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This page provides a detailed outline of the book.
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Contents
Preface
Foreword
Symbols
Chapter 1
What is corporate finance?
Section 1 - The financial manager is first and
foremost a salesman…
Section 2 - … of financial securities…
Section 3 - … valued continuously by the financial
markets.
Section 4 - Most importantly, he is a negotiator...
Section 5 - ... who never forgets to do an occasional
reality check!
Summary, questions, exercises and bibliography
SECTION 1
FINANCIAL ANALYSIS
Part 1
FUNDAMENTAL CONCEPTS IN FINANCIAL ANALYSIS
Chapter 2
Cash flows
Section 1 - Operating and investment cycle
Section 2 - Financial resources
Summary, questions, exercises and bibliography
Chapter 3
Earnings
Section 1 - Additions to wealth and deductions
from wealth
Section 2 - Different income statements formats
Summary, questions, exercises and bibliography
Chapter 4
Capital employed and invested capital
Section 1 - The balance sheet: definitions and
concepts
Section 2 - A capital-employed analysis of the
balance sheet
Section 3 - A solvency-and-liquidity analysis of
the balance sheet
Section 4 - A detailed exemple of a capital-employed
balance sheet
Summary, questions, exercises and bibliography
Chapter 5
Walking through from earnings to
cash flow
Section 1 - Analysis of earnings from a cash flow
perspective
Section 2 - Cash flow statement
Summary, questions, exercises and bibliography
Chapter 6
Getting to grips with consolidated
accounts
Section 1 - Consolidation methods
Section 2 - Consolidation-related issues
Section 3 - Technical aspects of consolidation
Summary, questions, exercises and bibliography
Chapter 7
How to cope with the most complex
points in financial accounts
Accrual in the income statement
Construction contracts
Convertible bonds or loans
Currency translation adjustments
Deferred tax assets and liabilities
Dilution profits or losses
Exchangeable bonds
Goodwill
Intangible fixed assets
Inventories
Leases
Mandatory convertible bonds
Off-balance sheet commitments
Preference shares
Perpetual subordinated loans or notes
Provisions
Stock option
Tangible fixed assets
Treasury shares
Part 2
FINANCIAL ANALYSIS AND FORECASTING
Chapter 8
How to perform a financial analysis
Section 1 - What is financial analysis?
Section 2 - Economic analysis of companies
Section 3 - An assessment of a company's accounting
policy
Section 4 - Standard financial analysis plan
Section 5 - The various techniques of financial
analysis
Section 6 - Ratings
Section 7 - Scoring techniques
Section 8 - Expert systems
Summary, questions, exercises and bibliography
Chapter 9
Margin analysis: structure
Section 1 - How operating profit is formed
Section 2 - How operating profit is allocated
Section 3 - Financial assessment
Section 4 - Pro forma income statements (individual
and consolidated accounts)
Section 5 - Case study: Ericsson
Summary, questions, exercises and bibliography
Chapter 10
Margin analysis: risks
Section 1 - How operating leverage works
Section 2 - A more refined analysis provides greater
insight
Section 3 - From analysis to forecasting: the concept
of normative margin
Section 4 - Case study: Ericsson
Summary, questions, exercises and bibliography
Chapter 11
Working capital and capital expenditures
Section 1 - The nature of working capital
Section 2 - Working capital turnover ratios
Section 3 - Reading between the lines of working
capital
Section 4 - Analysing capital expenditures
Section 5 - Case study: Ericsson
Summary, questions, exercises and bibliography
Chapter 12
Financing
Section 1 - A dynamic analysis of the company's
financing
Section 2 - A static analysis of the company's
financing
Section 3 - Case study: Ericsson
Summary, questions, exercises and bibliography
Chapter 13
Return on capital employed and return
on equity
Section 1 - Analysis of corporate profitability
Section 2 - Leverage effect
Section 3 - Uses and limitations of the leverage
effect
Section 4 - Case study: Ericsson
Summary, questions, exercises and bibliography
Chapter 14
Conclusion of financial analysis
Section 1 - Solvency
Section 2 - Value creation
Section 3 - Financial analysis without the relevant
accounting documents
Section 4 - Case study: Ericsson
Summary, questions, exercises and bibliography
SECTION TWO
INVESTMENT ANALYSIS
Chapter 15
The financial markets
Section 1 - The rise of capital markets
Section 2 - The functions of a financial system
Section 3 - The relationship between banks and
companies
Section 4 - From value to price (1): financial
communication
Section 5 - From value to price (2): the efficient
markets
Section 6 - Limitations in the theory of efficient
markets
Section 7 - Investors' behaviour
Summary, questions, exercises and bibliography
Part 1
INVESTMENT DECISION RULES
Chapter 16
The time value of money and net
present value (NPV)
Section 1 - Capitalisation
Section 2 - Discounting
Section 3 - Present value and net present value
of a financial security
Section 4 - The NPV decision rule
Section 5 - What does net present value depend
on?
