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Financial Management

Book Description

Financial Management introduces students to the fundamental tools and concepts of corporate finance by explaining the reasoning behind various financial concepts. The book prepares students for life outside the classroom through snapshots from contemporary organizations, solved examples and application-based problems. The book includes short vignettes about the financial practices of organizations such as Steel Authority of India Limited, Hindalco Industries Limited, Amazon.com and Tata Motors; useful facts and rules of thumb, and provide insights into financial practices in organizations like Godrej Industries Ltd, Infosys Technologies Ltd and ICICI Bank; solved examples, solved problems and excel worksheets to help enhance students' understanding of numerical and MS Excel-based problems.

Table of Contents

  1. Cover
  2. Title Page
  3. Brief Contents
  4. Contents
  5. Dedication
  6. Preface
  7. Unit I: Introduction to Corporate Finance
    1. 1. Introduction to Financial Management
      1. 1.1 - INTRODUCTION
      2. 1.2 - FINANCE FUNCTIONS
        1. 1.2.1 - Financing Decisions
        2. 1.2.2 - Investment Decisions
        3. 1.2.3 - Liquidity Decisions
        4. 1.2.4 - Dividend Decisions
        5. 1.2.5 - Decisions Regarding the Reporting, Monitoring and Controlling of Funds
      3. 1.3 - THE ROLE OF THE FINANCE MANAGER
        1. 1.3.1 - The Functions of a Finance Manager
        2. 1.3.2 - The Role of a Finance Manager in the Indian Context
      4. 1.4 - THE GOALS OF A FIRM
        1. 1.4.1 - Non-Financial Goals
        2. 1.4.2 - Financial Goals
      5. 1.5 - PROFIT AND WEALTH MAXIMIZATION
        1. 1.5.1 - Profit Maximization
        2. 1.5.2 - Wealth Maximization
      6. 1.6 - MANAGEMENT VERSUS SHAREHOLDERS
      7. 1.7 - FIELDS RELATED TO FINANCE
        1. 1.7.1 - Economics
        2. 1.7.2 - Accounting
      8. 1.8 - FINANCE AND OTHER FUNCTIONAL AREAS
        1. 1.8.1 - Marketing
        2. 1.8.2 - Distribution and Selling
        3. 1.8.3 - Production and Total Quality Management
        4. 1.8.4 - Personnel and Behavioural Aspects
        5. 1.8.5 - Strategic Decisions of Top Management
      9. 1.9 - CORPORATE SOCIAL RESPONSIBILITY
      10. 1.10 - FINANCIAL PLANNING
        1. 1.10.1 - Steps in Financial Planning
        2. 1.10.2 - Tools of Financial Planning
        3. 1.10.3 - Limitations of Financial Planning
      11. 1.11 - CAREERS IN FINANCE
        1. 1.11.1 - Corporate Finance
        2. 1.11.2 - Financial Planning
        3. 1.11.3 - Commercial and Retail Banking
        4. 1.11.4 - Insurance
        5. 1.11.5 - Mutual Fund
        6. 1.11.6 - Real Estate
        7. 1.11.7 - International Finance
        8. 1.11.8 - Investment Banking
        9. KEY TERMS
        10. SUMMARY
        11. CLASSROOM EXERCISES
        12. CASE APPLICATION
    2. 2. Fundamentals of Financial Statements
      1. 2.1 - INTRODUCTION
        1. 2.1.1 - Forms of Business Organizations
        2. 2.1.2 - Types of Business Operations
        3. 2.1.3 - Objectives of Accounting
        4. 2.1.4 - The Accounting Process
        5. 2.1.5 - Accrual Basis and Cash Basis
        6. 2.1.6 - Users of Accounting Information
      2. 2.2 - ACCOUNTING AND BOOKKEEPING
      3. 2.3 - GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
      4. 2.4 - FUNDAMENTALS OF ACCOUNTING
        1. 2.4.1 - Basic Assumptions
        2. 2.4.2 - Some Basic Accounting Principles
      5. 2.5 - THE BASIC ACCOUNTING EQUATION
        1. 2.5.1 - The Elements of Accounting
        2. 2.5.2 - The Accounting Equation
        3. 2.5.3 - Recording the Transactions in the Accounting Equation
        4. 2.5.4 - The Interrelationship of Assets, Liabilities and Owner's Equity
      6. 2.6 - ACCOUNTING STATEMENTS
        1. 2.6.1 - The Income Statement/Profit and Loss Account
        2. 2.6.2 - Statement of Owner's Equity
        3. 2.6.3 - The Balance Sheet
      7. 2.7 - DOUBLE-ENTRY SYSTEM OF ACCOUNTING
        1. 2.7.1 - Features of the Double-Entry System
        2. 2.7.2 - The ‘T’ Account
        3. 2.7.3 - General Rules for Debit and Credit
        4. 2.7.4 - Rules for Debit and Credit According to Accounts
      8. 2.8 - JOURNALS
      9. 2.9 - LEDGERS
      10. 2.10 - TRIAL BALANCE
      11. 2.11 - ANNUAL REPORTS OF COMPANIES
      12. 2.12 - ADVANTAGES OF ACCOUNTING
      13. 2.13 - LIMITATIONS OF ACCOUNTING
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
        4. SOLVED PROBLEMS
        5. UNSOLVED PROBLEMS
        6. CASE APPLICATION
    3. 3. Cash Flow Statements
      1. 3.1 - INTRODUCTION
      2. 3.2 - RATIONALE OF CASH FLOW STATEMENTS
      3. 3.3 - PREPARATION OF CASH FLOW STATEMENTS
        1. 3.3.1 - Measuring the Change in the Cash Position of the Company
        2. 3.3.2 - Measuring the Net Cash Flow from the Operations of the Company
        3. 3.3.3 - Cash Flow Arising from Investing Activities
        4. 3.3.4 - Cash Flow Arising from Financing Activities
        5. 3.3.5 - Compiling the Cash Flows Arising from Different Activities
        6. 3.3.6 - Methods for Preparing Cash Flow Statements
      4. 3.4 - FUNDS FLOW STATEMENTS
