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Fundamentals of Financial Management, Third Edition

Book Description

With the growing complexities involved in corporate financial decisions, financial management has undergone a sea change in recent years. Fundamentals of Financial Management focuses on keeping readers abreast of these changes and acquainting them with the theoretical concepts and analytical tools in the field of financial management. Readers new to the subject, and especially those not well versed with business terminology, will find this book invaluable.

Table of Contents

  1. Cover
  2. Title Page
  3. Contents
  4. About the Author
  5. Dedication
  6. Preface to the Third Edition
  7. Preface
  8. Part I. Fundamental Concepts of Financial Management
    1. Chapter 1. Nature and Goal of Financial Decisions
      1. 1.1 Nature of Financial Decisions
      2. 1.2 Factors Influencing Financial Decisions
      3. 1.3 Objective of Corporate Financial Decisions
      4. Summary
      5. Points to Remember
      6. Descriptive Questions
      7. Objective-type Questions
      8. Study Topic: Managing Agency Problem
      9. References
      10. Select Further Readings
    2. Chapter 2. Time Value of Money
      1. 2.1 The Concept
      2. 2.2 Computation of Future Value
      3. 2.3 Computation of Present Value of Cash Flows
      4. Summary
      5. Points to Remember
      6. Descriptive Questions
      7. Objective-type Questions
      8. Numerical Problems
      9. Solved Numerical Problems
      10. Select Further Readings
    3. Chapter 3. Concept of Risk and Return
      1. 3.1 Basic Concepts of Returns
      2. 3.2 Concept and Measurement of Risk
      3. 3.3 Portfolio Risk
      4. 3.4 The Capital-Asset-Pricing Model (CAPM)
      5. Summary
      6. Points to Remember
      7. Descriptive Questions
      8. Objective-type Questions
      9. Numerical Problems
      10. Solved Numerical Problems
      11. References
      12. Select Further Readings
    4. Chapter 4. Valuation of the Firm
      1. 4.1 Various Concepts of Value
      2. 4.2 Valuation of Bonds or Debentures
      3. 4.3 Factors Influencing Bond Valuation
      4. 4.4 Valuation of Preference Shares
      5. 4.5 Valuation of Ordinary Shares
      6. Summary
      7. Points to Remember
      8. Descriptive Questions
      9. Objective-type Questions
      10. Numerical Problems
      11. Solved Numerical Problems
      12. Reference
      13. Select Further Reading
      14. Appendix A
      15. Appendix B
  9. Part II. Long-Term Investment Decision
    1. Chapter 5. Principles of Capital Budgeting
      1. 5.1 Nature of Capital Budgeting
      2. 5.2 The Concept of Cash Flows
      3. 5.3 Project Evaluation Criteria
      4. Summary
      5. Points to Remember
      6. Descriptive Questions
      7. Objective-type Questions
      8. Numerical Problems
      9. Solved Numerical Problems
      10. Reference
      11. Select Further Readings
    2. Chapter 6. Capital Budgeting in Practice
      1. 6.1 Capital Rationing
      2. 6.2 Capital Budgeting Under Inflationary Conditions
      3. 6.3 Decision Concerning Mutually Exclusive Proposals With Unequal Lives
      4. 6.4 The Conditions of Risk
      5. 6.5 Managerial Options and the Cash Flow
      6. 6.6 International Capital Budgeting
      7. Summary
      8. Points to Remember
      9. Descriptive Questions
      10. Objective-type Questions
      11. Numerical Problems
      12. Solved Numerical Problems
      13. References
      14. Select Further Readings
    3. Chapter 7. Cost of Capital
      1. 7.1 Significance of Cost of Capital
      2. 7.2 Computation of the Cost of Capital
      3. 7.3 Weighted Average Cost of Capital
      4. 7.4 Marginal Cost of Capital
      5. Summary
      6. Points to Remember
      7. Descriptive Questions
      8. Objective-type Questions
      9. Numerical Problems
      10. Solved Numerical Problems
      11. Reference
      12. Select Further Readings
  10. Part III. Working Capital Management
    1. Chapter 8. Working Capital Policy
      1. 8.1 Concept of Working Capital