Section 6 - Some examples of simplification of
present value calculations
Section 7 - Special NPV topics
Summary, questions, exercises and bibliography
Chapter 17
The internal rate of return (IRR)
Section 1 - How is internal rate of return determined?
Section 2 - Internal rate of return as an investment
criterion
Section 3 - The limits of the internal rate of
return
Section 4 - Some more financial mathematics: interest
rate and yield to maturity
Summary, questions, exercises and bibliography
Chapter 18
Incremental cash flows and other
investment criteria
Section 1 - The predominance of NPV and the importance
of IRR
Section 2 - The main lines of reasoning
Section 3 - Which cash flows are important?
Section 4 - Other investment criteria
Summary, questions, exercises and bibliography
Chapter 19
Measuring value creation
Section 1 - Accounting criteria
Section 2 - Economic criteria
Section 3 - Market criteria
Section 4 - Putting things into perspective
Summary, questions, exercises and bibliography
Chapter 20
Risk and investment analysis
Section 1 - A closer look at risk
Section 2 - The contribution of real options
Summary, questions, exercises and bibliography
Part 2
THE RISK OF SECURITIES AND THE COST OF CAPITAL
Chapter 21
The risk and return of securities
Section 1 - Sources of risk
Section 2 - Risk and the fluctuation in the value
of a security
Section 3 - Tools for measuring return and risk
Section 4 - How diversification reduces risk
Section 5 - Portfolio risk
Section 6 - Measuring how individual securities
affect portfolio risk: the beta coefficient
Section 7 - Choosing among several risky assets
and the efficient frontier
Section 8 - Choosing between several risky assets
and a risk-free asset: the capital market line
Section 9 - How portfolio management works
Summary, questions, exercises and bibliography
Chapter 22
The cost of equity
Section 1 - Return required by investors: the
CAPM
Section 2 - Properties of the CAPM
Section 3 - The limits of the CAPM model
Section 4 - Multi-factor models
Section 5 - The cost of equity based on historical
returns
Section 6 - The cost of equity based on current
market prices
Summary, questions, exercises and bibliography
Chapter 23
From the cost of equity to the cost
of capital
Section 1 - The cost of capital and the risk of
assets
Section 2 - Alternative methods for estimating
the cost of capital
Section 3 - Some practical applications
Section 4 - Can corporate managers influence the
cost of capital?
Section 5 - Cost of capital: a look at the evidence
Summary, questions, exercises and bibliography
Chapter 24
The term structure of interest rates
Section 1 - Fixed-income securities and risk
Section 2 - The different interest rates curves
Section 3 - Relationship between interest rates
and maturities
Section 4 - The stochastic approach to modelling
the rate structure
Section 5 - A flashback
Summary, questions, exercises and bibliography
SECTION THREE
CORPORATE FINANCIAL POLICIES
Part 1
FINANCIAL SECURITIES
Chapter 25
Enterprise value and financial securities
Section 1 - A completely different way of looking
at things
Section 2 - Debt and equity
Section 3 - Overview of how to compute enterprise
value
Section 4 - Valuation by discounting free cash
flow
Summary, questions, exercises and bibliography
Chapter 26
Debt Securities
Section 1 - Basic concepts
Section 2 - The yield to maturity
Section 3 - Floating-rate bonds
Section 4 - Other debt securities
Section 5 - The volatility of debt securities
Section 6 - Default risk and the role of rating
Summary, questions, exercises and bibliography
Chapter 27
Other Debt Products
Section 1 - General features of corporate financing
Section 2 - Marketable debt securities
Section 3 - Bank debt products
Section 4 - Leasing
Section 5 - Project financing
Section 6 - Investment of cash
Summary, questions, exercises and bibliography
Chapter 28
Equity
Section 1 - Basic concepts
Section 2 - P/E
Section 3 - Key market data
Section 4 - Adjusting per share data for technical
factors
Summary, questions, exercises and bibliography
Chapter 29
Options
Section 1 - Definition and theoretical foundation
of options
Section 2 - Mechanisms used in pricing options
Section 3 - Analysing options
Section 4 - Parameters to value options
Section 5 - Methods for pricing options
Section 6 - Tools for managing an options position
Summary, questions, exercises and bibliography
Chapter 30
Hybrid securities
Section 1 - Warrants
Section 2 - Convertible bonds
Section 3 - Preference shares
Section 4 - Other hybrid securities
Summary, questions, exercises and bibliography
Chapter 31
Selling securities
Section 1 - General principles in the sale of
securities
Section 2 - Initial public offerings
Section 3 - Capital increases
Section 4 - Block trades of shares
Section 5 - Bonds
Section 6 - Convertible and exchangeable bonds
Section 7 - Syndicated loans
Summary, questions, exercises and bibliography
Part 2
CAPITAL STRUCTURE POLICIES
Chapter 32
Value and corporate finance
Section 1 - The purpose of finance is to create
value
Section 2 - Value creation and markets in equilibrium
Section 3 - Value and organisation theories
Section 4 - How can we create value?