        1. 3.4.1 - Sources of Working Capital
        2. 3.4.2 - Funds from Operations
        3. 3.4.3 - Uses of Working Capital
      5. 3.5 - FUNDS FLOW STATEMENTS VERSUS CASH FLOW STATEMENTS
      6. 3.6 - THE IMPORTANCE OF CASH FLOW STATEMENTS
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
        4. SOLVED PROBLEMS
        5. UNSOLVED PROBLEMS
        6. CASE APPLICATION
    4. 4. Cost Concepts for Managers
      1. 4.1 - INTRODUCTION
      2. 4.2 - ELEMENTS OF MANUFACTURING COSTS
        1. 4.2.1 - Direct Cost
        2. 4.2.2 - Indirect Cost
      3. 4.3 - TYPES OF COSTING SYSTEMS
        1. 4.3.1 - Job-Order Costing System
        2. 4.3.2 - Process Costing System
        3. 4.3.3 - Job Order Costing System Versus Process Costing System
      4. 4.4 - STANDARD COSTING
      5. 4.5 - VARIANCE ANALYSIS
        1. 4.5.1 - Material Variance
        2. 4.5.2 - Labour Variance
        3. 4.5.3 - Factory Overhead Variance
      6. 4.6 - APPROACHES TO COSTING
      7. 4.7 - ACTIVITY-BASED COSTING
      8. 4.8 - BUDGETING
        1. 4.8.1 - The Importance of Budgeting
        2. 4.8.2 - Types of Budgets
        3. KEY TERMS
        4. SUMMARY
        5. CLASSROOM EXERCISES
        6. CASE APPLICATION 1
        7. CASE APPLICATION 2
    5. 5. Cost-Volume-Profit Analysis
      1. 5.1 - INTRODUCTION
      2. 5.2 - UNDERSTANDING CVP ANALYSIS
        1. 5.2.1 - The Basic Elements of CVP Analysis
        2. 5.2.2 - The CVP Relationship
        3. 5.2.3 - The Importance of CVP Analysis
        4. 5.2.4 - Assumptions of CVP Analysis
      3. 5.3 - TOOLS OF CVP ANALYSIS
        1. 5.3.1 - Breakeven Analysis
        2. 5.3.2 - Contribution Margin
      4. 5.4 - BUSINESS APPLICATIONS OF CVP ANALYSIS
        1. 5.4.1 - Purchasing New Machinery
        2. 5.4.2 - Adding or Dropping a Product Line
        3. 5.4.3 - Make or Buy Decisions
        4. 5.4.4 - Special Pricing of the Product
        5. 5.4.5 - Change in Fixed Costs and Sales Volume
        6. KEY TERMS
        7. SUMMARY
        8. CLASSROOM EXERCISES
        9. SOLVED PROBLEMS
        10. UNSOLVED PROBLEMS
        11. CASE APPLICATION
  8. Unit II: Tools of Corporate Finance
    1. 6. Time Value of Money
      1. 6.1 - INTRODUCTION
      2. 6.2 - THE SIMPLE INTEREST APPROACH
      3. 6.3 - THE COMPOUND INTEREST APPROACH
        1. 6.3.1 - Future Value
        2. 6.3.2 - Present Value
        3. 6.3.3 - Discounting and Compounding
        4. 6.3.4 - Reading time Value Tables
        5. 6.3.5 - Using Excel Spreadsheets for Computing time Value of Money
        6. 6.3.6 - Annuity
        7. 6.3.7 - Perpetuity
        8. 6.3.8 - Compounding n Number of Times a Year
      4. 6.4 - AMORTIZATION SCHEDULES
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
        4. SOLVED PROBLEMS
        5. UNSOLVED PROBLEMS
        6. CASE APPLICATION
    2. 7. Ratio Analysis
      1. 7.1 - INTRODUCTION
      2. 7.2 - RATIO BENCHMARKS
      3. 7.3 - LIQUIDITY RATIOS
        1. 7.3.1 - Current Ratio
        2. 7.3.2 - Quick Ratio
        3. 7.3.3 - Cash ratio
        4. 7.3.4 - Net Working Capital Ratio
      4. 7.4 - DEBT RATIOS
        1. 7.4.1 - Debt-Equity Ratio
        2. 7.4.2 - Total Debt Ratio
        3. 7.4.3 - Debt Recovery Ratio
        4. 7.4.4 - Capital Employed to Net Worth Ratio
        5. 7.4.5 - Total Liabilities to Total Assets Ratio
        6. 7.4.6 - Interpreting Debt Ratios
        7. 7.4.7 - Interest Coverage Ratio
        8. 7.4.8 - Fixed Charges Coverage Ratio
      5. 7.5 - ACTIVITY RATIOS
        1. 7.5.1 - Receivables Turnover Ratio
        2. 7.5.2 - Average Collection Period
        3. 7.5.3 - Inventory Turnover Ratio
        4. 7.5.4 - Assets Turnover Ratios
      6. 7.6 - PROFITABILITY RATIOS
        1. 7.6.1 - Profitability in Relation to Sales
        2. 7.6.2 - Profitability in Relation to Investment
      7. 7.7 - LIMITATIONS OF RATIOS
      8. 7.8 - SUMMARY OF IMPORTANT RATIOS
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
        4. SOLVED PROBLEMS
        5. CASE APPLICATION 1
        6. CASE APPLICATION 2
    3. 8. Investment Risk and Return
      1. 8.1 - INTRODUCTION
      2. 8.2 - THE OBJECTIVES OF INVESTMENT
        1. 8.2.1 - Safety of the Principal Amount
        2. 8.2.2 - Income from Investment
        3. 8.2.3 - Growth of Capital
        4. 8.2.4 - Tax Minimization
        5. 8.2.5 - Liquidity of the Investment
      3. 8.3 - INVESTORS' ATTITUDE TOWARDS RISK
        1. 8.3.1 - Utility Function for the Risk–Return Choice
        2. 8.3.2 - Risk Tolerance
        3. 8.3.3 - The Risk–Return Indifference Curve
      4. 8.4 - RISKS ASSOCIATED WITH INVESTMENTS
        1. 8.4.1 - Purchasing Power Risk
        2. 8.4.2 - Interest Rate Risk
        3. 8.4.3 - Financial Risk
        4. 8.4.4 - Business Risk
        5. 8.4.5 - Liquidity Risk
        6. 8.4.6 - Reinvestment Risk
        7. 8.4.7 - Market Risk
      5. 8.5 - THE RISK–RETURN CONCEPT
        1. 8.5.1 - Investment Return
        2. 8.5.2 - Investment Risk
      6. 8.6 - RISK–RETURN TRADE-OFF
        1. 8.6.1 - Risk–Return Portfolio Choice for Single Assets
        2. 8.6.2 - Risk–Return Choice for Two Assets
      7. 8.7 - COMBINATIONS OF ASSETS AND DIVERSIFICATION
