Financial Analysis Tools and Techniques: A Guide for Managers

Introduction<br/>Chapter 1 The Challenge of Financial/Economic Decision-making<br/>Lessons for the Millennium<br/>The New Economy<br/>Some Key Questions<br/>The Basics Never Change<br/>The Economic Manager<br/>Understanding Business Economics<br/>Appropriate Economic Tools<br/>The Practice of Financial/Economic Analysis<br/>Day to Day Decisions and Operational Planning<br/>Supporting Strategy Development<br/>Performance Assessment and Incentives<br/>Valuation and Investor Communications<br/>The Value Creating Company<br/>Relevant Decision Information<br/>Economic Incentives<br/>Total Systems Management<br/>Chapter 2 A Systems Context for Financial Management<br/>A Dynamic Perspective of Business<br/>Decision Context<br/>The Business System<br/>Investment Decisions<br/>Operating Decisions<br/>Financing Decisions<br/>Interrelationship of Strategy and Value Creation<br/>The Nature of Financial Statements<br/>The Balance Sheet<br/>The Income Statement<br/>The Cash Flow Statement<br/>The Statement of Changes in Shareholders’ (Owners’) Equity<br/>The Context of Financial Analysis<br/>Key Issues<br/>Analytical Support<br/>Chapter 3 Managing Operating Funds<br/>Funds Flow Cycles<br/>The Funds Cycle for Manufacturing<br/>The Funds Cycle for Sales<br/>The Funds Cycle for Services<br/>Variability of Funds Flows<br/>Growth/Decline Variations<br/>Seasonal Variations<br/>Cyclical Variations<br/>Generalized Funds Flow Relationships<br/>Interpreting Funds Flow Data<br/>Funds Management and Shareholder Value<br/>Cash Management<br/>Working Capital Management<br/>Investment Management<br/>Key Issues<br/>Analytical Support<br/>Chapter 4 Assessment of Business Performance<br/>Ratio Analysis and Performance<br/>Management’s Point of View<br/>Operational Analysis<br/>Resource Management<br/>Profitability<br/>Owners’ Point of View<br/>Investment Return<br/>Disposition of Earnings<br/>Market Indicators<br/>Lenders’ Point of View<br/>Liquidity<br/>Financial Leverage<br/>Debt Service<br/>Ratios as a System<br/>Elements of Return on Assets<br/>Elements of Return on Equity<br/>Integration of Financial Performance Analysis<br/>Some Special Issues<br/>Inventory Costing<br/>Depreciation Methods<br/>The Impact of Inflation<br/>Key Issues<br/>Analytical Support<br/>Chapter 5 Projection of Financial Requirements<br/>Pro Forma Financial Statements<br/>Pro Forma Income Statement<br/>Pro Forma Balance Sheet<br/>Pro Forma Cash Flow Statement<br/>Cash Budgets<br/>Operating Budgets<br/>Sales Budget<br/>Production Budget<br/>Interrelationship of Financial Projections<br/>Financial Modeling<br/>Sensitivity Analysis<br/>Key Issues<br/>Analytical Support<br/>Chapter 6 Dynamics and Growth of the Business System<br/>Leverage<br/>Operating Leverage<br/>Target Profit Analysis<br/>Financial Leverage<br/>Financial Growth Plans<br/>Basic Financial Growth Model<br/>Sustainable Growth and the Sustainable Growth Equation<br/>Integrated Financial Plan<br/>Key Issues<br/>Analytical Support<br/>Chapter 7 Cash Flows and the Time Value of Money<br/>The Time Value of Money<br/>Discounting, Compounding, and Equivalence<br/>Components of Analysis<br/>Net Investment<br/>Net Operating Cash Inflows<br/>Economic Life<br/>Terminal (Residual) Value<br/>Methods of Analysis<br/>Simple Measures<br/>Economic Investment Measures<br/>Net Present Value<br/>Present Value Payback<br/>Profitability Index (BCR)<br/>Internal Rate of Return (IRR, Yield)<br/>Annualized Net Present Value<br/>Applying Time-Adjusted Measures<br/>Key Issues<br/>Analytical Support<br/>Chapter 8 Analysis of Investment Decisions<br/>Strategic