Robert Parrino is the Lamar Savings Centennial Professor of Finance in the McCombs School of Business, University of Texas at Austin. He is the Associate Editor of the Journal of Corporate Finance and the Journal of Financial Research. He has experience in the application of corporate finance concepts in a variety of business situations and researches on corporate governance, financial policies, restructuring, mergers and acquisitions, and private equity markets.
David S. Kidwell is Professor of Finance and Dean Emeritus at the Curtis L. Carlson School of Management, University of Minnesota. He has over 30 years’ experience in financial education, as a teacher, researcher and administrator. He has published in leading journals such as Journal of Finance, Journal of Financial Economics, Journal of Financial and Quantitative Analysis, Financial Management and Journal of Money, Credit and Banking.
Hue Hwa Au Yong is a Senior Lecturer in the Department of Accounting and Finance at Monash University. Prior to this, she completed her PhD in the area of risk management at Monash University. Her research has been published in several international peer reviewed journals including Journal of International Financial Markets, Institutions and Money, Australian Journal of Management and International Review of Financial Analysis. She specialises in teaching corporate finance. In 2009, she was awarded the Faculty of Business and Economics Dean’s Commendation for Outstanding Teaching.
Michael Dempsey is a Professor of Finance in the Department of Economics, Finance and Marketing at RMIT University. Prior to this he was with Monash University and Griffith University, having previously been at Leeds University, United Kingdom. He also has many years’ experience working for the petroleum exploration industry in the Middle East, Egypt, Aberdeen and London. His PhD was obtained in Astrophysics. His teaching responsibilities have been in corporate and investment fi nance, international fi nance, derivatives and fi nancial engineering. He is an active researcher and research supervisor in the area of fi nancial markets and the formation of asset prices, where he has continued to publish as well as referee major journal articles.
Samson Ekanayake is a Senior Lecturer in finance at Deakin University. He has been teaching business and corporate finance at Deakin since 1992 and also served as the Discipline Leader for Finance until July 2010. Samson has won several awards for teaching excellence in business fi nance and was nominated for Faculty Awards for innovative teaching in 2010. His research interests include corporate finance, management control and enterprise risk management. Before joining Deakin University, he held senior managerial positions in accounting and finance in several reputed companies. To name a few, he was the fi nance manager of Mitsubishi Olayan Machinery Industries, Corporate Treasurer of The Finance Company, and Economist of Fiji Sugar Corporation. Samson is a Chartered Accountant and a Certifi ed Practising Accountant. He completed his post-graduate studies at The University of Lancaster in England.
Jennifer Kofoed is a Lecturer in the School of Business and Law at Central Queensland University. She has over twelve years teaching experience and specialises in teaching corporate finance and auditing and professional practice. In 2008, she was awarded the Faculty of Business and Informatics Award for Teaching Excellence and Central Queensland University’s Innovative Teacher of the Year Award. Jenny was awarded an ALTC Citation for Outstanding Contributions to Student Learning in 2009. Her research interests focus on improving her teaching strategies to maximise student learning. In 2009, she was awarded an Outstanding Paper Award at the World Conference on Educational Media & Technology in Honolulu and the Edith Cowan Authentic Learning Award at the Higher Education Research and Development Society of Australasia Conference in Darwin.
Nigel Morkel-Kingsbury is a Lecturer in the Department of Banking and Finance at Monash University. He is an experienced educator at both graduate and undergraduate levels, specialising in teaching corporate finance and international study programs. His research interests and publications include the following areas: Central bank transparency and interest rates — the topic of his doctoral thesis; monetary policy; corporate finance; and initial public off erings.
James Murray previously taught at Monash University, and has also tutored at Swinburne University of Technology and Lincoln University. He completed his PhD in the area of dividend policy at Monash University. His research interests primarily relate to the role of the legal and tax environment in corporate finance.
About the authors xi
Organisation and coverage xv
Applications at a glance xviii
How to use this book xx
Student and lecturer resources xxiv
Selected abbreviations and notation xxv
PART 1. Introduction
CHAPTER 1. The financial manager and the company 2
PART 2. Foundations
CHAPTER 2. The financial system and the level of interest rates 30
CHAPTER 3. Financial statements, cash flows and tax 56
CHAPTER 4. Analysing financial statements 88
PART 3. Valuation of future cash flows and risk
CHAPTER 5. The time value of money 138
CHAPTER 6. Discounted cash flows and valuation 178
CHAPTER 7. Risk and return 222
CHAPTER 8. Bond valuation and the structure of interest rates 266
CHAPTER 9. Share valuation 302
PART 4. Capital budgeting decisions
CHAPTER 10. The fundamentals of capital budgeting 334
CHAPTER 11. Cash flows and capital budgeting 380
CHAPTER 12. Evaluating project economics and capital rationing 416
CHAPTER 13. The cost of capital 448
PART 5. Working capital management and financing decisions
CHAPTER 14. Working capital management 486
CHAPTER 15. How companies raise capital 520
CHAPTER 16. Capital structure policy 548
CHAPTER 17. Dividends and dividend policy 584
PART 6. Business formation, valuation and financial planning
CHAPTER 18. Business formation, growth and valuation 608
CHAPTER 19. Strategic financial planning and forecasting 646
PART 7. Options and corporate finance and international decisions
CHAPTER 20. Options and corporate finance 684
CHAPTER 21. International financial management 714
Appendix A: Present value and future value tables 746
Appendix B: Solutions to self-study problems 754