        1. 8.7.1 - Minimum Variance Portfolio: Two-Asset Case
        2. 8.7.2 - Two-Asset Portfolio Combinations
        3. 8.7.3 - Efficient Portfolio
        4. 8.7.4 - Diversification and Investment Risk
      8. 8.8 - THE CAPITAL ASSET PRICING MODEL (CAPM)
        1. 8.8.1 - The Assumptions of CAPM
        2. 8.8.2 - Security Market Line
        3. 8.8.3 - Evaluation of CAPM
      9. 8.9 - THE ARBITRAGE PRICING THEORY (APT)
        1. 8.9.1 - Assumptions of the APT
        2. 8.9.2 - Graphical Depiction of APT
        3. KEY TERMS
        4. SUMMARY
        5. CLASSROOM EXERCISES
        6. SOLVED PROBLEMS
        7. UNSOLVED PROBLEMS
        8. CASE APPLICATION
    4. 9. Beta: Determination and Implications
      1. 9.1 - INTRODUCTION
        1. 9.1.1 - Diversifiable Risk
        2. 9.1.2 - Non-Diversifiable Risk
      2. 9.2 - UNDERSTANDING BETA
      3. 9.3 - CALCULATING BETA
        1. 9.3.1 - The Covariance Method
        2. 9.3.2 - The Single-Index or Market Model
        3. 9.3.3 - Beta Calculation in MS Excel
      4. 9.4 - THE BETA OF A PORTFOLIO
      5. 9.5 - FACTORS AFFECTING BETA
        1. 9.5.1 - Type of Business
        2. 9.5.2 - Degree of Operating Leverage
        3. 9.5.3 - Degree of Financial Leverage
      6. 9.6 - THE BETA OF AN ASSET
        1. 9.6.1 - Steps to Determine Asset Beta
        2. 9.6.2 - Rationale for Determining Asset Beta
      7. 9.7 - LIMITATIONS OF BETA
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
        4. SOLVED PROBLEMS
        5. UNSOLVED PROBLEMS
    5. 10. Bonds and Equity Valuation
      1. 10.1 - INTRODUCTION
      2. 10.2 - UNDERSTANDING BONDS
        1. 10.2.1 - Some Terms Used in Bond Valuation
        2. 10.2.2 - Types of Bonds
        3. 10.2.3 - Issuers of Bonds in India
        4. 10.2.4 - Advantages of the Bond Market
      3. 10.3 - BOND VALUES AND YIELDS
        1. 10.3.1 - The Value of a Bond With Maturity
        2. 10.3.2 - Bond Value and Semi-Annual Interest Payment
        3. 10.3.3 - Bond Yield
        4. 10.3.4 - Value of Zero-Coupon Bonds
        5. 10.3.5 - Bond Value and Interest Rates
        6. 10.3.6 - Yield Curve
      4. 10.4 - PREFERRED STOCK VALUATION
      5. 10.5 - STOCK VALUATION
        1. 10.5.1 - The Objective of Share Valuation
        2. 10.5.2 - Bases of Share Valuation
        3. 10.5.3 - The Dividend Method of Stock Valuation
        4. 10.5.4 - The Price−Earnings Model
        5. KEY TERMS
        6. SUMMARY
        7. CLASSROOM EXERCISES
        8. SOLVED PROBLEMS
        9. UNSOLVED PROBLEMS
        10. CASE APPLICATION
    6. 11. Understanding Options
      1. 11.1 - INTRODUCTION
      2. 11.2 - BASIC CONCEPTS
      3. 11.3 - CALL OPTIONS AND PUT OPTIONS
        1. 11.3.1 - Understanding Call Options
        2. 11.3.2 - Understanding Put Options
      4. 11.4 - THE STRIKE PRICE AND THE SPOT PRICE OF THE UNDERLYING ASSET
      5. 11.5 - OPTION PREMIUM
        1. 11.5.1 - Intrinsic value
        2. 11.5.2 - Time Value
      6. 11.6 - OPTION TRADING IN INDIA
        1. 11.6.1 - Understanding An Option Contract
        2. 11.6.2 - Trading of An Option Contract
      7. 11.7 - FACTORS AFFECTING OPTION PRICES
        1. 11.7.1 - The Spot (Market) Price of the Underlying Asset/Stock
        2. 11.7.2 - The Strike Price of the Option
        3. 11.7.3 - Time to Expiration
        4. 11.7.4 - Volatility of Stock Price
        5. 11.7.5 - Dividends
        6. 11.7.6 - Interest rates
      8. 11.8 - OPTION PRICING
        1. 11.8.1 - The Binomial Model
        2. 11.8.2 - The Black–Scholes Model
      9. 11.9 - OPTION GREEKS: MEASURES OF THE PRICE SENSITIVITY OF OPTIONS
        1. 11.9.1 - Directional Risk (Delta Risk)
        2. 11.9.2 - Gamma Risk
        3. 11.9.3 - Volatility Risk (Vega Risk)
        4. 11.9.4 - Time Decay (Theta Risk)
        5. 11.9.5 - Interest-Rate Risk (Rho Risk)
      10. 11.10 - OPTION STRATEGIES AND COMBINATIONS
        1. 11.10.1 - Protective Puts
        2. 11.10.2 - Put–Call Parity
        3. 11.10.3 - Covered Calls
        4. 11.10.4 - Straddles
        5. 11.10.5 - Strangles
      11. 11.11 - PLAYERS IN THE OPTIONS MARKET: MARKET MAKERS
        1. 11.11.1 - Backspreaders
        2. 11.11.2 - Frontspreaders
      12. 11.12 - BENEFITS OF USING OPTIONS
      13. 11.13 - CHALLENGES FACED WHILE DEALING WITH OPTIONS
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
        4. SOLVED PROBLEMS
        5. UNSOLVED PROBLEMS
  9. Unit III: Aspects of Corporate Financial Structure
    1. 12. Leverages
      1. 12.1 - INTRODUCTION
      2. 12.2 - OPERATING LEVERAGE
        1. 12.2.1 - Degree of Operating Leverage
        2. 12.2.2 - Understanding Breakeven
        3. 12.2.3 - Degree of Operating Leverage and Breakeven
        4. 12.2.4 - Business Risk
      3. 12.3 - FINANCIAL LEVERAGE
        1. 12.3.1 - Favourable and Unfavourable Financial Leverage
        2. 12.3.2 - Degree of Financial Leverage
        3. 12.3.3 - Financial Risk
        4. 12.3.4 - Rules for Giving Financial Leverage to Investors (Corporate and Individual)
      4. 12.4 - EBIT–EPS ANALYSIS
        1. 12.4.1 - Understanding EBIT–EPS Analysis
        2. 12.4.2 - Plotting the Graph for EBIT–EPS Analysis
