Principles of Finance
Designed to meet the scope and sequence of your course, Principles of Finance provides a strong foundation in financial applications using an innovative use-case approach to explore their role in business decision-making. An array of financial calculator and downloadable Microsoft Excel data exercis...
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| Main Authors: | , , |
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| Format: | Electronic eBook |
| Language: | English |
| Published: |
[Place of publication not identified]
OpenStax
2022.
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| Series: | Open textbook library.
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| Subjects: | |
| Online Access: | Access online version |
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Table of Contents:
- Preface
- Chapter 1. Introduction to Finance
- Why it Matters
- 1.1 What Is Finance?
- 1.2 The Role of Finance in an Organization
- 1.3 Importance of Data and Technology
- 1.4 Careers in Finance
- 1.5 Markets and Participants
- 1.6 Microeconomic and Macroeconomic Matters
- 1.7 Financial Instruments
- 1.8 Concepts of Time and Value
- Summary
- Key Terms
- Multiple Choice
- Review Questions
- Video Activity
- Chapter 2. Corporate Structure and Governance
- Why it Matters
- 2.1 Business Structures
- 2.2 Relationship between Shareholders and Company Management
- 2.3 Role of the Board of Directors
- 2.4 Agency Issues: Shareholders and Corporate Boards
- 2.5 Interacting with Investors, Intermediaries, and Other Market Participants
- 2.6 Companies in Domestic and Global Markets
- Summary
- Key Terms
- CFA Institute
- Multiple Choice
- Review Questions
- Video Activity
- Chapter 3. Economic Foundations: Money and Rates
- Why It Matters
- 3.1 Microeconomics
- 3.2 Macroeconomics
- 3.3 Business Cycles and Economic Activity
- 3.4 Interest Rates
- 3.5 Foreign Exchange Rates
- 3.6 Sources and Characteristics of Economic Data
- Summary
- Key Terms
- CFA Institute
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Chapter 4. Accrual Accounting Process
- Why It Matters
- 4.1 Cash versus Accrual Accounting
- 4.2 Economic Basis for Accrual Accounting
- 4.3 How Does a Company Recognize a Sale and an Expense?
- 4.4 When Should a Company Capitalize or Expense an Item?
- 4.5 What Is “Profit” versus “Loss” for the Company?
- Summary
- Key Terms
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Chapter 5. Financial Statements
- Why It Matters
- 5.1 The Income Statement
- 5.2 The Balance Sheet
- 5.3 The Relationship between the Balance Sheet and the Income Statement
- 5.4 The Statement of Owner’s Equity
- 5.5 The Statement of Cash Flows
- 5.6 Operating Cash Flow and Free Cash Flow to the Firm (FCFF)
- 5.7 Common-Size Statements
- 5.8 Reporting Financial Activity
- Summary
- Key Terms
- CFA Institute
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Chapter 6. Measures of Financial Health
- Why It Matters
- 6.1 Ratios: Condensing Information into Smaller Pieces
- 6.2 Operating Efficiency Ratios
- 6.3 Liquidity Ratios
- 6.4 Solvency Ratios
- 6.5 Market Value Ratios
- 6.6 Profitability Ratios and the DuPont Method
- Summary
- Key Terms
- CFA Institute
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Chapter 7. Time Value of Money I: Single Payment Value
- Why It Matters
- 7.1 Now versus Later Concepts
- 7.2 Time Value of Money (TVM) Basics
- 7.3 Methods for Solving Time Value of Money Problems
- 7.4 Applications of TVM in Finance
- Summary
- Key Terms
- CFA Institute
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Chapter 8. Time Value of Money II: Equal Multiple Payments
- Why It Matters
- 8.1 Perpetuities
- 8.2 Annuities
- 8.3 Loan Amortization
- 8.4 Stated versus Effective Rates
- 8.5 Equal Payments with a Financial Calculator and Excel
- Summary
- Key Terms
- CFA Institute
- Multiple Choice
- Problems
- Video Activity
- Chapter 9. Time Value of Money III: Unequal Multiple Payments Values
- Why It Matters
- 9.1 Timing of Cash Flows
