Corporate Finance: Theory and Practice

Merging theory and practice into a comprehensive, highly-anticipated text Corporate Finance continues its legacy as one of the most popular financial textbooks, with well-established content from a diverse and highly respected author team. Unique in its features, this valuable text blends theory and practice with a direct, succinct style and commonsense presentation. Readers will be introduced to concepts in a situational framework, followed by a detailed discussion of techniques and tools. This latest edition includes new information on venture finance and debt structuring, and has been updated throughout with the most recent statistical tables. The companion website provides statistics, graphs, charts, articles, computer models, and classroom tools, and the free monthly newsletter keeps readers up to date on the latest happenings in the field. The authors have generously made themselves available for questions, promising an answer in seventy-two hours. Emphasizing how key concepts relate to real-world situations is what makes Corporate Finance a valuable reference with real relevance to the professional and student alike. Readers will gain insight into the methods and tools that shape the industry, allowing them to: Analyze investments with regard to hurdle rates, cash flows, side costs, and more Delve into the financing process and learn the tools and techniques of valuation Understand cash dividends and buybacks, spinoffs, and divestitures Explore the link between valuation and corporate finance As the global economy begins to recover, access to the most current information and statistics will be required. To remain relevant in the evolving financial environment, practitioners will need a deep understanding of the mechanisms at work. Corporate Finance provides the expert guidance and detailed explanations for those requiring a strong foundational knowledge, as well as more advanced corporate finance professionals.

Table of Contents:
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 Governance and Financial Engineering 727 40 Setting Up a Company or Financing Start-Ups 729 41 Choice of Corporate Structure 748 42 Initial Public Offerings (iPOs) 770 43 Corporate Governance 783 44 Taking Control of a Company 797 45 Mergers and Demergers 820 46 Leveraged Buyouts (LBOs) 837 47 Bankruptcy and Restructuring 852 Part Two Managing Working Capital, Cash Flows and Financial Risks 867 48 Managing Working Capital 869 49 Managing Cash Flows 881 50 Managing Financial Risks 900 Epilogue—Finance and Strategy 925 Top 20 Largest Listed Companies 933 Contents 941 Index 951

About the Author :
Pierre Vernimmen (deceased) was a founding member and first coordinator of the Finance Department at HEC, where he established himself as a leading academic in the field of corporate finance.?In 1973 he joined Paribas, initially as a private equity banker, moving onto the advisory business line which he set up and managed from 1993 until his death in 1996. Pascal Quiry (Paris, France) is MD in the Corporate Finance department at BNP Paribas, and affiliate professor of finance at HEC.?Pascal is board member of the French Finance Association and member of the American Finance Association. Yann Le Fur (Paris, France) is a senior associate in the Paris Corporate Finance department of Schroder Salomon Smith Barney, and a lecturer at HEC. Maurizio Dallocchio (Milan, Italy) is former Dean of the leading Italian business school Bocconi (Milan) and Lehman Brothers Chair of Corporate Finance. He is also a board member of several listed and unlisted companies and is one of the most distinguished Italian authorities on finance. Antonio Salvi (Milan, Italy) is an Assistant Professor of Finance at Bocconi and the University of Venice where he teaches Corporate Finance.