        3. 12.4.3 - Risk in EBIT–EPS Analysis
        4. 12.4.4 - Calculating the Indifference Point Graphically
        5. 12.4.5 - Calculating the Indifference Point Mathematically
      5. 12.5 - TOTAL LEVERAGE
        1. 12.5.1 - Degree of Total Leverage
        2. 12.5.2 - Total Risk
        3. KEY TERMS
        4. SUMMARY
        5. CLASSROOM EXERCISES
        6. SOLVED PROBLEMS
        7. UNSOLVED PROBLEMS
        8. CASE APPLICATION 1
        9. CASE APPLICATION 2
    2. 13. Cost of Capital
      1. 13.1 - INTRODUCTION
      2. 13.2 - UNDERSTANDING COST OF CAPITAL
        1. 13.2.1 - Opportunity Cost of Capital
        2. 13.2.2 - Sources of Funds
        3. 13.2.3 - Overall Cost of Capital
      3. 13.3 - COST OF DEBT
        1. 13.3.1 - Tax Advantage of Debt
        2. 13.3.2 - Types of Debt and Their Cost Determination
      4. 13.4 - COST OF PREFERENCE SHARES
        1. 13.4.1 - Cost of Irredeemable Preference Shares
        2. 13.4.2 - Cost of Redeemable Preference Shares
      5. 13.5 - COST OF EQUITY CAPITAL
        1. 13.5.1 - Dividend Capitalization Method
        2. 13.5.2 - The Capital Asset Pricing Model (CAPM)
      6. 13.6 - COST OF DEBT VERSUS COST OF EQUITY
      7. 13.7 - COST OF RETAINED EARNINGS
      8. 13.8 - WEIGHTED AVERAGE COST OF CAPITAL (WACC)
        1. 13.8.1 - Steps for Calculating WACC
        2. 13.8.2 - Assigning Weights
      9. 13.9 - FACTORS AFFECTING COST OF CAPITAL
      10. 13.10 - SOME IMPORTANT COST OF CAPITAL FORMULAE
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
        4. SOLVED PROBLEMS
        5. UNSOLVED PROBLEMS
        6. CASE APPLICATION
    3. 14. Capital Structure
      1. 14.1 - INTRODUCTION
      2. 14.2 - UNDERSTANDING CAPITAL STRUCTURE
      3. 14.3 - RELEVANCE OF CAPITAL STRUCTURE
        1. 14.3.1 - The Net Income Approach
        2. 14.3.2 - The Traditional View
      4. 14.4 - IRRELEVANCE OF CAPITAL STRUCTURE
        1. 14.4.1 - The Net Operating Income Approach
        2. 14.4.2 - The Modigliani–Miller (MM) Theory
        3. 14.4.3 - The MM Model With Corporate Tax
      5. 14.5 - THE TRADE-OFF THEORY
        1. 14.5.1 - The Tax Differential
        2. 14.5.2 - Cost of Financial Risk (Financial Distress)
      6. 14.6 - AGENCY COSTS
      7. 14.7 - THE PECKING ORDER THEORY
      8. 14.8 - FACTORS AFFECTING CAPITAL STRUCTURE
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
        4. SOLVED PROBLEMS
        5. UNSOLVED PROBLEMS
        6. CASE APPLICATION 1
        7. CASE APPLICATION 2
    4. 15. Dividend Theory
      1. 15.1 - INTRODUCTION
      2. 15.2 - THE DIVIDEND RELEVANCE GROUP OF THEORIES
        1. 15.2.1 - Walter's Model
        2. 15.2.2 - Gordon's Model
      3. 15.3 - DIVIDEND IRRELEVANCE THEORIES
        1. 15.3.1 - The Miller–Modigliani (MM) Model
      4. 15.4 - MARKET IMPERFECTIONS
        1. 15.4.1 - Attitude of Investors Towards Risk
        2. 15.4.2 - Personal Taxes
        3. 15.4.3 - Transaction Costs
        4. 15.4.4 - The Clientele Effect
        5. 15.4.5 - Information Content of Dividends
        6. 15.4.6 - Information Asymmetry
        7. 15.4.7 - Agency Cost
      5. 15.5 - THE FREE CASH-FLOW HYPOTHESIS
      6. 15.6 - THE BIRD-IN-HAND ARGUMENT
        1. KEY TERMS
        2. SUMMARY
        3. SOLVED PROBLEMS
        4. UNSOLVED PROBLEMS
        5. CASE APPLICATION 1
        6. CASE APPLICATION 2
    5. 16. Dividend Policy
      1. 16.1 - INTRODUCTION
      2. 16.2 - THE DIVIDEND RATIONALE
        1. 16.2.1 - Investment and Financing Decisions As Independent Functions
        2. 16.2.2 - Investment and Financing Decisions As Dependent Functions
      3. 16.3 - DIVIDEND POLICY
        1. 16.3.1 - Dividend Payment
        2. 16.3.2 - The Dividend Decision
        3. 16.3.3 - Dividend Policy As a Residual Function
      4. 16.4 - DIVIDEND POLICY AND FIRM VALUE
      5. 16.5 - TYPES OF DIVIDENDS
        1. 16.5.1 - Cash Dividends
        2. 16.5.2 - Bonus Shares
      6. 16.6 - SHARE REPURCHASE
        1. 16.6.1 - Types of Share Repurchase
        2. 16.6.2 - Legal Clauses for Share Repurchase in India
      7. 16.7 - STOCK SPLITS
        1. 16.7.1 - Types of Stock Splits
        2. 16.7.2 - The Rationale Behind Ordinary Stock Splits
        3. 16.7.3 - Fractional Shares After Stock Splits
        4. 16.7.4 - Notional Loss On Stock Splits
      8. 16.8 - STABLE DIVIDEND POLICIES
        1. 16.8.1 - Types of Stable Dividend Policies
        2. 16.8.2 - The Need For Stable Dividends
      9. 16.9 - THE SIGNALLING EFFECT
      10. 16.10 - THE CLIENTELE EFFECT
      11. 16.11 - FACTORS AFFECTING DIVIDEND POLICY
      12. 16.12 - DIVIDEND PAYOUTS IN INDIA
        1. 16.12.1 - Legal Aspects
        2. 16.12.2 - Taxes
        3. KEY TERMS
        4. SUMMARY
        5. CLASSROOM EXERCISES
        6. SOLVED PROBLEMS
        7. UNSOLVED PROBLEMS
        8. CASE APPLICATION
  10. Unit IV: Dimensions of Investment
    1. 17. Principles of Capital Budgeting
      1. 17.1 - INTRODUCTION
      2. 17.2 - UNDERSTANDING CAPITAL INVESTMENTS
      3. 17.3 - CHARACTERISTICS OF CAPITAL BUDGETING DECISIONS
        1. 17.3.1 - Long-Term Consequences
        2. 17.3.2 - Large Initial Investments
        3. 17.3.3 - High Degree of Risk
