Fundamentals of Financial Management (Concise 6th Edition)

I N D E X

A

Abandonment option, 383–384
Abercrombie & Fitch, 533
Accounting income vs. cash
! ow, 365
Accounting standards, global, 97
Accounts payable, 493–495
Accounts receivable, 490–493
modifying, 524
Accruals, 500
Accrued liabilities, 500
Actual (realized) rate of return
(rˉ), 276
Additional funds needed
(AFN), 514
Add-on interest, 498
AFLAC, 534
AFN equation, 514–518
After-tax cost of debt, rd(1 – T), 311
Agency theory, 18
Aggressive approach, 476
Aging schedule, 493
Airbus, 335, 355
Allied Components Company, 362
Allied Food Products, 69, 87, 105,
108, 195, 197, 256, 279, 289,
307–309, 316, 394, 473, 482–485,
492, 493, 512–525
balance sheet, 58
summary of ratios, 104
Allocation, capital, 28–29
Alternative estimates, averaging
the, 317
Alternative minimum tax
(AMT), 72
Amazon.com, 270
American Depository Receipts
(ADRs), 554
American Development
Corporation (ADC), 460
American Stock Exchange, 38
American terms, 543
Amortization, 63
Amortization schedule, 152
Amortized loan, 151–152
Annual compounding, 146–148
Annual depreciation rates, 397
Annual percentage rate
(APR), 148
Annual report, 55
Annuity, 134–135
Annuity due, 135
future rate of, 137
Annuity payments (PMT),
" nding, 139

Apple Computer, 9, 10, 60, 270,

287, 368

Appreciation of currency, 541, 551

Arbitrage, 546

Ask price, 40

Asset-based " nancing, 500

Asset management ratios, 89–92

Assets, opportunity costs

association with, 367

Asymmetric information, 423

AT&T, 16, 19

Atlantic Rich" eld, 460

Auction rate securities (ARS), 173

Average collection period

(ACP), 479

Average stock’s beta, 245

Average tax rate, 70

B

Balance sheet, 57–61

Allied Food, 58

forecasted, 519

Bank,

commercial, 34

investment, 34

Bank loans, 495–499

cost of, 497

Bank of America, 34, 36

Bankruptcy,

and reorganization, 219

effect on capital structure, 421

Base-case NPV, 376

Base-case scenario, 378

Basic earning power (BEP)

ratio, 98

Before-tax cost of debt, 310

Behavioral " nance theory, 49

Behavioral " nance, 49

Benchmarking, 105–106

Best Buy Company, 472, 488

Best-case scenario, 378

Beta and CAPM, concerns

about, 257

Beta coef" cient, 245

Beta coef" cient, changes in, 256

Beta risk, within-" rm

and, 381–382

Bid-ask spread, 40

Bid price, 40

Billingham Corporation, 215

Bird-in-the-hand fallacy, 443

Boeing, 335, 355

Bond(s), 195

and valuation, 194

bankruptcy and

reorganization, 219

characteristics of, 196–200

issuers, 195–196

other features, 199–200

risk in market, 194

with semiannual

coupons, 209–210

Bond markets, 220

Bond ratings, 215

changes in, 218

criteria for, 216

importance of, 217

Bond riskiness, assessing, 210–214

Bond valuation, 200–203

Bond values, changes over time,

206–209

Bond yields, 203–205

Bondholders vs. stockholders, 20

Bond-yield-plus-risk-premium

approach, 315

Budgeting methods, conclusions,

355–356

Business

activity, 185

climate, 557

decisions, interest rates and,

185–187

ethics, 15–18

company behavior, 15

unethical behavior, 16

organization, forms of, 6–8

risk, 402, 403 –413

trends, important, 14

C

Call provision, 198

Campus Deli Inc., 435

Cannibalization, 367, 371

Capital,

alternative sources of, 456

external, cost of raising, 319

increased cost of, 318

Capital allocation process, 28–29

Capital asset pricing model

(CAPM), 240

Capital budget, optimal, 385

Capital budgeting, 336

Asian/Paci" c region, 380

basics of, 335

competition in aircraft

industry, 335

decision criteria, 356

international, 556–558

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