- 9.2 Unequal Payments Using a Financial Calculator or Microsoft Excel
- Summary
- Key Terms
- CFA Institute
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Chapter 10. Bonds and Bond Valuation
- Why It Matters
- 10.1 Characteristics of Bonds
- 10.2 Bond Valuation
- 10.3 Using the Yield Curve
- 10.4 Risks of Interest Rates and Default
- 10.5 Using Spreadsheets to Solve Bond Problems
- Summary
- Key Terms
- CFA Institute
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Chapter 11. Stocks and Stock Valuation
- Why It Matters
- 11.1 Multiple Approaches to Stock Valuation
- 11.2 Dividend Discount Models (DDMs)
- 11.3 Discounted Cash Flow (DCF) Model
- 11.4 Preferred Stock
- 11.5 Efficient Markets
- Summary
- Key Terms
- CFA Institute
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Chapter 12. Historical Performance of US Markets
- Why It Matters
- 12.1 Overview of US Financial Markets
- 12.2 Historical Picture of Inflation
- 12.3 Historical Picture of Returns to Bonds
- 12.4 Historical Picture of Returns to Stocks
- Summary
- Key Terms
- Multiple Choice
- Review Questions
- Video Activity
- Chapter 13. Statistical Analysis in Finance
- Why It Matters
- 13.1 Measures of Center
- 13.2 Measures of Spread
- 13.3 Measures of Position
- 13.4 Statistical Distributions
- 13.5 Probability Distributions
- 13.6 Data Visualization and Graphical Displays
- 13.7 The R Statistical Analysis Tool
- Summary
- Key Terms
- CFA Institute
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Chapter 14. Regression Analysis in Finance
- Why It Matters
- 14.1 Correlation Analysis
- 14.2 Linear Regression Analysis
- 14.3 Best-Fit Linear Model
- 14.4 Regression Applications in Finance
- 14.5 Predictions and Prediction Intervals
- 14.6 Use of R Statistical Analysis Tool for Regression Analysis
- Summary
- Key Terms
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Chapter 15. How to Think about Investing
- Why It Matters
- 15.1 Risk and Return to an Individual Asset
- 15.2 Risk and Return to Multiple Assets
- 15.3 The Capital Asset Pricing Model (CAPM)
- 15.4 Applications in Performance Measurement
- 15.5 Using Excel to Make Investment Decisions
- Summary
- Key Terms
- CFA Institute
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Chapter 16. How Companies Think about Investing
- Why It Matters
- 16.1 Payback Period Method
- 16.2 Net Present Value (NPV) Method
- 16.3 Internal Rate of Return (IRR) Method
- 16.4 Alternative Methods
- 16.5 Choosing between Projects
- 16.6 Using Excel to Make Company Investment Decisions
- Summary
- Key Terms
- CFA Institute
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Chapter 17. How Firms Raise Capital
- Why It Matters
- 17.1 The Concept of Capital Structure
- 17.2 The Costs of Debt and Equity Capital
- 17.3 Calculating the Weighted Average Cost of Capital
- 17.4 Capital Structure Choices
- 17.5 Optimal Capital Structure
- 17.6 Alternative Sources of Funds
- Summary
- Key Terms
- CFA Institute
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Chapter 18. Financial Forecasting
- Why It Matters
- 18.1 The Importance of Forecasting
- 18.2 Forecasting Sales
- 18.3 Pro Forma Financials
- 18.4 Generating the Complete Forecast
- 18.5 Forecasting Cash Flow and Assessing the Value of Growth
- 18.6 Using Excel to Create the Long-Term Forecast
- Summary
- Key Terms
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Chapter 19. The Importance of Trade Credit and Working Capital in Planning
- Why It Matters
- 19.1 What Is Working Capital?
- 19.2 What Is Trade Credit?
- 19.3 Cash Management
- 19.4 Receivables Management
- 19.5 Inventory Management
- 19.6 Using Excel to Create the Short-Term Plan
- Summary
- Key Terms
- Multiple Choice
- Review Questions
- Video Activity
- Chapter 20. Risk management and the Financial Manager
- Why It Matters
- 20.1 The Importance of Risk Management
- 20.2 Commodity Price Risk
- 20.3 Exchange Rates and Risk
- 20.4 Interest Rate Risk
- Summary
- Key Terms
- CFA Institute
- Multiple Choice
- Review Questions
- Problems
- Video Activity
- Index