Intermediate Financial Management (Finance Titles in the Brigham Family)

Book Preface

Much has happened in finance recently. Years ago, when the body of knowledge was smaller, the fundamental principles could be covered in a one-term lecture course and then reinforced in a subsequent case course. This approach is no longer feasible. There is simply too much material to cover in one lecture course.

As the body of knowledge expanded, we and other instructors experienced increasing difficulties. Eventually, we reached these conclusions:

●● The introductory course should be designed for all business students, not just for finance majors, and it should provide a broad overview of finance. Therefore, a text designed for the first course should cover key concepts but avoid confusing students by going beyond basic principles.

●● Finance majors need a second course that provides not only greater depth on the core issues of valuation, capital budgeting, capital structure, cost of capital, and working capital management but also covers such special topics as mergers, multinational finance, leasing, risk management, and bankruptcy.

●● This second course should also utilize cases that show how finance theory is used in practice to help make better financial decisions.

When we began teaching under the two-course structure, we tried two types of existing books, but neither worked well. First, there were books that emphasized theory, but they were unsatisfactory because students had difficulty seeing the usefulness of the theory and consequently were not motivated to learn it. Moreover, these books were of limited value in helping students deal with cases. Second, there were books designed primarily for the introductory MBA course that contained the required material, but they also contained too much introductory material. We eventually concluded that a new text was needed, one designed specifically for the second financial management course, and that led to the creation of Intermediate Financial Management, or IFM for short.

Brief Contents

Part I    Fundamental Concep ts of Corporate Finance    1
1 An Overview of Financial Management and the Financial Environment 2
2 Risk and Return: Part I 36
3 Risk and Return: Part II 91
4 Bond Valuation 127
5 Financial Options 175
6 Accounting for Financial Management 207
7 Analysis of Financial Statements 252
Part II    Corporate Valuation 293
8 Basic Stock Valuation 294
9 Corporate Valuation and Financial Planning 347
10 Corporate Governance 385
11 Determining the Cost of Capital 409
Part III    Projec t Valuation 451
12 Capital Budgeting: Decision Criteria 452
13 Capital Budgeting: Estimating Cash Flows and Analyzing Risk 493
14 Real Options 544
PART IV    S trategic Financing Dec isions 569
15 Distributions to Shareholders: Dividends and Repurchases 570
16 Capital Structure Decisions 614
17 Dynamic Capital Structures and Corporate Valuation 654
PART V T actical Financing Dec isions 695
18 Initial Public Offerings, Investment Banking, and
Financial Restructuring 696
19 Lease Financing 742
20 Hybrid Financing: Preferred Stock, Warrants, and Convertibles 771
PART VI    Working Capital Management 803
21 Supply Chains and Working Capital Management 804
22 Providing and Obtaining Credit 857
23 Other Topics in Working Capital Management 893
PART VII    Spec ial Topics 923
24 Enterprise Risk Management 924
25 Bankruptcy, Reorganization, and Liquidation 961
26 Mergers and Corporate Control 995
27 Multinational Financial Management 1040
Appe ndixes
Appendix A Values of the Areas under the Standard Normal
Distribution Function 1089
Appendix B Answers to End-of-Chapter Problems 1091
Appendix C Selected Equations 1103
Glossary 1121
Name Index 1149
Subject Index 1155