        4. 17.3.4 - Irreversibility of Decisions
        5. 17.3.5 - Indicator of a Firm's Growth Potential
      4. 17.4 - THE CAPITAL BUDGETING PROCESS
        1. 17.4.1 - Identifying Profitable Investment Opportunities
        2. 17.4.2 - Planning and Preparing the Capital Budget
        3. 17.4.3 - Estimating and Evaluating Cash Flows
        4. 17.4.4 - Selecting the Project Proposal
        5. 17.4.5 - Project Implementation
        6. 17.4.6 - Online Monitoring
        7. 17.4.7 - Post-Audit Control
      5. 17.5 - LIMITATIONS OF CAPITAL BUDGETING DECISIONS
      6. 17.6 - PROJECT CATEGORIES
        1. 17.6.1 - Dependent Projects
        2. 17.6.2 - Independent Projects
        3. KEY TERMS
        4. SUMMARY
        5. CLASSROOM EXERCISES
        6. SOLVED PROBLEMS
        7. UNSOLVED PROBLEMS
        8. CASE APPLICATION
    2. 18. Capital Budgeting Techniques
      1. 18.1 - INTRODUCTION
      2. 18.2 - CAPITAL BUDGETING DECISION TECHNIQUES
      3. 18.3 - NON-DISCOUNTING TECHNIQUES
        1. 18.3.1 - The Accounting Rate of Return (ARR) Method
        2. 18.3.2 - The Payback Period (PB) Method
      4. 18.4 - DISCOUNTING CASH FLOW TECHNIQUES
        1. 18.4.1 - The Discounted PB Method
        2. 18.4.2 - The Profitability Index (PI) Method
        3. 18.4.3 - The Net Present Value (NPV) Method
        4. 18.4.4 - Internal Rate of Return (IRR)
      5. 18.5 - MODIFIED IRR
        1. 18.5.1 - Using Excel to Calculate MIRR
        2. 18.5.2 - Manual Calculation
      6. 18.6 - CAPITAL RATIONING
        1. 18.6.1 - Types of Capital Rationing
        2. 18.6.2 - Factors Affecting Capital Rationing
        3. 18.6.3 - Valuing Capital Rationing Decisions
      7. 18.7 - SOME IMPORTANT FORMULAE FOR INVESTMENT METHODS
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
        4. SOLVED PROBLEMS
        5. UNSOLVED PROBLEMS
        6. CASE APPLICATION
    3. 19. Capital Budgeting Under Risk and Uncertainty
      1. 19.1 - INTRODUCTION
      2. 19.2 - UNDERSTANDING RISK
      3. 19.3 - ABSOLUTE MEASURES OF PROJECT RISK
        1. 19.3.1 - Range
        2. 19.3.2 - Standard Deviation
        3. 19.3.3 - Coefficient of Variation (V)
      4. 19.4 - QUANTIFYING RISK IN CAPITAL BUDGETING
        1. 19.4.1 - The Risk-Adjusted Discount Rate Approach
        2. 19.4.2 - The Certainty-Equivalent Approach (CEA)
      5. 19.5 - OTHER RISK-EVALUATION APPROACHES IN CAPITAL BUDGETING
        1. 19.5.1 - Sensitivity Analysis
        2. 19.5.2 - Scenario Analysis
        3. 19.5.3 - Probability Analysis
        4. 19.5.4 - Simulation Techniques
        5. 19.5.5 - The Decision-Tree Approach
        6. KEY TERMS
        7. SUMMARY
        8. CLASSROOM EXERCISES
        9. SOLVED PROBLEMS
        10. UNSOLVED PROBLEMS
        11. CASE APPLICATION
  11. Unit V: Dimensions of Financial Operations
    1. 20. Working Capital Management
      1. 20.1 - INTRODUCTION
      2. 20.2 - RATIONALE FOR WORKING CAPITAL
      3. 20.3 - FINANCING OF CURRENT ASSETS
      4. 20.4 - THE OBJECTIVE OF WORKING CAPITAL MANAGEMENT
      5. 20.5 - CONSERVATIVE AND AGGRESSIVE WORKING CAPITAL POLICIES
      6. 20.6 - FACTORS AFFECTING THE COMPOSITION OF WORKING CAPITAL
      7. 20.7 - THE OPERATING CYCLE AND THE CASH CYCLE
        1. 20.7.1 - The Concept of Operating Cycle
        2. 20.7.2 - The Concept of Cash Cycle
        3. 20.7.3 - Calculation of Operating Cycle and Cash Cycle Period
      8. 20.8 - THE HEDGING APPROACH
      9. 20.9 - PERMANENT AND VARIABLE WORKING CAPITAL
      10. 20.10 - ASSESSMENT OF WORKING CAPITAL REQUIREMENT
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
        4. SOLVED PROBLEMS
        5. UNSOLVED PROBLEMS
        6. CASE APPLICATION 1
        7. CASE APPLICATION 2
    2. 21. Short-Term Sources of Financing
      1. 21.1 - INTRODUCTION
      2. 21.2 - ACCRUED EXPENSES
      3. 21.3 - PROVISIONS AND RESERVES
      4. 21.4 - TRADE CREDIT
        1. 21.4.1 - Cost of Trade Credit
      5. 21.5 - BANK FINANCE
        1. 21.5.1 - Cash credit
        2. 21.5.2 - Overdraft
        3. 21.5.3 - Note Lending
        4. 21.5.4 - Discounting of Bills
        5. 21.5.5 - Letter of Credit
      6. 21.6 - COMMERCIAL PAPERS
      7. 21.7 - PUBLIC DEPOSITS
      8. 21.8 - FACTORING
        1. 21.8.1 - Factoring Services
        2. 21.8.2 - Factoring Process
        3. 21.8.3 - Cost of Factoring
        4. 21.8.4 - Factoring Versus Bill Discounting
        5. 21.8.5 - Types of Factoring
      9. 21.9 - FORFAITING
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
    3. 22. Cash Management
      1. 22.1 - INTRODUCTION
      2. 22.2 - THE NEED FOR CASH MANAGEMENT
      3. 22.3 - MOTIVES FOR HOLDING CASH
        1. 22.3.1 - Transaction Motive
        2. 22.3.2 - Speculative Motive
        3. 22.3.3 - Precautionary Motive
        4. 22.3.4 - Avoiding the Demerits of Deficit Financing
        5. 22.3.5 - Compensation Motive
      4. 22.4 - EFFICIENT CASH MANAGEMENT
        1. 22.4.1 - Efficient Collections
        2. 22.4.2 - Efficient Disbursement
        3. 22.4.3 - Continuous and Dynamic Monitoring of Cash Movement
      5. 22.5 - TOOLS FOR EFFICIENT CASH MANAGEMENT
        1. 22.5.1 - The Cash Budget
