Finance Essentials

by Various Authors, Various

• ISBN13: 9781849300407
• ISBN10: 1849300402
• eBook ISBN(s): 9781849300599
• Format: Paperback
• Copyright: 2012-03-15
• Publisher: Bloomsbury Information Ltd

Summary

Finance Essentials is aimed at those serious about the importance of continuous education, from university through their whole careers. It is excellent background reading, and focuses on key knowledge areas including Corporate Governance, Business Finance plus Valuations, Financial and Strategic Management and Financial Statement Analysis. Coverage in Finance Essential includes Checklists: over 150 step-by-step guides to key finance tasks, from hedging interest rates to managing cashflow Calculations: over 100 key ratios and calculations to keep the firm in good financial health Best Practice articles: a selection of the top articles from the thought leaders in finance, guiding the way through financial jungle Dictionary: over 5000 terms, jargon-free definitions of thousands business and finance terms Finance Thinkers: profiles of the great minds behind modern finance - their lives, thoughts and the practical applications of their theories

Author Biography

Scott Moeller is professor in the practice of finance and the founder and director of the MA Research Centre at Cass Business School, London. He is the author of several best-selling business books and a former senior executive at Deutsche Bank and Morgan Stanley. While at Deutsche Bank, Professor Moeller held roles as global head of the corporate venture capital unit, managing director of the Global eBusiness division, and managing director responsible for worldwide strategy and new business acquisitions. At Morgan Stanley he was based first in New York and then Tokyo and Frankfurt.Prior to his career in investment banking, he was a management consultant with Booz, Allen Hamilton (now Booz Co). He has been a nonexecutive director of several nonprofit and financial services companies in the United States, the United Kingdom, and Continental Europe.

