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The AMA Handbook of Financial Risk Management

Book Description

Because all business is risky business. Managing financial risk boils down to understanding how to reduce a complex business environment into workable concepts and models. The AMA Handbook of Financial Risk Management provides readers with the tools they need for dealing with the most important areas of financial decision making. Filled with strategies, principles, and measurement techniques, the book shows readers how to: • Categorize financial risks • Reduce risks from cash flow and budget exposures • Analyze operating risks • Understand the interrelationship of risk and return • Manage risks in capital investment decisions • Determine the value of common stock • Optimize debt in the capital structure Providing both explanations and practical applications, the book clarifies the key decision areas in financial risk management. This indispensable guide enables anyone involved in the financial management of an organization to know what factors are at stake and how to protect the bottom line.

Table of Contents

  1. Cover Page
  2. Title Page
  3. Copyright Page
  4. Dedication
  5. Contents
  6. Preface
  7. Introduction
  8. Part 1. Introduction to Financial Risk
    1. Chapter 1. Categorizing Financial Risks
      1. The Enterprise Risk Management Framework
      2. Risk Categories
      3. Financial Risk Management
      4. Conclusion
  9. Part 2. Accounting, Cash Flow, and Budget Exposures
    1. Chapter 2. Risks from Financial Accounting
      1. Overview of Accounting
      2. Accounting Principles
      3. Categories of Accounts
      4. Trial Balance
      5. Financial Statements
      6. Conclusion
      7. Chapter 2 Appendixes
    2. Chapter 3. Managing Operating Cash Flows
      1. The Cash Flow Statement
      2. Cash Flow Exposures
      3. Conclusion
      4. Chapter 3 Appendixes
    3. Chapter 4. Operating Budgets
      1. Nature of Budgeting
      2. Forecasting Revenues
      3. Life-Cycle Stages in Budgeting
      4. Risks in Revenue Forecasting
      5. Expense Allocations
      6. Accounting Budgets
      7. Cash Budgeting
      8. Details of Budgeting
      9. Conclusion
      10. Chapter 4 Appendixes
  10. Part 3. Analyzing Operating Risks
    1. Chapter 5. Profit Planning
      1. Planning
      2. Breakeven Analysis
      3. Profit-Volume Analysis
      4. Marginal Analysis
      5. Future Earnings per Share
      6. Conclusion
      7. Chapter 5 Appendixes
    2. Chapter 6. Leverage
      1. Return on Investment Leverage
      2. Operating Leverage
      3. Financial Leverage
      4. Weaknesses of Profit Planning
      5. Conclusion
      6. Chapter 6 Appendixes
    3. Chapter 7. Financial Analysis
      1. Ratio Analysis
      2. Liquidity Ratios
      3. Profitability Ratios
      4. Other Ratios
      5. Determining Financial Norms
      6. Conclusion
      7. Chapter 7 Appendixes
  11. Part 4. Relationship of Risk and Return
    1. Chapter 8. Time Value of Money
      1. Short-Term Financing
      2. Intermediate-Term Financing
      3. The Amortization Schedule
      4. Conclusion
      5. Chapter 8 Appendixes
    2. Chapter 9. Risk and Required Return
      1. Nature of Risk
      2. Capital Asset Theory
      3. Risk and Required Return
      4. Financial and Operational Risks
      5. Conclusion
      6. Chapter 9 Appendixes
  12. Part 5. Nature of a Capital Investment Decision
    1. Chapter 10. Capital Budgeting Cash Flows
      1. Foundation of Capital Budgeting
      2. Cash Flows
      3. Conclusion
      4. Chapter 10 Appendix
    2. Chapter 11. Capital Budgeting Returns
      1. Payback Method
      2. Present Value Techniques
      3. Internal Rate of Return Method
      4. Net Present Value (NPV) Method
      5. Midyear Discount Factors for Cash Flows
      6. Conclusion
      7. Chapter 11 Appendixes
  13. Part 6. Factors That Affect the Value of a Firm
    1. Chapter 12. Valuation of Common Stock
      1. Common Stock and Equity Markets
      2. Valuation Concepts
      3. Value of Common Stock
      4. Comparative Approaches to Valuation
      5. Conclusion
      6. Chapter 12 Appendixes
    2. Chapter 13. Capital Structure of the Firm
      1. Capital Structure
      2. Weighted Average Cost of Capital (WACC)
      3. Required Return at the Margin
      4. Contribution of Miller and Modigliani
      5. Optimal Capital Structure
      6. Conclusion
      7. Chapter 13 Appendixes
    3. Chapter 14. Valuation of Business Combinations
      1. Business Combinations
      2. Pyramiding
      3. Takeover Strategies
      4. Conclusion
      5. Chapter 14 Appendixes
  14. Index