Essentials of Managerial Finance (Book Only) 14th Edition

Book Preface

Essentials of Managerial Finance is intended for use in introductory finance courses. The book begins with a discussion of basic concepts, including financial statements, security markets, time value of money, interest rates, basic valuation, and risk analysis. Subsequent chapters explain how financial managers can help maximize their firms’ values by improving decisions in such areas as capital budgeting, choice of capital structure, and working capital management. This organization has three important advantages:

1. Early in the book we explain how financial markets operate and how security prices are determined. This shows students how managerial finance can affect the value of the firm. Also, early coverage of key concepts such as valuation techniques and risk analysis permits their use and reinforcement throughout the remainder of the book.

2. The book is structured around markets and valuation, which helps students see how the various topics relate to one another.

3. Most students—even those who do not plan to major in finance—are interested in stock and bond valuation, rates of return, and other similar topics. Because learning is a function of interest and motivation, and because Essentials begins by showing the relationships among security markets, stock and bond values, and managerial finance, this organization works well from a pedagogic standpoint.

Now in its fourteenth edition, Essentials has grown through time, especially with respect to the long list of practical and theoretical developments it covers. Because the primary goal of financial managers should be to maximize the values of their firms, the focus of the book is still on valuation concepts. However, on the recommendations of reviewers, we have restructured the discussions of a few topics. In addition, because it has proven to be a useful pedagogy in the classroom, we have included discussions about how managerial finance concepts relate to personal financial decisions.

Brief Contents
Part I Introduction to Managerial Finance 1
Chapter 1 An Overview of Managerial Finance 3
Part II Essential Concepts in Managerial Finance 31
Chapter 2 Analysis of Financial Statements 33
Chapter 3 The Financial Markets and the Investment Banking Process 87
Chapter 4 The Time Value of Money 127
Part III Valuation—Financial Assets 181
Chapter 5 The Cost of Money (Interest Rates) 183
Chapter 6 Bonds (Debt)—Characteristics and Valuation 219
Chapter 7 Stocks (Equity)—Characteristics and Valuation 263
Chapter 8 Risk and Rates of Return 305
Part IV Valuation—Real Assets (Capital Budgeting) 353
Chapter 9 Capital Budgeting Techniques 355
Chapter 10 Project Cash Flows and Risk 395
Part V Cost of Capital, Leverage, and Dividend Policy 447
Chapter 11 The Cost of Capital 449
Chapter 12 Capital Structure 493
Chapter 13 Dividend Policy 535
Part VI Working Capital Management 563
Chapter 14 Working Capital Policy 565
Chapter 15 Managing Short-Term Assets 595
Chapter 16 Managing Short-Term Liabilities (Financing) 637
Part VII Strategic Planning and Financing Decisions 669
Chapter 17 Financial Planning and Control 671
Chapter 18 Alternative Financing Arrangements and Corporate Restructuring 719
Appendix A Using Spreadsheets to Solve Financial Problems 751
Appendix B Solutions to Self-Test Problems 761
Appendix C Answers to End-of-Chapter Problems 793
Appendix D Selected Equations 807
Index 817