        2. 22.5.2 - Daily Cash and Bank Report
      6. 22.6 - OPTIMUM CASH BALANCE
      7. 22.7 - CASH MANAGEMENT MODELS
        1. 22.7.1 - The Baumol Model for Optimum Cash Balance
        2. 22.7.2 - The Miller–Orr Model for Optimum Cash Balance Under Uncertainty
        3. KEY TERMS
        4. SUMMARY
        5. CLASSROOM EXERCISES
        6. SOLVED PROBLEMS
        7. UNSOLVED PROBLEMS
        8. CASE APPLICATION
    4. 23. Receivables Management
      1. 23.1 - INTRODUCTION
      2. 23.2 - THE RATIONALE FOR CREDIT SALES
      3. 23.3 - CREDIT POLICY
      4. 23.4 - CREDIT CONDITIONS
        1. 23.4.1 - The Credit Period
        2. 23.4.2 - Cash Discount
        3. 23.4.3 - The Cash Discount Period
      5. 23.5 - THE CREDIT STANDARDS OF A FIRM
        1. 23.5.1 - Costs Involved
        2. 23.5.2 - Variables of Credit Standards
        3. 23.5.3 - Credit Standard Decisions
      6. 23.6 - COLLECTION POLICY AND PROCEDURES
        1. 23.6.1 - Forecasting Sales Under Different Credit Terms
        2. 23.6.2 - Monitoring/Controlling Accounts Receivables
        3. 23.6.3 - Collection Practices
        4. 23.6.4 - Analysis of the Receivables
      7. 23.7 - FACTORS AFFECTING THE SIZE OF RECEIVABLES
      8. 23.8 - CREDIT INSTRUMENTS
        1. 23.8.1 - Bills Payable
        2. 23.8.2 - Letter of Credit
        3. KEY TERMS
        4. SUMMARY
        5. CLASSROOM EXERCISES
        6. SOLVED PROBLEMS
        7. UNSOLVED PROBLEMS
        8. CASE APPLICATION
    5. 24. Inventory Management
      1. 24.1 - INTRODUCTION
      2. 24.2 - TYPES OF INVENTORY
      3. 24.3 - CHARACTERISTICS OF INVENTORY
      4. 24.4 - SIGNIFICANCE OF INVENTORY MANAGEMENT
      5. 24.5 - COSTS RELATED TO INVENTORY
        1. 24.5.1 - Ordering Costs
        2. 24.5.2 - Carrying Costs
        3. 24.5.3 - Shortage or Stock Out Cost
      6. 24.6 - EFFICIENT INVENTORY MANAGEMENT
        1. 24.6.1 - Inventory Policy
        2. 24.6.2 - Inventory Control
        3. 24.6.3 - Inventory Control With the EOQ Model
        4. 24.6.4 - Reorder Level
        5. 24.6.5 - The Stock Level of the Firm
      7. 24.7 - ABC ANALYSIS: CONTROLLING INVENTORY BY SELECTION
        1. 24.7.1 - Objectives of ABC Analysis
        2. 24.7.2 - Control Policies of ABC Items
        3. 24.7.3 - Advantages of ABC Analysis
        4. KEY TERMS
        5. SUMMARY
        6. CLASSROOM EXERCISES
        7. SOLVED PROBLEMS
        8. UNSOLVED PROBLEMS
        9. CASE APPLICATION 1
        10. CASE APPLICATION 2
  12. Unit VI: Understanding the Financial Market
    1. 25. Understanding the Capital Market
      1. 25.1 - INTRODUCTION
        1. 25.1.1 - The Need for Capital Market Reforms in India
        2. 25.1.2 - Indian Capital Market Reforms
      2. 25.2 - FINANCIAL INSTITUTIONS
        1. 25.2.1 - The Reserve Bank of India
        2. 25.2.2 - Banks
        3. 25.2.3 - Non-Banking Financial Companies
        4. 25.2.4 - Mutual Funds
        5. 25.2.5 - State-Level Institutions
        6. 25.2.6 - Stock Exchanges
      3. 25.3 - THE CAPITAL MARKET IN INDIA
      4. 25.4 - THE SECONDARY MARKET
      5. 25.5 - STOCK EXCHANGES
        1. 25.5.1 - Functions of Stock Exchanges
        2. 25.5.2 - Types of Delivery Contracts
        3. 25.5.3 - Clearing Houses
        4. 25.5.4 - Governing Bodies of a Stock Exchange
        5. 25.5.5 - Demutualization of the Stock Exchange
        6. 25.5.6 - Disclosure Norms
      6. 25.6 - THE STOCK MARKET: SOME BASIC INFORMATION
      7. 25.7 - STOCK INDEX
      8. 25.8 - DEMATERIALIZATION
        1. 25.8.1 - Shift to an Electronic Trading System
        2. 25.8.2 - The Depository System
      9. 25.9 - MEMBERS OF THE STOCK EXCHANGE
      10. 25.10 - THE TRADING MECHANISM
      11. 25.11 - THE SETTLEMENT SYSTEM
      12. 25.12 - PERFECTION IN THE CAPITAL MARKET
        1. 25.12.1 - Weak form of Efficiency
        2. 25.12.2 - Semi-Strong form of Efficiency
        3. 25.12.3 - Strong form of Efficiency
      13. 25.13 - INTERNATIONAL CAPITAL MARKETS
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
    2. 26. Understanding the Primary Market
      1. 26.1 - INTRODUCTION
      2. 26.2 - THE PRIMARY MARKET FOR EQUITY
        1. 26.2.1 - Types of Issues
        2. 26.2.2 - Offer Document for the Primary Market
      3. 26.3 - PRICING OF ISSUES
        1. 26.3.1 - Free Pricing and SEBI Guidelines
        2. 26.3.2 - Types of Issue Pricing
      4. 26.4 - METHODS FOR PRICING ISSUES
      5. 26.5 - INTERMEDIARIES TO AN ISSUE
        1. 26.5.1 - Merchant Bankers and Book Running Lead Manager
        2. 26.5.2 - The Registrar
        3. 26.5.3 - Bankers to the Issue
        4. 26.5.4 - Underwriters
      6. 26.6 - MARKET STRATEGIES FOR NEW ISSUES
        1. 26.6.1 - The Safety Net
        2. 26.6.2 - Different Distributive Channels
        3. KEY TERMS
        4. SUMMARY
        5. CLASSROOM EXERCISES
        6. Solved Problem
        7. CASE APPLICATION
    3. 27. Traditional Financial Instruments
      1. 27.1 - INTRODUCTION
      2. 27.2 - SHARE CAPITAL
        1. 27.2.1 - The Value of Equity
        2. 27.2.2 - Features of Equity Shares
        3. 27.2.3 - Modes of Issue
      3. 27.3 - PREFERENCE SHARES
        1. 27.3.1 - Characteristics of Preference Shares
