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Financial management for decision makers 7/e

Financial management for decision makers 7/e
Peter Atrill

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This book is one of five recommended titles for 'Supply chain diligence' (PD4).

 

Adopting an innovative, open-learning approach to introduce the main principles of financial management in an accessible, non-technical way, this fully updated seventh edition provides a unique focus on the practical application of financial management and its role in decision making.
 
New to this edition:
increased coverage of managing for shareholder value
additional activities throughout to help reinforce key points
increased coverage of the functioning of stock markets
more diagrams to help assist understanding
updated ‘real world’ examples

Adopting an innovative, open-learning approach to introduce the main principles of financial management in an accessible, non-technical way, this fully updated seventh edition provides a unique focus on the practical application of financial management and its role in decision making.

 
New to this edition:

 

  • increased coverage of managing for shareholder value
  • additional activities throughout to help reinforce key points
  • increased coverage of the functioning of stock markets
  • more diagrams to help assist understanding
  • updated ‘real world’ examples

 

Table of contents


Preface   

Acknowledgements

How to use this book

Guided tour of the book

Guided tour of the companion website

 

1 The world of financial management


Introduction

Learning outcomes

The finance function

Structure of the book

Modern financial management

Why do businesses exist?

Balancing risk and return

Behaving ethically

Protecting shareholders’ interests

Shareholder involvement

Summary

Key terms

References

Further reading

Review questions


 

2 Financial planning


Introduction

Learning outcomes

Planning for the future

The role of projected financial statements

Preparing projected financial statements

Preparing the projected statements: a worked example

Projected cash flow statement

Projected income statement

Projected statement of financial position (balance sheet)

Projected financial statements and decision making

Per-cent-of-sales method

Long-term cash flow projections

Taking account of risk

Summary

Key terms

Further reading

Review questions

Exercises

 


3 Analysing and interpreting financial statements


Introduction

Learning outcomes

Financial ratios

Financial ratio classifications

The need for comparison

Calculating the ratios

A brief overview

Profitability

Efficiency

Relationship between profitability and efficiency

Liquidity

Financial gearing

Investment ratios

Financial ratios and the problem of overtrading

Trend analysis

Using ratios to predict financial failure

Limitations of ratio analysis

Summary

Key terms

References

Further reading

Review questions

Exercises

 


4 Making capital investment decisions


Introduction

Learning outcomes

The nature of investment decisions

Investment appraisal methods

Accounting rate of return (ARR)

Payback period (PP)

Net present value (NPV)

Why NPV is better

Internal rate of return (IRR)

Some practical points

Investment appraisal in practice

Investment appraisal and strategic planning

Summary

Key terms

Further reading

Review questions

Exercises

 


5 Making capital investment decisions: further issues


Introduction

Learning outcomes

Investment decisions when funds are limited

Comparing projects with unequal lives

The ability to delay

The problem of inflation

The problem of risk

Sensitivity analysis

Scenario analysis

Simulations

Risk preferences of investors

Risk-adjusted discount rate

The standard deviation and the normal distribution

The expected value–standard deviation rule

Measuring probabilities

The limits of probability analysis

Portfolio effects and risk reduction

Summary

Key terms

Further reading

Review questions

Exercises


 

6 Financing a business 1: sources of finance


Introduction

Learning outcomes

Sources of finance

External sources of finance

External sources of long-term finance

External sources of short-term finance

Long-term versus short-term borrowing

Internal sources of finance

Internal sources of long-term finance

Internal sources of short-term finance

Summary

Key terms

Further reading

Review questions

Exercises

 


7 Financing a business 2: raising long-term finance


Introduction

Learning outcomes

The Stock Exchange

Stock market efficiency

Are the stock markets really efficient?

Share issues

Long-term finance for the smaller business

Business angels

Government assistance

The Alternative Investment Market (AIM)

Amazon.com: a case history

Summary

Key terms

References

Further reading

Review questions

Exercises


 

8 The cost of capital and the capital structure decision


Introduction

Learning outcomes

Cost of capital

Weighted average cost of capital (WACC)

Specific or average cost of capital?

Limitations of the WACC approach

Cost of capital – some evidence

Financial gearing

Degree of financial gearing

Gearing and capital structure decisions

Constructing a PBIT–EPS indifference chart

What determines the level of gearing?

The capital structure debate

Summary

Key terms

References

Further reading

Review questions

Exercises


 

9 Making distributions to shareholders


Introduction

Learning outcomes

Paying dividends

Dividend distributions in practice

Dividend policy and shareholder wealth

The importance of dividends

Factors determining the level of dividends

Dividend policy and management attitudes: some evidence

Dividend smoothing in practice

What should managers do?

Alternatives to cash dividends

Summary

Key terms

References

Further reading

Review questions

Exercises


 

10 Managing working capital


Introduction

Learning outcomes

What is working capital?

Managing inventories

Inventories management models

Managing trade receivables

Managing cash

Managing trade payables

Summary

Key terms

Further reading

Review questions

Exercises


 

11 Measuring and managing for shareholder value


Introduction

Learning outcomes

The quest for shareholder value

Creating shareholder value

The need for new forms of measurement

Net present value (NPV) analysis

Managing the business with shareholder value analysis

Implications of SVA

Economic value added (EVA®)

Eva®-based ratios

EVA® and SVA compared

EVA® or SVA?

Market value added (MVA)

The link between MVA and EVA®

Limitations of MVA

Total shareholder return

Criticisms of the shareholder value approach

Measuring the value of future growth

Implementing the shareholder value approach

Directors’ share options and shareholder value

Summary

Key terms

References

Further reading

Review questions

Exercises


 

12 Business mergers and share valuation


Introduction

Learning outcomes

Mergers and takeovers

Merger and takeover activity

The rationale for mergers

Wealth-enhancing motives for mergers

Other motives for mergers

Forms of purchase consideration

Mergers and financial performance

Who benefits?

The merger puzzle

Ingredients for successful mergers

Rejecting a takeover bid

Restructuring a business: divestments and demergers

The valuation of shares

Choosing a valuation model

Summary

Key terms

References

Further reading

Review questions

Exercises


Appendix A Present value table

Appendix B Annual equivalent factor table

Appendix C Solutions to self-assessment questions

Appendix D Solutions to review questions

Appendix E Solutions to selected exercises

Glossary


 

Book Detail

 
Publication Date: Thursday, June 19, 2014
ISBN: 9781292016061
Number of Pages: 656
Category: Business Books , Management
Edition: 7th edition