Frequently Asked Questions in Corporate Finance E-Book

Pascal Quiry

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 523

Veröffentlichungsjahr: 2011

Beschreibung

The definitive question and answer guide to understanding corporate finance From the team behind the popular corporate finance website, Vernimmen.com comes a concise guide to the subject, presented in an easy-to-use, highly accessible "question and answer" format. An essential reference for students of corporate finance and practising corporate financiers alike, Frequently Asked Questions in Corporate Finance answers key questions in financial engineering, valuation, financial policy, cost of capital, financial analysis, and financial management. Covering both the theory and practice of corporate finance, the book demonstrates how financial theory can be put to use solving practical problems. * What advantages are there to a business looking to spin off its divisions into subsidiaries? * Is there a formula that can be used to determine the change in normalised free cash flows? * What are the possible reasons behind a share buyback? What are the pros and cons of off-market share buy-back? Filled with the answers to all of the most common, and not so common, questions about corporate finance, the book presents authoritative, reliable information from a respected team of experts from the banking, corporate, and academic worlds.

Leseprobe

Table of Contents

Title Page

Copyright

Frequently Asked Questions

About the Authors

Chapter 1: Frequently Asked Questions

1. What is Corporate Finance?

2. What are Cash Flows?

3. What Alternative Formats of the Balance Sheet May Companies Use?

4. What is the Working Capital and How do Companies Manage It?

5. What are the Alternative Formats of an Income Statement?

6. How can We Perform the Financial Analysis of a Company?

7. What is the Operating Profit?

8. What is the Scissors Effect?

9. How does Operating Leverage Work?

10. What is CAPEX?

11. How can the Credit Risk of a Company be Assessed?

12. How do We Measure the Profitability of a Company?

13. What is the Financial Leverage Effect and How does It Work?

14. What are Efficient Markets?

15. What do We Mean by Discounting a Sum?

16. How do Companies Measure Value Creation?

17. What is the NPV of a Project?

18. What is the IRR of a Project?

19. How do Companies Deal with Uncertainty in Capital Budgeting?

20. How can Real Options be Used In Corporate Finance?

21. What is Risk In Finance?

22. Is There Any Relation Between Risk and Return?

23. How are Risk and Return Measured?

24. What is Diversification?

25. What are the Efficient Frontier and the Capital Market Line?

26. What are the CAPM and the Beta Coefficients?

27. What is the Cost of Capital and How can It be Estimated?

28. What are the Most Important Debt Products for Companies' Financing?

29. What do We Mean by Stock Market Analysis of a Company?

30. What are Financial Options?

31. What are Hybrid Securities?

32. How are Securities Sold on Capital Markets?

33. What are the Most Important Corporate Valuation Methodologies?

34. What is the DCF Method?

35. What are Valuation Multiples?

36. What does the Modigliani and Miller Theorem Say?

37. What Happens to the Modigliani and Miller Theorem if We Consider Taxes and Financial Distress Costs?

38. What are the Other Real-World Factors that Affect the Capital Structure Decision?

39. How do Companies Design their Debt Funding?

40. Can Options be Used for the Analysis of the Capital Structure?

41. How can Companies Distribute Their Excess Cash?

42. What are Share Buybacks and How do They Work?

43. What is the Dilution of Control in a Capital Increase?

44. How Many Different Types of Shareholders do We Know?

45. Why do Companies Go Public?

46. How can the Control of a Company be Strengthened?

47. What are Holding Company and Conglomerate Discounts?

48. What are Control Premiums and Minority Discounts?

49. What is a Cascade Structure?

50. Why is Corporate Governance So Important?

51. How can Companies be Taken Over?

52. What are Synergies?

53. What are Demergers and Split-Offs?

54. What is a Leveraged Buyout?

55. What is Bankruptcy?

56. What do We Mean by Cash Flow Management?

57. How Many Types of Financial Risks do Companies Face?

58. How can Companies Hedge Financial Risks?

Chapter 2: Topics

50 Years of Research in Finance

Ten Deadly Mistakes in Corporate Finance

Five Mistakes in Corporate Valuation

2.4 M&A: Six Mistakes to be Avoided

2.5 Rating Agencies

2.6 Credit Scoring

2.7 Behavioral Finance: Are Investors Really Rational?

2.8 Micro-finance: Helping the Poor

2.9 Project Finance

2.10 Corporate Finance in Europe: Confronting Theory with Practice

2.11 Capital Markets: Some Useful Definitions

2.12 Transaction Multiples: Before and During the Crisis

2.13 The Making of an Investment Banker

2.14 Corporate Finance Books

2.15 Brainteasers—PART I

2.16 Brainteasers—PART II

2.17 Answers

2.18 True or False: Test Yourself

2.19 Answers

2.20 Crossword

Index

This edition first published in 2011

Copyright © 2011 Pierre Vernimmen

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Library of Congress Cataloging-in-Publication Data

