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The Portable MBA in Finance and Accounting, 4th Edition

Book Description

The most comprehensive and authoritative review of B-School fundamentals—from top accounting and finance professors

For years, the Portable MBA series has tracked the core curricula of leading business schools to teach you the fundamentals you need to know about business-without the extreme costs of earning an MBA degree. The Portable MBA in Finance and Accounting covers all the core methods and techniques you would learn in business school, using real-life examples to deliver clear, practical guidance on finance and accounting. The new edition also includes free downloadable spreadsheets and web resources.

If you're in charge of making decisions at your own or someone else's business, you need the best information and insight on modern finance and accounting practice. This reliable, information-packed resource shows you how to understand the numbers, plan and forecast for the future, and make key strategic decisions. Plus, this new edition covers the effects of Sarbanes-Oxley, applying ethical accounting standards, and offers career advice.

  • Completely updated with new examples, new topics, and full coverage of topical issues in finance and accounting—fifty percent new material

  • The most comprehensive and authoritative book in its category

  • Teaches you virtually everything you'd learn about finance and accounting in today's best business schools

Whether you're thinking of starting your own business or you already have and just need to brush up on finance and accounting basics, this is the only guide you need.

Table of Contents

  1. Title Page
  2. Copyright Page
  3. List of Downloadable Materials
  4. Syllabus
  5. Preface
  6. Acknowledgements
  7. About the Contributors
  8. Part I - Financial Accounting
    1. Chapter 1 - Understanding Financial Statements
      1. What Are Financial Statements? A Case Study
      2. Points to Remember about Financial Statements
      3. Financial Statements: Who Uses Them and Why
      4. Financial Statement Format
      5. Guide to SEC Filings
      6. The Notes to the Financial Statements
      7. Financial Accounting Standards
      8. From GAAP to IFRS
      9. Summary and Conclusions
      10. Downloadable Resources for this chapter available at www.wiley.com/go/portablembainfinance
      11. Internet Links
      12. For Further Reading
    2. Chapter 2 - Analyzing Financial Statements
      1. How to Analyze Financial Statements
      2. Using Financial Ratios
      3. Combining Financial Ratios
      4. The Z-Score
      5. Summary and Conclusions
      6. Downloadable Resources for this chapter available at www.wiley.com/go/portablembainfinance
      7. Internet Links
      8. Notes
      9. For Further Reading
    3. Chapter 3 - Analyzing Business Earnings
      1. The Nature of Nonrecurring Items
      2. The Process of Identifying Nonrecurring Items
      3. Nonrecurring Items in the Income Statement
      4. Nonrecurring Items in the Statement of Cash Flows
      5. Interpreting Information in the Operating Activities Section
      6. Nonrecurring Items in the Inventory Disclosures of LIFO Firms
      7. Nonrecurring Items in the Income Tax Note
      8. Nonrecurring Items in the Other Income and Expense Note
      9. Nonrecurring Items in Management’s Discussion and Analysis (MD&A)
      10. Nonrecurring Items in Other Selected Notes
      11. Earnings Analysis and Other Comprehensive Income
      12. Summarizing Nonrecurring Items and Determining Sustainable Earnings
      13. Role of the Sustainable Earnings Base
      14. Application of the Sustainable Earnings Base Worksheet: Pfizer, Inc.
      15. The Pfizer Worksheet Analysis: Downloadable Tool 3.38
      16. Summary
      17. Downloadable Resources for this chapter available at www.wiley.com/go/portablembainfinance
      18. Internet Links
      19. Annual Reports Referenced in the Chapter
      20. Notes
      21. For Further Reading
  9. Part II - Financial Management
    1. Chapter 4 - Discounted Cash Flow
      1. Time Value of Money
      2. Future Value
      3. Present Value
      4. Annuities
      5. Amortized Loans
      6. Summary
      7. Downloadable Resources for this chapter available at www.wiley.com/go/portablembainfinance
