Introduction to Corporate Finance

I-9

Index

I-9

fallen angels 513
fiduciary 9, 753
final dividend 536
finance
charges 672
control function 572
role in long-term planning 571–2
finance leases 520
Financial Accounting Standards Board
(FASB) 35
financial deficit 434
financial distress 483, 586, 763–78,
784 , 790 – 1
costs of 482–4
financial engineering 787 , 811 – 12
financial flexibility 489
financial instruments 124, 433–4, 802
bonds versus notes 137
financial intermediary (FI) 14–15, 435–8
definition and roles 435, 436
financial leverage 46, 238, 404–5
definition and effects 467–71
financial management 11
financial managers 5–6
financial markets 14–15
government intervention 614
financial options 416
financial performance 42–52
financial planning 570–2
adjusting 570–1
planning and control 582–91
financial ratios 42–3, 524–5
financial relationships 664
financial reporting 31, 582–3
financial risk 473
financial risk management 787 ,
788–94
financial slack 488–9
financial statements 30–3, 64, 577–82
public reporting/tax purposes 32–3
see also pro forma financial statements
financial structure 404–5
financial venture capital funds 692
financing 10–11
strategies 582–5
financing constraints 313–14
financing costs 358–9
financing flows 38
financing needs 588–90
firm-commitment offering 179
firms 5
five Cs of credit 642
fixed asset turnover 45

fixed assets 363–4, 583

underutilised 570

fixed exchange rates 603–5

fixed-for-floating currency swap 811

fixed-for-floating interest rate swap 808

payoff diagrams 809 – 10

fixed-price offer 442

fixed-rate offerings 501

flexibility options 418–19

flip 448

float 663–4, 666 , 674

floating exchange rates 603–5

floating-rate bonds 138

floating-rate issues 501

follow-on investment options 417

forecasting 200, 320, 578, 664 , 777–8

errors 313

interest rates (yield curves) 148–50

see also pro forma financial statements

foreign bonds 439, 514

foreign currency futures, hedging with

804

foreign debt NOT IN OLD 614–16

foreign exchange (forex) markets

612–14

revised NPV 617–19

risk adjustments for 401

turnover (by counterparty) 613

foreign exchange risk 788 – 9 , 799

forward contracts 794–800

versus futures 803

payoff diagrams 797

forward discount 609–10

forward exchange rate 609, 796

forward premium 609–10

forward prices 794 – 6 , 798

forward rate agreement (FRA) 799

franking credits 359–60, 538

fraud 674–5

free cash flow (FCF) 38–9, 170–3, 548

full disclosure 443

fundamental principle of financial

leverage 470–1

fundamental valuation model 122–3

funds transfers mechanisms 669–71

fungibility 803

future benefits 121–2, 130

future gains 272

future value (FV) 201

of cash flow streams 79–86

changes with frequency of

compounding 96–9

deposits and 99–100

equation 69–71

graphical view 71–2

of lump sum received today 68–72

futures contracts 800–6, 801 – 2

concerns 804 – 6

hedging with 804

no physical delivery of 804

G

gains 54, 141, 192, 552, 737–8, 791 ,

805

gearing levels 466

general cash offerings 458

general partners 17, 699

generally accepted accounting principles

(GAAP) 30

global beta 620

global brands, market value 35

global financial crisis (GFC) 8, 148,

503, 678 , 691

see also recession

global market risk premium 620

global recession 570–1

globalisation 7, 750

‘going private’ 742–3

‘going public’ 432, 450, 452–4

goodwill 746

Gordon growth model 94–5, 164

government 614

gross domestic product (GDP) 135,

366, 614–15

gross profit 33

gross profit margin 47

gross profit to sales ratio 29

growing perpetuity, present value of

94–5

growth 163–7, 568, 698 , 726 – 7

defining 573–4

estimates 168

measures 573

opportunities 548

planning 572–82

see also mergers

growth rate 77

H

hedge funds. short selling restrictions

238

hedge ratio 285

hedging 12, 613, 614–16, 804

motivations for 790–3

option as tool for 806 – 7

over-hedging 793