Fundamentals of Corporate Finance 2nd Edition Berk Test Bank

Fundamentals of Corporate Finance 2nd Edition Berk Test Bank

Product details:

• ISBN-10 ‏ : ‎ 0470933267
• ISBN-13 ‏ : ‎ 978-0470933268
• Author: Robert Parrino

Fundamentals of Corporate Finance, 2nd Edition offers an innovative integration of conceptual understanding and problem-solving… of intuition and decision-making… of the authors’ industry and classroom/research experience…with current real-world examples and online practice. Authors Robert Parrino, David Kidwell, and Thomas Bates believe that students who understand the intuition underlying the basic concepts of finance are better able to develop the critical judgments necessary to apply financial tools in real decision- making situations.  Their text develops intuitive thinking while simultaneously helping students develop problem solving and computational skills. It then shows students how to apply intuition and analytical skills to decision making while integrating it all with valuation and building shareholder value.

Table contents:

Chapter 1
Introduction to Corporate Finance 1
1.1 Corporate Finance and the
Financial Manager 2
What Is Corporate Finance? 2
The Financial Manager 2
Financial Management Decisions 2
Capital Budgeting 2
Capital Structure 3
Working Capital Management 4
Conclusion 4
1.2 Forms of Business Organization 4
Sole Proprietorship 5
Partnership 5
Corporation 6
A Corporation by Another Name . . . 7
1.3 The Goal of Financial Management 8
Possible Goals 8
The Goal of Financial Management 9
A More General Goal 9
1.4 The Agency Problem and Control
of the Corporation 10
Agency Relationships 10
Management Goals 10
Do Managers Act in the Stockholders? Interests? 12
Managerial Compensation 12
Control of the Firm 13
Conclusion 14
Stakeholders 14
1.5 Financial Markets and the Corporation 14
Cash Flows to and from the Firm 14
Primary versus Secondary Markets 15
Primary Markets 15
Secondary Markets 16
1.6 Summary and Conclusions 17
Chapter 2
Financial Statements, Taxes,
and Cash Flow 20
2.1 The Balance Sheet 21
Assets: The Left-Hand Side 21
Liabilities and Owners? Equity: The Right-Hand Side 21
>>
Net Working Capital 22
Liquidity 23
Debt versus Equity 24
Market Value versus Book Value 24
2.2 The Income Statement 25
GAAP and the Income Statement 26
Noncash Items 27
Time and Costs 27
2.3 Taxes 29
Corporate Tax Rates 29
Average versus Marginal Tax Rates 29
2.4 Cash Flow 31
Cash Flow from Assets 32
Operating Cash Flow 32
Capital Spending 33
Change in Net Working Capital 33
Conclusion 34
A Note on "Free" Cash Flow 34
Cash Flow to Creditors and Stockholders 34
Cash Flow to Creditors 34
Cash Flow to Stockholders 35
An Example: Cash Flows for Dole Cola 36
Operating Cash Flow 36
Net Capital Spending 37
Change in NWC and Cash Flow from Assets 37
Cash Flow to Stockholders and Creditors 38
2.5 Summary and Conclusions 39
PART TWO
Financial Statements and Long-Term
Financial Planning
Chapter 3
Working with Financial Statements 48
3.1 Cash Flow and Financial Statements:
A Closer Look 49
Sources and Uses of Cash 49
The Statement of Cash Flows 51
3.2 Standardized Financial Statements 53
Common-Size Statements 53
Common-Size Balance Sheets 54
Common-Size Income Statements 54
Common-Size Statements of Cash Flows 55
Common?Base Year Financial Statements:
Trend Analysis 55
Combined Common-Size and Base-Year Analysis 56
ros91593_fm.qxd 12/20/04 22:06 Page xxxiii
3.3 Ratio Analysis 56
Short-Term Solvency, or Liquidity, Measures 57
Current Ratio 58
The Quick (or Acid-Test) Ratio 59
Other Liquidity Ratios 59
Long-Term Solvency Measures 60
Total Debt Ratio 60
A Brief Digression: Total Capitalization versus
Total Assets 61
Times Interest Earned 61
Cash Coverage 61
Asset Management, or Turnover, Measures 62
Inventory Turnover and Days? Sales in Inventory 62
Receivables Turnover and Days? Sales in Receivables 63
Asset Turnover Ratios 64
Profitability Measures 64
Profit Margin 65
Return on Assets 65
Return on Equity 65
Market Value Measures 66
Price-Earnings Ratio 66
Market-to-Book Ratio 67
Conclusion 68
3.4 The Du Pont Identity 68
A Closer Look at ROE 68
An Expanded Du Pont Analysis 70
3.5 Using Financial Statement Information 71
Why Evaluate Financial Statements? 72
Internal Uses 72
External Uses 72
Choosing a Benchmark 72
Time-Trend Analysis 72
Peer Group Analysis 73
Problems with Financial Statement Analysis 77
3.6 Summary and Conclusions 78
Chapter 4
Long-Term Financial Planning
and Growth 90
4.1 What Is Financial Planning? 91
Growth as a Financial Management Goal 91
Dimensions of Financial Planning 92
What Can Planning Acccomplish? 93
Examining Interactions 93
Exploring Options 93
Avoiding Surprises 93
Ensuring Feasibility and Internal Consistency 93
Conclusion 94
4.2 Financial Planning Models: A First Look 94
A Financial Planning Model:The Ingredients 94
Sales Forecast 94
Pro Forma Statements 94
Asset Requirements 95
Financial Requirements 95
The Plug 95
Economic Assumptions 95
A Simple Financial Planning Model 95
4.3 The Percentage of Sales Approach 97
The Income Statement 97
The Balance Sheet 98
A Particular Scenario 99
An Alternative Scenario 100
4.4 External Financing and Growth 102
EFN and Growth 104
Financial Policy and Growth 106
The Internal Growth Rate 106
The Sustainable Growth Rate 107
Determinants of Growth 108
A Note on Sustainable Growth Rate Calculations 109
4.5 Some Caveats Regarding Financial
Planning Models 111
4.6 Summary and Conclusions 111
PART THREE
Valuation of Future Cash Flows

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