Applied Corporate Finance, Trade
Applied Corporate Finance, Trade is a hands-on guide with concentration on converting the theory and models in corporate finance into useful tools to analyze, understand, and help businesses, through its real solutions using real-time data on real companies. With valuable insights that give the user's perspective to corporate finance, it also contains tools and analytical techniques about the author’s detailed principles and concepts. This book’s contents include the foundations of corporate finance, the objective of decision making, the basics of risk, risk measurement and hurdle rates in practice, measuring return of investments, project interactions, side costs and side benefits, capital structure, the optimal financial mix, and dividend policy.
Applied Corporate Finance provides a user’s perspective to corporate finance, by posing the three major questions that every business has to answer:
- Where do we invest our resources? (The Investment Decision) The first part of the book looks at how to assess risk and develop a risk profile for a firm, convert this risk profile into a hurdle rate, and develops the basic rules that need to be followed in estimating the returns on any investment.
- How should we fund these investments? (The Financing Decision) Firms generally can use debt, equity, or some combination of the two to fund projects. This part of the book examines the relationship between this choice and the hurdle rate to be used in analyzing projects and presents ways in which the Financing decision can be used to maximize firm value. It also sets up a framework for picking the right kind of security for any firm.
- How much cash can and should we return to the owners? (The Dividend Decision) The third part of the book establishes a process that can be used to decide how much cash should be taken out of the business, and in what form — Dividends or stock buybacks. The final chapter in the book ties in the value of the firm to these three decisions, and provides insight into how firms can enhance value.