      4. 27.4 - DEBENTURES AND BONDS
        1. 27.4.1 - Characteristic Features of Debentures and Bonds
        2. 27.4.2 - Types of Debentures and Bonds
      5. 27.5 - RETAINED EARNINGS
      6. 27.6 - EUROBONDS
      7. 27.7 - FOREIGN BONDS
      8. 27.8 - DEPOSITORY RECEIPTS
        1. 27.8.1 - American Depository Receipts
        2. 27.8.2 - Other Depository Receipts
      9. 27.9 - EXTERNAL COMMERCIAL BORROWINGS
      10. 27.10 - EQUIPMENT FINANCING
      11. 27.11 - VENTURE CAPITAL
      12. 27.12 - LEASING AND HIRE PURCHASE
        1. 27.12.1 - Types of Leasing
        2. 27.12.2 - Advantages of Leasing
        3. 27.12.3 - Disadvantages of Leasing
      13. 27.13 - GOVERNMENT SUBSIDIES AND SALES TAX DEFERMENTS AND EXEMPTIONS
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
    4. 28. New Financial Instruments and Derivatives
      1. 28.1 - INTRODUCTION
      2. 28.2 - HEDGING FUTURE RISK
      3. 28.3 - REGULATION OF DERIVATIVES IN INDIA
      4. 28.4 - TYPES OF DERIVATIVES
      5. 28.5 - FORWARD CONTRACTS
      6. 28.6 - FUTURES
        1. 28.6.1 - Trading Futures Contracts
        2. 28.6.2 - Pricing of Futures
      7. 28.7 - OPTIONS
        1. 28.7.1 - Call Option
        2. 28.7.2 - Put Option
        3. 28.7.3 - Advantage of Options
      8. 28.8 - WARRANTS
        1. 28.8.1 - Intrinsic Value of Warrants
        2. 28.8.2 - Characteristics of a Warrant
      9. 28.9 - SWAPS
        1. 28.9.1 - Interest Rate Swaps
        2. 28.9.2 - Currency Swaps
      10. 28.10 - SWAP OPTIONS (SWAPTIONS)
      11. 28.11 - SECURITIZATION
        1. 28.11.1 - The Process of Securitization
        2. 28.11.2 - Instruments of Securitization
        3. 28.11.3 - Benefits of Securitization
        4. KEY TERMS
        5. SUMMARY
        6. CLASSROOM EXERCISES
    5. 29. Venture Capital
      1. 29.1 - INTRODUCTION
      2. 29.2 - VENTURE CAPITAL
      3. 29.3 - VENTURE CAPITAL VERSUS TRADITIONAL FUNDING
      4. 29.4 - FEATURES OF VENTURE CAPITAL
      5. 29.5 - THE VENTURE CAPITAL PROCESS
      6. 29.6 - DIFFERENT TYPES OF VENTURE CAPITAL FUNDS
      7. 29.7 - VENTURE CAPITAL IN INDIA
        1. 29.7.1 - Venture capital instruments
        2. 29.7.2 - Factors Affecting Venture Capital Growth in India
        3. 29.7.3 - Venture Capital Regulations
        4. KEY TERMS
        5. SUMMARY
        6. CLASSROOM EXERCISES
    6. 30. Hedge Funds and Mutual Funds
      1. 30.1 - INTRODUCTION TO HEDGE FUNDS
      2. 30.2 - CHARACTERISTIC FEATURES OF HEDGE FUNDS
      3. 30.3 - THE GROWTH OF HEDGE FUNDS
      4. 30.4 - TYPES OF HEDGE FUND INVESTORS
      5. 30.5 - HEDGE FUND INVESTMENT STRATEGIES
        1. 30.5.1 - The Tactical Trading Style
        2. 30.5.2 - The Relative-Value Arbitrage Strategy
        3. 30.5.3 - Event-Driven Strategies
        4. 30.5.4 - Equity: Long and Short Style
        5. 30.5.5 - Fund of Funds
      6. 30.6 - HEDGE FUND INDICES AND DATABASES
      7. 30.7 - INTRODUCTION TO MUTUAL FUNDS
      8. 30.8 - THE INDIAN MUTUAL FUND INDUSTRY
        1. 30.8.1 - Evolution of the Indian Mutual Fund Industry
        2. 30.8.2 - Structure of Mutual Funds
      9. 30.9 - MUTUAL FUND SCHEMES
        1. 30.9.1 - Open-Ended Schemes
        2. 30.9.2 - Close-Ended Schemes
        3. 30.9.3 - Interval Schemes
        4. 30.9.4 - Growth Schemes
        5. 30.9.5 - Fixed Income Schemes
        6. 30.9.6 - Balanced Schemes
        7. 30.9.7 - Tax-Saving Schemes
        8. 30.9.8 - Index Schemes
        9. 30.9.9 - Sector-Specific Schemes
        10. 30.9.10 - Money Market Mutual Funds
      10. 30.10 - NET ASSET VALUE
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
  13. Unit VII: Influences from Beyond the Border
    1. 31. International Finance
      1. 31.1 - INTRODUCTION
      2. 31.2 - UNDERSTANDING INTERNATIONAL TRADE
      3. 31.3 - EVOLUTION OF THE INTERNATIONAL MONETARY SYSTEM
        1. 31.3.1 - Pre–Bretton Woods Systems
        2. 31.3.2 - Post–Bretton Woods Systems
        3. 31.3.3 - Special Drawing Rights
      4. 31.4 - THE WORLD BANK
      5. 31.5 - THE INTERNATIONAL MONETARY FUND
      6. 31.6 - FOREIGN EXCHANGE MARKETS
      7. 31.7 - FOREIGN EXCHANGE RATES
        1. 31.7.1 - Understanding Foreign Exchange Rates
        2. 31.7.2 - Direct and Indirect Quotes
        3. 31.7.3 - Cross Rates
        4. 31.7.4 - Spot and Forward Exchange Rates
        5. 31.7.5 - The Relationship Between Forward and Spot Exchange Rates
      8. 31.8 - FOREIGN EXCHANGE EXPOSURE
        1. 31.8.1 - Transaction Exposure
        2. 31.8.2 - Translation Exposure
      9. 31.9 - INTERNATIONAL FINANCING
        1. 31.9.1 - Foreign Currency Loans
        2. 31.9.2 - Export Credit
        3. 31.9.3 - External Commercial Borrowings
        4. 31.9.4 - Eurocurrency Loan
        5. 31.9.5 - Euro Issues
        6. 31.9.6 - Pre-Shipment Finance
        7. 31.9.7 - Post-Shipment Finance
        8. 31.9.8 - Exim Bank Finance
      10. 31.10 - THE EURO
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
    2. 32. Foreign Direct Investment
      1. 32.1 - INTRODUCTION
      2. 32.2 - THE RATIONALE FOR FDI
      3. 32.3 - COSTS OF FDI
      4. 32.4 - FOREX RATE VOLATILITY, BOP AND FDI
      5. 32.5 - DETERMINANTS OF FDI
