Principles of Managerial Finance

CHAPTER 1 The Role and Environment of Managerial Finance 33

chapter begins with a numbered list of learning goals. Next to each major text

heading is a “toolbox,” which notes by number the specific learning goal(s)

addressed in that section. At the end of each section of the chapter (positioned

before the next major heading) are review questions that test your understanding

of the material in that section. At the end of each chapter, the chapter summaries,

self-test problems, and problems are also keyed by number to each chapter’s

learning goals. By linking all elements to the learning goals, the integrated learn-

ing system facilitates your mastery of the goals.

Also keyed to various parts of the text is the PMF CD-ROM Software,a disk

for use with IBM PCs and compatible microcomputers. The disk contains three

different sets of routines:

1. The PMF Tutoris a user-friendly program that extends self-testing opportu-
   nities in the more quantitative chapters beyond those included in the end-of-
   chapter materials. It gives immediate feedback with detailed solutions and
   provides tutorial assistance (including text references). Text discussions and
   end-of-chapter problems with which the PMF Tutorcan be used are marked
   with a.


2. The PMF Problem-Solvercan be used as an aid in performing many of the
   routine financial calculations presented in the book. A disk symbol, ,
   identifies those text discussions and end-of-chapter problems that can be
   solved with the PMF Problem-Solver.


3. The PMF Excel Spreadsheet Templatescan be used with Microsoft Excel to
   input data and carry out “what-if” types of analyses in selected chapters.
   These problems are marked by the symbol.

A detailed discussion of how to use the PMF CD-ROM Software—the Tutor,

the Problem-Solver, and the Excel Spreadsheet Templates—is included in

Appendix D at the back of this book.

Each chapter ends with a case that integrates the chapter materials, and each

part ends with an integrative case that ties together the key topical material cov-

ered in the chapters within that part. Where applicable, the symbols for the PMF

Problem-Solverand/or the PMF Tutoridentify case questions that can be solved

with the aid of these programs. Both the chapter-end and the part-end cases can

be used to synthesize and apply related concepts and techniques.

SUMMARY

FOCUS ON VALUE

Chapter 1 established the primary goal of the firm—to maximize the wealth of the owners
for whom the firm is being operated.For public companies, which are the focus of this text,
value at any time is reflected in the stock price. Therefore, management should act only on
those alternatives or opportunities that are expected to create value for owners by increasing
the stock price. Doing this requires management to consider the returns (magnitude and tim-
ing of cash flows) and the risk of each proposed action and their combined impact on value.