Corporate Finance

Preface viii
Frequently Used Symbols xii
1 What is Corporate Finance? 1
Section I Financial Analysis 15
Part One Fundamental Concepts in Financial Analysis 17
2 Cash Flow 19
3 Earnings 29
4 Capital Employed and Invested Capital 44
5 Walking Through from Earnings to Cash Flow 57
6 Getting to Grips with Consolidated Accounts 71
7 How to Cope with the Most Complex Points in Financial Accounts 89
Part Two Financial Analysis and Forecasting 115
8 How to Perform a Financial Analysis 117
9 Margin Analysis: Structure 143
10 Margin Analysis: Risks 166
11 Working Capital and Capital Expenditures 181
12 Financing 202
13 Return on Capital Employed and Return on Equity 216
14 Conclusion of Financial Analysis 236
Section II Investors and Markets 243
Part One Investment Decision Rules 245
15 The Financial Markets 247
16 The Time Value of Money and Net Present Value 268
17 The Internal Rate of Return 285
Part Two The Risk of Securities and the Required Rate of Return 299
18 Risk and Return 301
19 The Required Rate of Return 329
Part Three Financial Securities 347
20 Bonds 349
21 Other Debt Products 371
22 Shares 386
23 Options 406
24 Hybrid Securities 428
25 Selling Securities 446
Section III Value 471
26 Value and Corporate Finance 473
27 Measuring Value Creation 492
28 Investment Criteria 510
29 The Cost of Capital 528
30 Risk and Investment Analysis 545
31 Valuation Techniques 558
Section IV Corporate Financial Policies 589
Part One Capital Structure Policies 591
32 Capital Structure and the Theory of Perfect Capital Markets 593
33 Capital Structure, Taxes and Organisation Theories 605
34 Debt, Equity and Options Theory 622
35 Working Out Details: The Design of The Capital Structure 641
Part Two Equity Capital 659
36 Returning Cash to Shareholders 661
37 Distribution in Practice: Dividends and Share Buy-Backs 677
38 Share Issues 695
39 Implementing a Debt Policy 708
Section V Financial Management 725
Part One Corporate