        1. 32.5.1 - Market Size
        2. 32.5.2 - Political Risk
        3. 32.5.3 - Quality of Labour
        4. 32.5.4 - Quality of Business Infrastructure
        5. 32.5.5 - GDP Growth Rate
        6. 32.5.6 - Macroeconomic Stability
        7. 32.5.7 - The Regulatory Environment
        8. 32.5.8 - Profit Repatriation
        9. 32.5.9 - Openness
        10. 32.5.10 - Incentives and Operating Conditions
      6. 32.6 - FDI IN INDIA
        1. 32.6.1 - Joint Ventures in India
        2. 32.6.2 - Concern for Repatriation
      7. 32.7 - ADVANTAGES OF FDI
      8. 32.8 - FDI AND ASIAN COUNTRIES
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
  14. Unit VIII: Strategic Dimensions for Value Creation
    1. 33. Corporate Governance
      1. 33.1 - INTRODUCTION
      2. 33.2 - GOOD CORPORATE GOVERNANCE
      3. 33.3 - CRITERIA FOR GOOD CORPORATE GOVERNANCE
      4. 33.4 - CORPORATE GOVERNANCE IN INDIA
        1. 33.4.1 - Corporate Governance at HDFC
        2. 33.4.2 - Corporate Governance at Wipro
        3. 33.4.3 - Corporate Governance at GACL
      5. 33.5 - MODELS OF CORPORATE GOVERNANCE
        1. 33.5.1 - The Anglo-American Model of Corporate Governance
        2. 33.5.2 - The German and Japanese Model
        3. KEY TERMS
        4. SUMMARY
        5. CLASSROOM EXERCISES
    2. 34. Mergers and Acquisitions
      1. 34.1 - INTRODUCTION
      2. 34.2 - STRATEGIC RATIONALE
        1. 34.2.1 - The Eveready Merger
        2. 34.2.2 - The BPL Merger
        3. 34.2.3 - The Unilever Merger
      3. 34.3 - MERGERS AND ACQUISITIONS AS A RESTRUCTURING TOOL
      4. 34.4 - TYPES OF MERGERS AND ACQUISITIONS
        1. 34.4.1 - Mergers
        2. 34.4.2 - Acquisitions
        3. 34.4.3 - Horizontal Mergers/Acquisitions
        4. 34.4.4 - Vertical Mergers
        5. 34.4.5 - Conglomerate Mergers/Acquisitions
      5. 34.5 - MERGERS AND ACQUISITIONS: INDIAN LEGAL DUE DILIGENCE
      6. 34.6 - VALUATION IN MERGERS AND ACQUISITIONS
        1. 34.6.1 - Relative Valuation
        2. 34.6.2 - The DCF Method of Target Valuation
      7. 34.7 - ACCOUNTING FOR ACQUISITIONS
      8. 34.8 - DEAL STRUCTURING
        1. 34.8.1 - Cash Versus Stock Deals
        2. 34.8.2 - Determining the Exchange Ratio
        3. 34.8.3 - Evaluating Deal Structures
        4. KEY TERMS
        5. SUMMARY
        6. SOLVED PROBLEMS
        7. UNSOLVED PROBLEMS
        8. CLASSROOM EXERCISES
    3. 35. Business Valuation
      1. 35.1 - INTRODUCTION
      2. 35.2 - THE HISTORICAL COST APPROACH
      3. 35.3 - THE RESIDUAL INCOME APPROACH
      4. 35.4 - THE MULTIPLES APPROACH
        1. 35.4.1 - Equity Multiples
        2. 35.4.2 - Value Multiples
        3. 35.4.3 - Sectoral Multiples
      5. 35.5 - THE DIVIDEND DISCOUNT MODEL
      6. 35.6 - THE DISCOUNTED CASH FLOW APPROACH
        1. 35.6.1 - Forecasting the Cash Inflows
        2. 35.6.2 - Estimating the Cost of Capital
        3. 35.6.3 - Determining the Terminal Value
        4. 35.6.4 - Determining the Total Firm Value
      7. 35.7 - ECONOMIC VALUE ADDED
        1. 35.7.1 - Measuring EVA
        2. 35.7.2 - The Importance of EVA
        3. 35.7.3 - NPV and EVA
        4. 35.7.4 - Management Value Added and EVA
        5. 35.7.5 - Shareholder Value Management
        6. KEY TERMS
        7. SUMMARY
        8. CLASSROOM EXERCISES
    4. 36. Brand Valuation
      1. 36.1 - INTRODUCTION
      2. 36.2 - THE RATIONALE FOR BRAND VALUATION
      3. 36.3 - BRAND VALUATION METHODS
        1. 36.3.1 - Accounting-Based Methods
        2. 36.3.2 - Market-Based Methods
        3. 36.3.3 - The Discounted Cash Flow Method
        4. 36.3.4 - The Interbrand Method
        5. 36.3.5 - The Royalty Relief Method
      4. 36.4 - IFRS AND BRAND VALUATION
      5. 36.5 - INTANGIBLE ASSETS
      6. 36.6 - VALUE DRIVERS FOR VALUATION
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
    5. 37. Strategic Financial Decisions
      1. 37.1 - INTRODUCTION
      2. 37.2 - STRATEGIC VITALS
      3. 37.3 - CASH FLOWS
      4. 37.4 - PROFITABILITY AND PRICING
      5. 37.5 - PROFILING FOR FUTURE PROFITS
      6. 37.6 - MONITORING AGAINST BENCHMARKS
      7. 37.7 - FINANCIAL STRATEGY AND MARKETING INVESTMENTS
      8. 37.8 - STRATEGIC EVALUATION OF ADVERTISING INVESTMENTS
      9. 37.9 - FUTURE FORECASTING AND BENCHMARKING
      10. 37.10 - OPERATIONAL/FUNCTIONAL STRATEGY AND FINANCIAL IMPACT
      11. 37.11 - OPTIMIZING VARIABLE COST EXPENSES
      12. 37.12 - FORECASTING OUTCOMES
      13. 37.13 - STRATEGIC MANAGEMENT FOR CUSTOMER DELIGHT
      14. 37.14 - A COMPREHENSIVE OVERVIEW
        1. KEY TERMS
        2. SUMMARY
        3. CLASSROOM EXERCISES
  15. Notes
    1. Chapter 1
    2. Chapter 2
    3. Chapter 5
    4. Chapter 7
    5. Chapter 8
    6. Chapter 9
    7. Chapter 10
    8. Chapter 11
    9. Chapter 12
    10. Chapter 14
    11. Chapter 15
    12. Chapter 16
    13. Chapter 19
    14. Chapter 22
    15. Chapter 24
    16. Chapter 25
    17. Chapter 26
    18. Chapter 27
    19. Chapter 28
    20. Chapter 29
    21. Chapter 30
    22. Chapter 31
    23. Chapter 32
    24. Chapter 33
    25. Chapter 34
    26. Chapter 35
    27. Chapter 36
    28. Chapter 37
  16. Acknowledgements
  17. Copyright