Corporate Finance: Principles and Practice, 8th edition
Published by Pearson (December 9, 2019) © 2020
- Denzil Watson
- Antony Head
Title overview
Familiarise yourself with the core concepts in Corporate Finance with this reader-friendly text.
Corporate Finance: Principles and Practice, 8th edition is a comprehensive guide that introduces you to the key principles in the field.
Written and structured in a reader-friendly style for those new to the topic, this updated edition explains step by step the essential principles, with a plethora of questions and exercises for deeper understanding.
The numerous examples demonstrate Corporate Finance techniques in action, giving you a glimpse of the tools that managers use in the real world to achieve corporate goals in the business environment.
This edition includes a Companion Website.
Table of contents
Preface
Acknowledgements
- The finance function
Learning objectives
Introduction
- 1.1 Two key concepts in corporate finance
- 1.2 The role of the financial manager
- 1.3 Corporate objectives
- 1.4 How is shareholder wealth maximised?
- 1.5 Agency theory
- 1.6 Corporate governance
- 1.7 Conclusion
Key points
Self-test questions
Questions for review
Questions for discussion
References
Recommended reading
- Capital markets, market efficiency and ratio analysis
Learning objectives
Introduction
- 2.1 Sources of business finance
- 2.2 Capital markets
- 2.3 Capital market efficiency
- 2.4 Assessing financial performance
- 2.5 Conclusion
Key points
Self-test questions
Questions for review
Questions for discussion
References
Recommended reading
- Short-term finance and working capital management
Learning objectives
Introduction
- 3.1 The objectives of working capital management
- 3.2 Working capital policies
- 3.3 Working capital and the cash conversion cycle
- 3.4 Overtrading
- 3.5 Managing inventory
- 3.6 Managing cash
- 3.7 Managing trade receivables
- 3.8 Conclusion
Key points
Self-test questions
Questions for review
Questions for discussion
References
Recommended reading
- Long-term finance: equity finance
Learning objectives
Introduction
- 4.1 Equity finance
- 4.2 The Stock Exchange
- 4.3 Rights issues
- 4.4 Scrip issues, share splits, scrip dividends and share repurchases
- 4.5 Preference shares
- 4.6 Conclusion
Key points
Self-test questions
Questions for review
Questions for discussion
References
Recommended reading
- Long-term finance: debt finance, hybrid finance and leasing
Learning objectives
Introduction
- 5.1 Bonds, loan notes, loan stock and debentures
- 5.2 Bank and institutional debt
- 5.3 International debt finance
- 5.4 Convertible bonds
- 5.5 Warrants
- 5.6 Valuing fixed interest bonds
- 5.7 Valuing convertible bonds
- 5.8 Leasing
- 5.9 Evaluating the financial effects of financing choices
- 5.10 Conclusion
Key points
Self-test questions
Questions for review
Questions for discussion
References
Recommended reading
- An overview of investment appraisal methods
Learning objectives
Introduction
- 6.1 The payback method
- 6.2 The return on capital employed method
- 6.3 The net present value method
- 6.4 The internal rate of return method
- 6.5 Comparing the NPV and IRR methods
- 6.6 The profitability index and capital rationing
- 6.7 The discounted payback method
- 6.8 Conclusion
Key points
Self-test questions
Questions for review
Questions for discussion
References
Recommended reading
- Investment appraisal: applications and risk
Learning objectives
Introduction
- 7.1 Relevant project cash flows
- 7.2 Taxation and capital investment decisions
- 7.3 Inflation and capital investment decisions
- 7.4 Investment appraisal and risk
- 7.5 Appraisal of foreign direct investment
- 7.6 Empirical investigations of investment appraisal
- 7.7 Conclusion
Key points
Self-test questions
Questions for review
Questions for discussion
References
Recommended reading
- Portfolio theory and the capital asset pricing model
Learning objectives
Introduction
- 8.1 The measurement of risk
- 8.2 The concept of diversification
- 8.3 Investor attitudes to risk
- 8.4 Markowitz's portfolio theory
- 8.5 Introduction to the capital asset pricing model
- 8.6 Using the CAPM to value shares
- 8.7 Empirical tests of the CAPM
- 8.8 Conclusion
Key points
Self-test questions
Questions for review
Questions for discussion
References
Recommended reading
- The cost of capital and capital structure
Learning objectives
Introduction
- 9.1 Calculating the cost of individual sources of finance
- 9.2 Calculating the weighted average cost of capital
- 9.3 Average and marginal cost of capital
- 9.4 The CAPM and investment appraisal
- 9.5 Practical problems with calculating WACC
- 9.6 WACC in the real world
- 9.7 The cost of capital for foreign direct investment
- 9.8 Gearing: its measurement and significance
- 9.9 The concept of an optimal capital structure
- 9.10 The traditional approach to capital structure
- 9.11 Miller and Modigliani (I): net income approach
- 9.12 Miller and Modigliani (II): corporate tax
- 9.13 Market imperfections
- 9.14 Miller and personal taxation
- 9.15 Pecking order theory
- 9.16 Conclusion: does an optimal capital structure exist?
Key points
Self-test questions
Questions for review
Questions for discussion
References
Recommended reading
- Dividend policy
Learning objectives
Introduction
- 10.1 Dividends: operational and practical issues
- 10.2 The effect of dividends on shareholder wealth
- 10.3 Dividend irrelevance
- 10.4 Dividend relevance
- 10.5 Dividend relevance or irrelevance?
- 10.6 Dividend policies
- 10.7 Alternatives to cash dividends
- 10.8 Empirical evidence on dividend policy
- 10.9 Conclusion
Key points
Self-test questions
Questions for review
Questions for discussion
References
Recommended reading
- Mergers and takeovers
Learning objectives
Introduction
- 11.1 The terminology of mergers and takeovers
- 11.2 Justifications for acquisitions
- 11.3 Trends in takeover activity
- 11.4 Target company valuation
- 11.5 The financing of acquisitions
- 11.6 Strategic and tactical issues
- 11.7 Divestment
- 11.8 Private equity
- 11.9 Empirical research on acquisitions
- 11.10 Conclusion
Key points
Self-test questions
Questions for review
Questions for discussion
References
Recommended reading
- Risk management
Learning objectives
Introduction
- 12.1 Interest and exchange rate risk
- 12.2 Internal risk management
- 12.3 External risk management
- 12.4 Futures contracts
- 12.5 Options
- 12.6 Swaps
- 12.7 Issues in interest and exchange risk management
- 12.8 Political risk
- 12.9 Conclusion
Key points
Self-test questions
Questions for review
Questions for discussion
References
Recommended reading