Fundamentals of Financial Management (Concise 6th Edition)

Index I-7

Stock splits, 457
effect on stock prices, 458
Stock value, expected dividends
as basis for, 277
Stockholder rights,
control of the " rm, 271
preemptive right, 272
Stockholder wealth
maximization, 9
Stockholders,
legal rights and privileges,
270–272
vs. bondholders, 20
vs. managers, 18
Strategic business plan, 337
Stretching accounts payable, 495
Strategic planning, 511–512
Subordinated debenture, 215
Sunk cost, 366–367, 371
Supernormal (nonconstant)
growth, 283
Supply chain management, 489
Survivor bias, 100
Survivorship bias, 252
Sustainable growth rate, 515
Symmetric information, 423
Synergy, 51 1

T

Takeover, 271
hostile, 19
Target capital structure, 401,
401–402
Target cash balance, 483
Target payout ratio, 441
Target payout ratio, 446
Tax depreciation, 397–398
Tax loss carry-back or carry-
forward, 74
Taxes,
corporate, 72
effect on capital structure, 420
income, 70–75
individual, 70
Teledyne, 460
Temporary current assets, 476
Tender offer, 460

Term structure of interest rates,

175 –176

Terminal (horizon) date, 284

Texas Instruments, 460

3M’s cost of capital, 334

Time line, 124–125

Time preferences for

consumption, 163

Time value of money, 123

Times-interest-earned (TIE)

ratio, 95

Total assets, total debt to, 94

Total assets turnover ratio, 92

Total debt to total assets, 94

Total return, 207

Trade credit, 493

Trade-off theory, 422

Trading in foreign exchange,

544–546

Treasury bonds, 196

almost riskless, 171

Trend analysis, 100

Tyco, 18

U

Unethical behavior,

and employees, 17

consequences of, 16

Uneven (nonconstant) cash # ows,

143 –144

Uneven cash! ow stream, future

value of, 144–145

Uneven cash! ows, solving for I,

145–146

Unlevered beta, 416

V

Vertically integrated

investment, 536

W

WACC,

and capital structure changes, 414

factors affecting, 321

factors " rm can control, 322

factors " rm cannot control, 321

see also weighted average cost

of capital

Wachovia, 34

Wal-Mart, 9, 10, 14, 340, 475, 488

Walt Disney Company, 18, 19, 198

Warrant, 199

Weighted average cost of capital

(WACC), 310, 321

overview, 307–309

Wells Fargo, 34

Western Money Management

Inc., 228

Whistle-blowers, protection for, 17

Window dressing techniques, 107

Within-" rm and beta risk, 381–382

Working capital management, 472

Best Buy, 472

Working capital, 59, 473

background, 473–474

operating with negative, 481

WorldCom, 14, 16, 17, 54

Worst-case scenario, 378

X

Xerox, 19, 459, 460, 535

Y

Yahoo!, 68

Yield curve, 175

shape determined, 176–180

used to estimate future interest

rates, 180–182

Yield spread, 217

Yield to call (YTC), 204

Yield to maturity (YTM), 203

Yogi Berra, 420

Z

Zero coupon bond, 197

Zero growth stock, 282