Section 5 - Value and taxation
Summary, questions, exercises and bibliography
Chapter 33
Capital structure and the theory
of perfect capital markets
Section 1 - The evidence from the real-world
Section 2 - The capital structure policy in perfect
financial markets
Summary, questions, exercises and bibliography
Chapter 34
The trade-off model
Section 1 - The benefits of debt
Section 2 - The costs of debt
Section 3 - The trade-off model
Summary, questions, exercises and bibliography
Chapter 35
Debt, Equity and options theory
Section 1 - Analysing the firm in light of options
theory
Section 2 - Contribution of the options theory
to the valuation of equity
Section 3 - Using options theory to analyse a company's
financial decisions
Section 4 - Resolving conflicts between shareholders
and creditors
Summary, questions, exercises and bibliography
Chapter 36
Working out details: the design
of the capital structure
Section 1 - The major concepts
Section 2 - Competitors, life cycle and the 'extended
trade-off' model
Section 3 - Other factors affecting the capital
structure choice
Section 4 - Effects of the financing choice on
accounting and financial criteria
Section 5 - Working out details of the capital
structure
Section 6 - Capital structure policies: a look
at the evidence
Summary, questions, exercises and bibliography
Part 3
EQUITY CAPITAL AND DIVIDEND POLICIES
Chapter 37
Internal Financing: Reinvesting
cash flow
Section 1 - Reinvested cash flow and the value
of equity
Section 2 - Internal financing and the various
stakeholders
Section 3 - Internal financing and return criteria
Summary, questions, exercises and bibliography
Chapter 38
Returning value to shareholders:
dividend policies
Section 1 - Dividends and market value
Section 2 - Dividend distribution in practice
Section 3 - Share buy-backs and capital reduction
Section 4 - Taxation of dividends, share buy-backs
and capital reduction
Summary, questions, exercises and bibliography
Chapter 39
Capital Increases
Section 1 - A definition of capital increase
Section 2 - Capital increases and finance theory
Section 3 - Old and new shareholders
Section 4 - Capital increases and financial criteria
Summary, questions, exercises and bibliography
SECTION FOUR
FINANCIAL MANAGEMENT
Part 1
VALUATION AND FINANCIAL ENGINEERING
Chapter 40
Valuation
Section 1 - Overview of the different methods
Section 2 - Premiums and discounts
Section 3 - Valuation by discounted cash flow
Section 4 - Multiple approach or peer-group comparisons
Section 5 - The sum-of-the-parts method and restated
net asset value (RNAV)
Section 6 - Comparison of valuation methods
Summary, questions, exercises and bibliography
Chapter 41
Choice of Corporate Structure
Section 1 - Shareholder structure
Section 2 - Initial Public Offerings (IPO) and
corporate governance
Section 3 - How to strengthen control over a company
Section 4 - Financial securities' discounts
Section 5 - Organising a diversified group
Summary, questions, exercises and bibliography
Chapter 42
Taking control of a company
Section 1 - The rise of mergers and acquisitions
Section 2 - Choosing a negotiating strategy
Section 3 - Taking over a listed European company
Summary, questions, exercises and bibliography
Chapter 43
Mergers And Demergers
Section 1 - All-Share Deals
Section 2 - The mechanics of all-share transactions
Section 3 - Demergers and split-offs
Summary, questions, exercises and bibliography
Chapter 44
LBOs
Section 1 - LBO structures
Section 2 - The players
Section 3 - LBOs and financial theory
Summary, questions, exercises and bibliography
Chapter 45
Bankruptcy and Restructuring
Section 1 - Why companies go bankrupt?
Section 2 - Bankruptcy and financial theory
Section 3 - An illustrative example of financial
restructuring
Summary, questions, exercises and bibliography
Part 2
MANAGING NET DEBT AND FINANCIAL RISKS
Chapter 46
Managing cash flows
Section 1 - Basic tenets
Section 2 - Cash management
Section 3 - Cash management within a group
Section 4 - Investment of cash
Summary, questions, exercises and bibliography
Chapter 47
Off Balance Sheet Financing
Section 1 - Reasons for using off-balance sheet
products
Section 2 - Main techniques
Section 3 - Accounting treatment
Section 4 - Consequences for financial analysis
Summary, questions, exercises and bibliography
Chapter 48
Managing Financial risks
Section 1 - The various sources of financial risk
Section 2 - Measuring financial risks
Section 3 - Principles of financial risk management
Section 4 - Organised markets versus OTC Markets
Summary, questions, exercises and bibliography
Appendices
Glossary
Index
Detailed table of contents
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