      2. 8.2 Size of Current Assets
      3. 8.3 Financing of Current Assets
      4. Summary
      5. Points to Remember
      6. Descriptive Questions
      7. Objective-type Questions
      8. Numerical Problems
      9. Solved Numerical Problems
      10. Reference
      11. Select Further Readings
    2. Chapter 9. Management of Cash and Near-Cash Assets
      1. 9.1 Cash Planning
      2. 9.2 Managing Cash Inflows and Outflows
      3. 9.3 Investment of Surplus Cash in Near-Cash Assets
      4. 9.4 Cash Management in International Firms
      5. Summary
      6. Points to Remember
      7. Descriptive Questions
      8. Objective-type Questions
      9. Numerical Problems
      10. Solved Numerical Problems
      11. References
      12. Select Further Readings
    3. Chapter 10. Management of Accounts Receivable
      1. 10.1 Benefits and Costs of Accounts Receivable
      2. 10.2 Credit Policy
      3. 10.3 Selection of Customers
      4. 10.4 Monitoring and Control of Credit
      5. Summary
      6. Points to Remember
      7. Descriptive Questions
      8. Objective-type Questions
      9. Numerical Problems
      10. Solved Numerical Problems
      11. References
      12. Select Further Readings
    4. Chapter 11. Inventory Management
      1. 11.1 Benefits and Cost of Maintaining Inventory
      2. 11.2 Goal of Inventory Management
      3. 11.3 Just-in-Time Inventory System
      4. Summary
      5. Points to Remember
      6. Descriptive Questions
      7. Objective-type Questions
      8. Numerical Problems
      9. Solved Numerical Problems
      10. Reference
      11. Select Further Readings
    5. Chapter 12. Sources of Short-Term Finance
      1. 12.1 Trade Credit
      2. 12.2 Bank Finance
      3. 12.3 Other Sources of Short-term Funds
      4. Summary
      5. Points to Remember
      6. Descriptive Questions
      7. Objective-type Questions
      8. Numerical Problems
      9. Solved Numerical Problems
      10. Select Further Readings
  11. Part IV. Long-Term Financing and Dividend Decisions
    1. Chapter 13. Capitalisation
      1. 13.1 Significance and Bases of Capitalisation
      2. 13.2 Over-capitalisation
      3. 13.3 Under-capitalisation
      4. 13.4 Way to Optimum Capitalisation
      5. Summary
      6. Points to Remember
      7. Descriptive Questions
      8. Objective-type Questions
      9. Numerical Problems
      10. Solved Numerical Problems
      11. Select Further Reading
    2. Chapter 14. Capital Structure
      1. 14.1 The Basic Issue
      2. 14.2 The Irrelevance Approach
      3. 14.3 Relevance of Capital Structure
      4. 14.4 Determination of Optimal Capital Structure
      5. 14.5 Features of a Sound Capital Structure
      6. Summary
      7. Points to Remember
      8. Descriptive Questions
      9. Objective-type Questions
      10. Numerical Problems
      11. Solved Numerical Problems
      12. References
      13. Select Further Readings
    3. Chapter 15. Corporate Securities
      1. 15.1 Equity Shares
      2. 15.2 Preference Shares
      3. 15.3 Debentures
      4. 15.4 Warrants
      5. 15.5 International Securities
      6. Summary
      7. Points to Remember
      8. Descriptive Questions
      9. Objective-type Questions
      10. Numerical Problems
      11. Solved Numerical Problems
      12. Select Further Readings
    4. Chapter 16. Term Loans and Leases
      1. 16.1 Term Loans
      2. 16.2 Nature and Forms of Lease
      3. 16.3 Lease versus Purchase Decision
      4. 16.4 Advantages and Disadvantages of Leasing
      5. Summary
      6. Points to Remember
      7. Descriptive Questions
      8. Objective-type Questions
      9. Numerical Problems
      10. Solved Numerical Problems
      11. Select Further Readings
    5. Chapter 17. Dividend Theories and Policy
      1. 17.1 Theories of Dividend
      2. 17.2 Factors Influencing the Dividend Policy
      3. 17.3 Stability of Dividend Payments
      4. 17.4 Bonus Shares
      5. 17.5 Share Split and Reverse Split
      6. 17.6 Repurchase of Shares
      7. Summary
      8. Points to Remember
      9. Descriptive Questions