      8. For Further Reading
    2. Chapter 5 - Capital Structure
      1. Risk and Return
      2. Portfolio Risk
      3. Capital Asset Pricing Model
      4. Cost of Capital
      5. Cost of Debt and Equity Capital
      6. Weight of Debt and Equity Capital
      7. Capital Structure Theory
      8. Capital Structure in Practice
      9. Bond Valuation
      10. Equity Valuation
      11. Conclusion
      12. Downloadable Resources for this chapter available at www.wiley.com/go/portablembainfinance
      13. Online Content
      14. Note
    3. Chapter 6 - Planning Capital Expenditure
      1. The Objective: Maximize Wealth
      2. Computing NPV: Projecting Cash Flows
      3. Initial Cash Outflow
      4. Cash Flows in Later Years
      5. Treatment of Net Working Capital
      6. Depreciation
      7. Windfall Profit and Windfall Tax
      8. Taxable Income and Income Tax
      9. Interest Expense
      10. Putting the Pieces Together to Forecast Cash Flow
      11. Guiding Principles for Forecasting Cash Flows
      12. Computing NPV: The Time Value of Money
      13. Discounting Cash Flows
      14. Summing the Discounted Cash Flows to Arrive at NPV
      15. Outsourcing and the Build/Buy Decision
      16. The Discount Rate
      17. Weighted Average Cost of Capital
      18. The Effects of Leverage
      19. Divisional versus Firm Cost of Capital
      20. Other Decision Rules
      21. Internal Rate of Return
      22. Innovations in Capital Budgeting
      23. Summary and Conclusions
      24. Note
      25. For Further Reading
    4. Chapter 7 - Global Finance
      1. Currency Exchange Rates: A Case of Individual Investing
      2. Currency Exchange Rates: A Case in China with Country Risk
      3. Local Partner: Robinson Investment Case
      4. Unknown Rental Cars Borrowing Case: January 1, 1985
      5. Theory: Interest Rate Parity
      6. Theory: Purchasing Power Parity
      7. Futures and Options
      8. Summary
      9. For Further Reading
  10. Part III - Business Entities
    1. Chapter 8 - Choosing a Business Form
      1. The Consulting Firm
      2. The Software Entrepreneur
      3. The Hotel Venture
      4. The Purpose of This Chapter
      5. Business Forms
      6. Comparison Factors
      7. Formation of Sole Proprietorships
      8. Formation of Partnerships
      9. Formation of Corporations
      10. Formation of Limited Partnerships
      11. Formation of Limited Liability Companies
      12. Out-of-State Operation of Sole Proprietorships and Partnerships
      13. Out-of-State Operation of Corporations, Limited Partnerships, and Limited ...
      14. Recognition of Sole Proprietorships as Legal Entities
      15. Recognition of Partnerships as Legal Entities
      16. Recognition of Corporations and Limited Liability Companies as Legal Entities
      17. Recognition of Limited Partnerships as Legal Entities
      18. Continuity of Life
      19. Transferability of Interest
      20. Control
      21. Liability
      22. Taxation
      23. Choice of Entity
      24. Conclusion
      25. Problems
      26. For Further Reading
    2. Chapter 9 - Taxes and Business Decisions
      1. The Business
      2. Unreasonable Compensation
      3. Making the Subchapter S Election
      4. Acquisition
      5. Executive Compensation
      6. Sharing the Equity
      7. Vacation Home
      8. Like-Kind Exchanges
      9. Dividends
      10. Estate Planning
      11. Spin-Offs and Split-Ups
      12. Sale of the Corporation
      13. Conclusion
      14. Problems
      15. For Further Reading
    3. Chapter 10 - The Integrity of Financial Reporting
      1. Introduction
      2. Restatements of Previously Published Financial Statements
      3. Asleep at the Switch
      4. The Remedies
      5. It’s Not Just the Private Sector
      6. Summary and Conclusions
      7. Downloadable Resources for this chapter available at www.wiley.com/go/portablembainfinance
      8. Notes
      9. For Further Reading
  11. Part IV - Management Accounting
    1. Chapter 11 - Forecasts and Budgeting
      1. The Concept of Budgeting
      2. Functions of Budgeting
      3. Reasons for Budgeting
      4. Effective Budgeting
      5. Developing a Budget
      6. Forecasting
      7. Fixed Budgets versus Flexible Budgets
      8. The Profit Plan