Frequently asked questions in corporate finance / Pierre Vernimmen … [et al.].

p. cm.

ISBN 978-1-119-97755-1 (pbk.)

1. Corporation–Finance. I. Vernimmen, Pierre.

HG4026.F747 2011

658.15—dc23

2011031090

ISBN 978-1-119-97755-1 (pbk), ISBN 978-1-119-96069-0 (ebk),

ISBN 978-1-119-96066-9 (ebk), ISBN 978-1-119-96065-2 (ebk)

A catalogue record for this book is available from the British Library.

Frequently Asked Questions

1.What is Corporate Finance?2.What are cash flows?3.What alternative formats of the balance sheet may companies use?4.What is the working capital and how do companies manage it?5.What are the alternative formats of an income statement?6.How can we perform the financial analysis of a company?7.What is the operating profit?8.What is the scissors effect?9.How does operating leverage work?10.What is CAPEX?11.How can the credit risk of a company be assessed?12.How do we measure the profitability of a company?13.What is the financial leverage effect and how does it work?14.What are efficient markets?15.What do we mean by discounting a sum?16.How do companies measure value creation?17.What is the NPV of a project?18.What is the IRR of a project?19.How do companies deal with uncertainty in capital budgeting?20.How can real options be used in corporate finance?21.What is risk in finance?22.Is there any relation between risk and return?23.How are risk and return measured?24.What is diversification?25.What are the efficient frontier and the capital market line?26.What are the CAPM and the beta coefficients?27.What is the cost of capital and how can it be estimated?28.What are the most important debt products for companies' financing?29.What do we mean by stock market analysis of a company?30.What are financial options?31.What are hybrid securities?32.How are securities sold on capital markets?33.What are the most important corporate valuation methodologies?34.What is the DCF method?35.What are valuation multiples?36.What does the Modigliani and Miller theorem say?37.What happens to the Modigliani and Miller theorem if we consider taxes and financial distress costs?38.What are the other real-world factors that affect the capital structure decision?39.How do companies design their debt funding?40.Can options be used for the analysis of the capital structure?41.How can companies distribute their excess cash?42.What are share buybacks and how do they work?43.What is the dilution of control in a capital increase?44.How many different types of shareholders do we know?45.Why do companies go public?46.How can the control of a company be strengthened?47.What are holding company and conglomerate discounts?48.What are control premiums and minority discounts?49.What is a cascade structure?50.Why is corporate governance so important?51.How can companies be taken over?52.What are synergies?53.What are demergers and split-offs?54.What is a leveraged buyout?55.What is bankruptcy?56.What do we mean by cash flow management?57.How many types of financial risks do companies face?58.How can companies hedge financial risks?

About the Authors

Pascal Quiry is a professor of finance at the leading European business school HEC Paris, and a managing director in the Corporate Finance arm of BNP Paribas specialising in M&A.

Maurizio Dallocchio is Bocconi University Nomura Chair of Corporate Finance and Past Dean of SDA Bocconi, School of Management. He is also a board member of international and Italian institutions and is one of the most distinguished Italian authorities in finance.

Yann Le Fur is a corporate finance teacher at HEC Paris business school and an investment banker with Mediobanca in Paris after several years with Schroders and Citi.

Antonio Salvi is Full Professor of Corporate Finance at “Jean Monnet” University, Italy. He also teaches corporate finance at EM Lyon Business School and SDA Bocconi School of Management.

Pierre Vernimmen who died in 1996, was both an M&A dealmaker (he advised Louis Vuitton on its merger with Moët Henessy to create LVMH, the world luxury goods leader) and a finance teacher at HEC Paris. His book, Finance d'Entreprise, was and still is the top-selling financial textbook in French-speaking countries and is the forebear of Corporate Finance: Theory and Practice.