      10. Objective-type Questions
      11. Numerical Problems
      12. Solved Numerical Problems
      13. References
      14. Select Further Readings
  12. Part V. Financial Analysis Planning and Forecasting
    1. Chapter 18. Financial Statements
      1. 18.1 Income Statement
      2. 18.2 Balance Sheet
      3. 18.3 Funds-flow Statement
      4. 18.4 Cash-flow Statement
      5. Summary
      6. Points to Remember
      7. Descriptive Questions
      8. Objective-type Questions
      9. Numerical Problems
      10. Solved Numerical Problems
      11. Select Further Reading
    2. Chapter 19. Financial Ratio Analysis
      1. 19.1 Significance of Ratio Analysis
      2. 19.2 Types of Financial Ratios
      3. 19.3 Application of Ratios
      4. 19.4 Uses of Ratio Analysis
      5. 19.5 Limitations of Financial Ratio Analysis
      6. Summary
      7. Points to Remember
      8. Descriptive Questions
      9. Objective-type Questions
      10. Numerical Problems
      11. Solved Numerical Problems
      12. Reference
      13. Select Further Readings
    3. Chapter 20. Break-Even Analysis
      1. 20.1 Significance of Break-even Analysis
      2. 20.2 Determination of Break-even Point
      3. 20.3 Break-even Point and Profit Planning
      4. 20.4 Sales-Mix and Break-even Analysis
      5. 20.5 Uses of Break-even Analysis
      6. 20.6 Limitations of Break-even Analysis
      7. Summary
      8. Points to Remember
      9. Descriptive Questions
      10. Objective-type Questions
      11. Numerical Problems
      12. Solved Numerical Problems
      13. Select Further Readings
    4. Chapter 21. Leverage
      1. 21.1 Return-on-Investment Leverage
      2. 21.2 Marginal-Analysis Leverage
      3. 21.3 Financial Leverage
      4. Summary
      5. Points to Remember
      6. Descriptive Questions
      7. Objective-type Questions
      8. Numerical Problems
      9. Solved Numerical Problems
      10. Select Further Reading
    5. Chapter 22. Financial Forecasting
      1. 22.1 Forecast of Single Financial Variable
      2. 22.2 Complete Forecast of Financial Position
      3. Summary
      4. Points to Remember
      5. Descriptive Questions
      6. Objective-type Questions
      7. Numerical Problems
      8. Solved Numerical Problems
      9. Select Further Readings
  13. Part VI. Special Topics in Financial Management
    1. Chapter 23. Corporate Combinations
      1. 23.1 Forms of Corporate Combinations
      2. 23.2 Motivations behind Combination
      3. 23.3 Gains and Costs of M&As
      4. 23.4 Determination of Consideration Value
      5. 23.5 Modes of Merger Financing
      6. 23.6 Mergers and Take-over Regulations in India
      7. 23.7 Accounting Procedures for Combinations
      8. 23.8 Pure Divestitures, Spin-offs and Equity Carve-outs
      9. Summary
      10. Points to Remember
      11. Descriptive Questions
      12. Objective-type Questions
      13. Numerical Problems
      14. Solved Numerical Problems
      15. Reference
      16. Select Further Readings
    2. Chapter 24. Corporate Financial Distress
      1. 24.1 Concept of Financial Distress
      2. 24.2 Symptoms of Financial Distress
      3. 24.3 Management of Corporate Failure
      4. 24.4 Management of Financial Distress in India
      5. Summary
      6. Points to Remember
      7. Descriptive Questions
      8. Objective-type Questions
      9. Numerical Problems
      10. Solved Numerical Problems
      11. References
      12. Select Further Readings
    3. Chapter 25. International Financial Management
      1. 25.1 Exchange Rate Regime
      2. 25.2 Exchange Rate Quotation
      3. 25.3 Determination of Exchange Rate in Spot Market
      4. 25.4 Exchange Rate Determination in Forward Market
      5. 25.5 Foreign Exchange Market
      6. 25.6 Market for Derivatives
      7. Summary
      8. Points to Remember
      9. Descriptive Questions
      10. Objective-type Questions
      11. Numerical Problems
      12. Solved Numerical Problems
      13. References
      14. Select Further Readings
  14. Answers
  15. Notes
  16. Glossary
  17. Mathematical Tables
  18. Copyright