Perspective<br/>Decisional Framework<br/>Problem Definition<br/>Nature of the Investment<br/>Future Costs and Benefits<br/>Incremental Cash Flows<br/>Relevant Accounting Data<br/>Sunk Costs<br/>Refinements of Investment Analysis<br/>A Machine Replacement<br/>Net Investment Refined<br/>Operating Cash Inflows Refined<br/>Unequal Economic Lives<br/>Capital Additions and Recoveries<br/>Analytical Framework<br/>A Business Expansion<br/>Mutually Exclusive Alternatives<br/>Maintain versus Replace<br/>Full-Fledged versus Economy Solution<br/>Comparing Different Scenarios<br/>Dealing with Risk and Changing Circumstances<br/>Specifying Risk<br/>Ranges of Estimates<br/>Business Investments as Options<br/>Probabilistic Simulation<br/>Risk-Adjusted Return Standards<br/>When to Use Investment Measures<br/>Some Further Considerations<br/>Leasing—A Financing Choice<br/>Accelerated Depreciation<br/>Inflation and Investment Analysis<br/>Accuracy<br/>Key Issues<br/>Analytical Support<br/>Chapter 9 Cost of Capital and Business Decisions<br/>Decisional Context<br/>Investment Decisions<br/>Operating Decisions<br/>Financing Decisions<br/>Cost of Operating Funds<br/>Cost of Long-term Debt<br/>Cost of Shareholders’ Equity<br/>Preferred Stock<br/>Common Equity<br/>Weighted Cost of Capital<br/>Cost Choices<br/>Weighting the Proportions<br/>Calculating the Weighted Cost of Capital<br/>Cost of Capital and Return Standards<br/>Cost of Capital as a Cutoff Rate<br/>Risk Categories<br/>Cost of Capital in Multibusiness Companies<br/>Multiple Rate Analysis<br/>Key Issues<br/>Analytical Support<br/>Chapter 10 Analysis of Financing Choices<br/>Framework for Analysis<br/>Cost of Incremental Funds<br/>Risk Exposure<br/>Flexibility<br/>Timing<br/>Control<br/>The Choice<br/>Techniques of Calculation<br/>Current Performance<br/>Long-Term Debt in the Capital Structure<br/>Preferred Stock in the Capital Structure<br/>Common Stock in the Capital Structure<br/>Range of Earnings Chart<br/>The Optimal Capital Structure<br/>Some Special Forms of Financing<br/>Leasing<br/>Convertible Securities<br/>Stock Rights<br/>Warrants<br/>Key Issues<br/>Analytical Support<br/>Chapter 11 Valuation and Business Performance<br/>Definitions of Value<br/>Economic Value<br/>Market Value<br/>Book Value<br/>Liquidation Value<br/>Breakup Value<br/>Reproduction Value<br/>Collateral Value<br/>Assessed Value<br/>Appraised Value<br/>Going Concern Value<br/>Shareholder Value<br/>Value to the Investor<br/>Bond Values<br/>Preferred Stock Values<br/>Common Stock Values<br/>Specialized Valuation Issues<br/>Rights and Warrants<br/>Options<br/>Business Valuation<br/>Valuing the Equity<br/>Valuing the Total Company<br/>Using Shortcuts in Valuing an Ongoing Business<br/>Key Issues<br/>Analytical Support<br/>Chapter 12 Managing for Shareholder Value<br/>Shareholder Value Creation in Perspective<br/>Evolution of Value-Based Methodologies<br/>A Review of Key Measures<br/>Economic Profit and CFROI<br/>Creating Value in Restructuring and Combinations<br/>Restructuring and Value<br/>Combinations and Synergy<br/>Combinations and Share Values<br/>Integration of Value Analysis<br/>Perspectives<br/>Expectations<br/>Time Period<br/>Cash Flow Pattern<br/>Ongoing Values<br/>Comparables<br/>Negotiations<br/>Key Issues<br/>Analytical Support<br/>Appendix I Financial Analysis Using Financial Genome<br/>Appendix II Glossary of Key Terms and Concepts<br/>Appendix III Financial Information and On-Line Sources<br/>Appendix IV Basic Inflation Concepts<br/>Appendix V Some Issues in Multinational Financial Analysis<br/>Index<br/>Footnotes<br/>Chapter 6<br/>1<br/>Chapter 12<br/>1<br/>Appendix 2<br/>1