * Eurobonds * Commercial paper * Project finance * Securitisation Chapter 17. Raising equity finance * To float or not to float? * Equity capital's advantage over debt * Floating on the Official List * What manager need to consider: * Prospectus * Conditions imposed and new responsibilities * You might be rejected as unsuitable * Hiring a sponsor * Paying underwriters * Hiring a broker * Accountants and solicitors rub their hands in glee * Registrars * Continuing obligations after floatation * Methods of issue * Timetable of a new offer * How does flotation on AIM differ * How much does it cost? * Rights issues * Placings and open offers * Scrip issue * Business angels * Venture capital * What returns do venture capitalists expect? * What types of business are they interested in? * What rates of return do they look for? * What rates of return do they achieve? * Structuring a VC deal * Exits * Power over managers * What else do they bring to the party? PART 4 -- MANAGING RISK Chapter 18. The financial risks managers have to deal with * The value of reducing the impact of adverse events * Financial planning * Reducing fear of financial distress * Some risks are not rewarded * Business risk * Insurable risk * Currency risk * Interest rate risk * Risk in the financial structure * Is it better to borrow long or short? * To match or not to match? * Currency of borrowing * Fixed or floating? * Retained earnings as financing option * The dangers of gearing Chapter 19. Options * An intuitive understanding * Share options * Corporate uses of options * Real options Chapter 20. Using derivatives to manage risk * Forwards * Futures * Marking to market and margins * Settlement * Managing interest rate risk with futures * Forward rate agreements * Caps, collars and floors * Swaps for long term hedging Chapter 21. Managing exchange rate risk * The impact of currency rate changes on the firm * Volatility in foreign exchange * The currency markets * Understanding the exchange rate tables in the FT * Covering in the forward market * Types of foreign exchange risk * Managing risk * Invoicing in the home currency * Do nothing * Netting * Matching * Leading and lagging * Hedging strategies * Forward market hedge * Money market hedge * Futures market hedge * Options hedge * Managing translation risk * Managing economic risk

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