      9. The Budget Review Process
      10. Recent Trends
      11. Internet Link
      12. Note
      13. For Further Reading
    2. Chapter 12 - Cost Structure Analysis, Profit Planning, and Value Creation
      1. Estimating Cost Structure from Publicly Available Information
      2. Pitfalls
      3. Profit Planning from an Internal Perspective
      4. Pricing in CVP Analysis
      5. Predatory Pricing
      6. Dumping
      7. Notes
    3. Chapter 13 - Activity-Based Costing
      1. Basics of Activity-Based Systems
      2. Reflections
      3. What an ABC Systems Is and Is Not
      4. Lessons from Japan
      5. Summary
      6. Notes
  12. Part V - Planning and Strategy
    1. Chapter 14 - Business Planning
      1. How This Chapter Fits in a Typical MBA Curriculum
      2. Who Uses This Material in the Real World
      3. The Story of Your Business
      4. Types of Plans
      5. From Glimmer to Action: The Process
      6. The Story Model
      7. The Business Plan
      8. Conclusion
      9. Other Resources
      10. Internet Links
      11. Notes
      12. For Further Reading
    2. Chapter 15 - Financial Management of Risks
      1. What Went Wrong: Case Studies of Derivatives Debacles
      2. Size of the Derivatives Market and Widespread Use
      3. The Instruments
      4. How to Choose the Appropriate Hedge
      5. Summary and Final Recommendations
      6. Notes
      7. For Further Reading
    3. Chapter 16 - Business Valuation
      1. Three Approaches to Value
      2. Different Types of Buyers
      3. An Overview of the Business Valuation Process
      4. The Fundamental Position of the Firm
      5. Financial Statement Analysis
      6. Ratio Analysis
      7. Comparison to Industry Averages
      8. Valuation Methods
      9. Debt-Free Analysis
      10. Cost of Capital
      11. Adjustments to Earnings for Valuation Purposes
      12. Income Approach: Discounted Cash Flow Method
      13. Discount Rate for the Valuation Model
      14. Market Approach: Publicly Traded Guideline Companies Method
      15. Reconciliation of Valuation Methods
      16. Adjustment for Illiquidity
      17. Valuation Conclusion for Acme
      18. Valuing Minority Interests
      19. Business Valuation Standards
      20. Value Engineering
      21. Summary
      22. Notes
      23. For Further Reading
    4. Chapter 17 - Profitable Growth by Acquisition
      1. Definitions and Background
      2. Recent Trends and the Performance Record of Mergers and Acquisitions
      3. Anatomy of a Successful Acquirer: The Case of Cisco Systems Inc.
      4. Creating Value in Mergers and Acquisitions
      5. Some Practical Considerations
      6. Successful Postmerger Implementation
      7. Summary and Conclusions
      8. Notes
      9. References
    5. Chapter 18 - Outsourcing
      1. Motivation to Outsource
      2. Domestic versus Offshore Outsourcing
      3. Issues with Using Offshore Providers
      4. Risks and Challenges of Outsourcing
      5. Determining Success
      6. Outsourcing a Process or a Project
      7. Summary
      8. Internet Links
      9. Notes
      10. For Further Reading
  13. Part VI - Advanced Topics
    1. Chapter 19 - Information Technology and You
      1. Introduction
      2. Hardware
      3. Software
      4. Networking
      5. Data
      6. The Future—Today, Tomorrow, and Next Week
      7. Downloadable Resources for this chapter available at www.wiley.com/go/portablembainfinance
      8. Note
      9. For Further Reading
    2. Chapter 20 - Information Technology and the Firm
      1. Historical Perspective
      2. Information Systems
      3. Organizational Productivity
      4. Managing IT Resources
      5. Information Technology Strategy
      6. Conclusion
      7. Downloadable Resources for this chapter available at www.wiley.com/go/portablembainfinance
      8. Internet Links
      9. Note
      10. For Further Reading
    3. Chapter 21 - Careers in Finance
      1. Overview: What Is the Marketplace for MBAs?
      2. Career Opportunities in Finance
      3. Your Career Plan/Your End Game
      4. Aiming for Your Goals
      5. Implementing Your Strategy
      6. Networking
      7. Assessing Opportunities
      8. Closing Thoughts: Coping with the Challenges
      9. Notes
  14. Glossary
  15. Index