COntents 1
1 Introduction 1
Business finance 1
The financial environment 3
Accounting 6
Problems in finance 15
2 Interest rates 19
Time 19
Inflation 20
Risk and required return 26
3 Cash 30
Uses of cash 30
Cash and profit 35
Cash planning 38
4 Working capital 43
Working capital as a whole 43
StOCkS 47
Debtors 50
Spontaneous creditors 54
5 Basic capital project appraisal 57
Background 57
Simple appraisal methods 59
Measuring profit over time 63
Discounted cash flow methods 67
6 Capital project appraisal refinements 76
Taxation 76
Capital disinvestment 79
Inflation 81
Risk and uncertainty 85
Capital budgeting 91
7 Borrowing 95
General features 95
Reducing the lender’s risk 98
The cost of debt 100
Other types of debt 102
Valuing debt 104
8 Ordinary shares 109
Shareholders’funds 109
The stock exchange 111
Issuing equity shares 115
Dividend policy 119
9 Valuing equity 125
Modern portfolio theory 125
Other share valuation methods 131
10 Corporate nuance 136
Cost of capital 136
Gearing 140
Capital structure 142
The corporate life cycle 147
11 Mergers and reconstructions 151
Reasons for mergers 151
Merger statistics 155
The process of merging 157
Restructuring 160
Appendix A：Acronyms 167
Appendix B：Present value tables 169
Glossary 175
Bibliography 192
Index 193