Table of Contents

Introduction	p. viii
Contributor Biographies	p. xii
Best Practice: Balance Sheets and Cash Flow
Best-Practice Working Capital Management: Techniques for Optimizing Inventories, Receivables, and Payables	p. 2
Best Practices in Cash Flow Management and Reporting	p. 7
Capital Budgeting: The Dominance of Net Present Value	p. 12
Comparing Net Present Value and Internal Rate of Return	p. 16
Fair Value Accounting: SFAS 157 and IAS 39	p. 19
Introduction to Islamic Financial Risk Management Products	p. 23
Investment Risk in Islamic Finance	p. 27
Managing Counterparty Credit Risk	p. 31
Managing Interest Rate Risk	p. 34
Navigating a Liquidity Crisis Effectively	p. 38
Pension Schemes: A Unique and Unintended Basket of Risks on the Balance Sheet	p. 41
Quantifying Corporate Financial Risk	p. 45
Risk Manágement of Islamic Finance Instruments	p. 48
To Hedge or not to Hedge	p. 53
Using Structured Products to Manage Liabilities	p. 57
Valuing Pension Fund Liabilities on the Balance Sheet	p. 60
Financial Regulation and compliance
Aligning the Internal Audit Function with Strategic Objectives	p. 63
Classification and Treatment of Leases	p. 66
Contemporary Developments in International Auditing Regulation	p. 70
Continuous Auditing: Putting Theory into Practice	p. 74
Effective Financial Reporting and Auditing: Importance and Limitations	p. 81
Engaging Senior Management in Internal Control	p. 84
How can Internal Audit Report Effectively to its Stakeholders?	p. 86
How to Implement a Standard Chart of Accounts Effectively	p. 90
Implementing an Effective Internal Controls System	p. 93
Incorporating Operational and Performance Auditing into Compliance and Financial Auditing	p. 97
Procedures for Reporting Financial Risk in Islamic Finance	p. 101
Starting a Successful Internal Audit Function to Meet Present and Future Demands	p. 103
What are the Leading Causes of Financial Restatements?	p. 108
Funding and Investment
Acquiring a Secondary Listing, or Cross-Listing	p. 112
Assessing Venture Capital Funding for Small and Medium-Sized Enterprises	p. 114
Asset Allocation Methodologies	p. 117
Equity Issues by Listed Companies: Rights Issues and Other Methods	p. 123
Financial Steps in an IPO for a Small or Medium-Size Enterprise	p. 126
Viewpoint: Investing in a Volatile Environment: A Black Swan Perspective	p. 129
IPOs in Emerging Markets	p. 131
Managing Activist Investors and Fund Managers	p. 134
Measuring Company Exposure to Country Risk	p. 136
Measuring Country Risk	p. 139
Minimizing Credit Risk	p. 142
Optimizing the Capital Structure: Finding the Right Balance between Debt and Equity	p. 145
Price Discovery in IPOs	p. 148
Rigidity in Microfinancing: Can One Size Fit all?	p. 151
The Role of Institutional Investors in Corporate Financing	p. 154
The Role of Short Sellers in the Marketplace	p. 158
Understanding Equity Capital in Small and Medium-Sized Enterprises	p. 164
Understanding the True Cost of Issuing Convertible Debt and Other Equity-Linked Financing	p. 169
Governance and Ethics
Balancing Senior Management Compensation Arrangements with Shareholders' Interests	p. 173
Best Practices in Corporate Social Responsibility	p. 175
Business Ethics	p. 179
Corporate Board Structures	p. 182
CSR: More than PR, Pursuing Competitive Advantage in the Long Run	p. 187
Dividend Policy: Maximizing Shareholder Value	p. 190
Executive Rewards: Ensuring that Financial Rewards Match Performance	p. 194
Human Risk: How Effective Strategic Risk Management can Identify Rogues	p. 198
Identifying the Right Nonexecutive Director	p. 201
Improving Corporate Profitability through Accountability	p. 204
Role of Internal Auditing at Board Committee Level	p. 207
Mergers and Acquisitions
Acquisition Integration: How to do it Successfully	p. 211
Coping with Equity Market Reactions to M&A Transactions	p. 213
Due Diligence Requirements in Financial Transactions	p. 216
Going Private: Public-to-Private Leveraged Buyouts	p. 220
Identifying and Minimizing the Strategic Risks from M&A	p. 224
Joint Ventures: Synergies and Benefits	p. 227
Leveraged Buyouts: What, Why, When, and How	p. 230
Maximizing a New Strategic Alliance	p. 233
Maximizing Value when Selling a Business	p. 235
Valuing Start-Ups	p. 239
Why Mergers Fail and How to Prevent it	p. 243
Operations and Performance
Aligning Structure with Strategy: Recalibrating for Improved Performance and Increased Profitability	p. 246
Business Continuity Management: How to Prepare for the Worst	p. 249
Countering Supply Chain Risk	p. 253
Creating Value with EVA	p. 255
Employee Stock Options	p. 258
Essentials for Export Success: Understanding How Risks and Relationships Lead to Rewards	p. 260
Five Routes to Greater Profitability for Small and Medium Enterprises	p. 264
The Impact of Climate Change on Business	p. 267
Political Risk: Countering the Impact on your Business	p. 270
Real Options: Opportunity from Risk	p. 273
Reducing Costs through Production and Supply Chain Management	p. 276
Understanding Reputation Risk and its Importance	p. 279
Using Decision Analysis to Value R&D Projects	p. 282
Using Financial Analysis to Evaluate Strategy	p. 287
Checklists: Balance Sheets and Cash Flow
Assessing Cash Flow and Bank Lending Requirements	p. 292
Estimating Enterprise Value with the Weighted Average Cost of Capital	p. 293
Hedging Liquidity Risk-Case Study and Strategies	p. 294
How to Manage your Credit Rating	p. 295
Identifying and Managing Exposure to Interest and Exchange Rate Risks	p. 296
Managing Risk in Islamic Finance	p. 297
Managing Working Capital	p. 298
Measuring Liquidity	p. 299
Preparing a Cash Flow Forecast	p. 301
Setting up a Dividend Policy	p. 302
Swaps, Options, and Futures: What they are and their Function	p. 303
Understanding and Calculating the Total Cost of Risk	p. 304
Understanding Asset-Liability Management (Full Balance Sheet Approach)	p. 305
Understanding Capital Structure Theory	p. 306
Understanding the Cost of Capital and the Hurdle Rate	p. 307
Understanding the Relationship between the Discount Rate and Risk	p. 308
Understanding the Weighted Average Cost of Capital (WACC)	p. 309
Financial Regulation and Compliance
Avoiding Conflict of Interest in Internal Audits	p. 311
Choosing an External Auditor	p. 312
Establishing a Framework for Assessing Risk	p. 313
Internal Audit Charters	p. 314
International Auditing for Fraud Detection and Prevention	p. 315
International Financial Reporting Standards (IFRS): The Basics	p. 316
Key Competencies for Internal Auditors	p. 317
The Key Components of an Audit Report	p. 318
MiFID-Its Development and Aims	p. 319
Preparing Financial Statements: Balance Sheets	p. 320
Preparing Financial Statements: Profit and Loss Accounts (P&Ls)	p. 321
The Role of the Audit Committee	p. 322
Understanding Internal Audits	p. 324
What is Forensic Auditing?	p. 325
Funding and Investment
Analysis Using Monte Carlo Simulation	p. 327
Applying the Gordon Growth Model	p. 328
Calculating Total Shareholder Return	p. 329
Islamic Microfinance	p. 330
Obtaining an Equity Value using the Weighted Average Cost of Capital (WACC)	p. 331
Sovereign Wealth Funds-Investment Strategies and Objectivies	p. 332
Steps for Obtaining Bank Financing	p. 333
Understanding and using Leverage Ratios	p. 335
Understanding Fixed-Charge Coverage	p. 336
Using Dividend Discount Models	p. 337
Governance and Ethics
Conflicting Interests: The Agency Issue	p. 338
Creating a Sustainable Development Policy	p. 339
Creating Executive Compensation	p. 340
Defining Corporate Governance: Its Aims, Goals, and Responsibilities	p. 341
Directors' Duties: A Primer	p. 342
Governance Practices in Family-Owned Firms	p. 343
Social Return on Investment	p. 345
Understanding Economic Efficiency Theory	p. 346
Mergers and Acquisitions
M&A Regulations: A Global Overview	p. 348
Management Buyouts	p. 349
Planning the Acquisition Process	p. 350
Planning the Disposal Process	p. 351
Structuring and Negotiating Joint Ventures	p. 352
Understanding Anti-Takeover Strategies	p. 354
Using the Market-Value Method for Acquisitions	p. 355
Operations and Performance
Applying Stress-Testing to Business Continuity Management	p. 357
Appraising Investment Opportunities	p. 358
Assessing Business Performance	p. 359
Assessing the Value of Outsourcing and Offshoring	p. 360
Basic Steps for Starting a Business	p. 361
Creating a Risk Register	p. 362
Identifying your Continuity Needs	p. 363
Managing Bankruptcy and Insolvency	p. 365
Nonperformance and Breach of Contract	p. 366
Understanding Real Options	p. 367
Understanding Strategy Maps	p. 368
What is Benchmarking?	p. 369
Calculations and Ratios
Accounts Receivable Turnover	p. 372
Alpha and Beta Values of a Security	p. 372
Amortization	p. 373
Annual Percentage Rate	p. 374
Asset Turnover	p. 375
Asset Utilization	p. 375
Basis Point Value	p. 376
Bond Yield	p. 377
Book Value	p. 378
Capital Asset Pricing Model	p. 379
Capital Expenditure	p. 380
Capitalization Ratios	p. 380
Contribution Margin	p. 381
Conversion Ratio	p. 382
Creditor and Debtor Days	p. 383
Current Ratio	p. 383
Debt/Equity Ratio	p. 384
Depreciation	p. 385
Discounted Cash Flow	p. 386
Distinguishing between a Capital and an Operating Lease	p. 387
Dividend Yield	p. 388
Earnings per Share	p. 389
EBITDA	p. 390
Economic Value Added	p. 391
Enterprise Value	p. 391
Fair Value Calculations	p. 392
Future Value	p. 393
Goodwill and Patents	p. 393
Gross Profit Margin Ratio	p. 394
Interest Coverage	p. 395
Internal Rate of Return	p. 396
Liquidity Ratio Analysis	p. 396
Management Accounts	p. 397
Marginal Cost	p. 398
Market/Book Ratio	p. 399
Net Added Value (NAV) and Adjusted NAV	p. 400
Net Present Value	p. 400
Nominal and Real Interest Rates	p. 401
Option Pricing	p. 402
Payback Period	p. 403
Payout Ratio	p. 404
Price/Earnings Ratio	p. 405
Rate of Return	p. 406
Residual Value	p. 407
Return on Assets	p. 408
Return on Investment	p. 408
Return on Stockholders' Equity	p. 409
Risk-Adjusted Rate of Return	p. 410
Time Value of Money	p. 411
Total Return	p. 411
Treynor Ratio	p. 412
Value at Risk	p. 413
Weighted Average Cost of Capital	p. 414
Working Capital Cycle	p. 414
Yield	p. 416
Dictionary	p. 417
Index	p. 609
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