Finance Essentials

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  • Format: Paperback
  • Copyright: 2012-03-15
  • Publisher: Bloomsbury Information Ltd
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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

Introductionp. viii
Contributor Biographiesp. xii
Best Practice: Balance Sheets and Cash Flow
Best-Practice Working Capital Management: Techniques for Optimizing Inventories, Receivables, and Payablesp. 2
Best Practices in Cash Flow Management and Reportingp. 7
Capital Budgeting: The Dominance of Net Present Valuep. 12
Comparing Net Present Value and Internal Rate of Returnp. 16
Fair Value Accounting: SFAS 157 and IAS 39p. 19
Introduction to Islamic Financial Risk Management Productsp. 23
Investment Risk in Islamic Financep. 27
Managing Counterparty Credit Riskp. 31
Managing Interest Rate Riskp. 34
Navigating a Liquidity Crisis Effectivelyp. 38
Pension Schemes: A Unique and Unintended Basket of Risks on the Balance Sheetp. 41
Quantifying Corporate Financial Riskp. 45
Risk Manágement of Islamic Finance Instrumentsp. 48
To Hedge or not to Hedgep. 53
Using Structured Products to Manage Liabilitiesp. 57
Valuing Pension Fund Liabilities on the Balance Sheetp. 60
Financial Regulation and compliance
Aligning the Internal Audit Function with Strategic Objectivesp. 63
Classification and Treatment of Leasesp. 66
Contemporary Developments in International Auditing Regulationp. 70
Continuous Auditing: Putting Theory into Practicep. 74
Effective Financial Reporting and Auditing: Importance and Limitationsp. 81
Engaging Senior Management in Internal Controlp. 84
How can Internal Audit Report Effectively to its Stakeholders?p. 86
How to Implement a Standard Chart of Accounts Effectivelyp. 90
Implementing an Effective Internal Controls Systemp. 93
Incorporating Operational and Performance Auditing into Compliance and Financial Auditingp. 97
Procedures for Reporting Financial Risk in Islamic Financep. 101
Starting a Successful Internal Audit Function to Meet Present and Future Demandsp. 103
What are the Leading Causes of Financial Restatements?p. 108
Funding and Investment
Acquiring a Secondary Listing, or Cross-Listingp. 112
Assessing Venture Capital Funding for Small and Medium-Sized Enterprisesp. 114
Asset Allocation Methodologiesp. 117
Equity Issues by Listed Companies: Rights Issues and Other Methodsp. 123
Financial Steps in an IPO for a Small or Medium-Size Enterprisep. 126
Viewpoint: Investing in a Volatile Environment: A Black Swan Perspectivep. 129
IPOs in Emerging Marketsp. 131
Managing Activist Investors and Fund Managersp. 134
Measuring Company Exposure to Country Riskp. 136
Measuring Country Riskp. 139
Minimizing Credit Riskp. 142
Optimizing the Capital Structure: Finding the Right Balance between Debt and Equityp. 145
Price Discovery in IPOsp. 148
Rigidity in Microfinancing: Can One Size Fit all?p. 151
The Role of Institutional Investors in Corporate Financingp. 154
The Role of Short Sellers in the Marketplacep. 158
Understanding Equity Capital in Small and Medium-Sized Enterprisesp. 164
Understanding the True Cost of Issuing Convertible Debt and Other Equity-Linked Financingp. 169
Governance and Ethics
Balancing Senior Management Compensation Arrangements with Shareholders' Interestsp. 173
Best Practices in Corporate Social Responsibilityp. 175
Business Ethicsp. 179
Corporate Board Structuresp. 182
CSR: More than PR, Pursuing Competitive Advantage in the Long Runp. 187
Dividend Policy: Maximizing Shareholder Valuep. 190
Executive Rewards: Ensuring that Financial Rewards Match Performancep. 194
Human Risk: How Effective Strategic Risk Management can Identify Roguesp. 198
Identifying the Right Nonexecutive Directorp. 201
Improving Corporate Profitability through Accountabilityp. 204
Role of Internal Auditing at Board Committee Levelp. 207
Mergers and Acquisitions
Acquisition Integration: How to do it Successfullyp. 211
Coping with Equity Market Reactions to M&A Transactionsp. 213
Due Diligence Requirements in Financial Transactionsp. 216
Going Private: Public-to-Private Leveraged Buyoutsp. 220
Identifying and Minimizing the Strategic Risks from M&Ap. 224
Joint Ventures: Synergies and Benefitsp. 227
Leveraged Buyouts: What, Why, When, and Howp. 230
Maximizing a New Strategic Alliancep. 233
Maximizing Value when Selling a Businessp. 235
Valuing Start-Upsp. 239
Why Mergers Fail and How to Prevent itp. 243
Operations and Performance
Aligning Structure with Strategy: Recalibrating for Improved Performance and Increased Profitabilityp. 246
Business Continuity Management: How to Prepare for the Worstp. 249
Countering Supply Chain Riskp. 253
Creating Value with EVAp. 255
Employee Stock Optionsp. 258
Essentials for Export Success: Understanding How Risks and Relationships Lead to Rewardsp. 260
Five Routes to Greater Profitability for Small and Medium Enterprisesp. 264
The Impact of Climate Change on Businessp. 267
Political Risk: Countering the Impact on your Businessp. 270
Real Options: Opportunity from Riskp. 273
Reducing Costs through Production and Supply Chain Managementp. 276
Understanding Reputation Risk and its Importancep. 279
Using Decision Analysis to Value R&D Projectsp. 282
Using Financial Analysis to Evaluate Strategyp. 287
Checklists: Balance Sheets and Cash Flow
Assessing Cash Flow and Bank Lending Requirementsp. 292
Estimating Enterprise Value with the Weighted Average Cost of Capitalp. 293
Hedging Liquidity Risk-Case Study and Strategiesp. 294
How to Manage your Credit Ratingp. 295
Identifying and Managing Exposure to Interest and Exchange Rate Risksp. 296
Managing Risk in Islamic Financep. 297
Managing Working Capitalp. 298
Measuring Liquidityp. 299
Preparing a Cash Flow Forecastp. 301
Setting up a Dividend Policyp. 302
Swaps, Options, and Futures: What they are and their Functionp. 303
Understanding and Calculating the Total Cost of Riskp. 304
Understanding Asset-Liability Management (Full Balance Sheet Approach)p. 305
Understanding Capital Structure Theoryp. 306
Understanding the Cost of Capital and the Hurdle Ratep. 307
Understanding the Relationship between the Discount Rate and Riskp. 308
Understanding the Weighted Average Cost of Capital (WACC)p. 309
Financial Regulation and Compliance
Avoiding Conflict of Interest in Internal Auditsp. 311
Choosing an External Auditorp. 312
Establishing a Framework for Assessing Riskp. 313
Internal Audit Chartersp. 314
International Auditing for Fraud Detection and Preventionp. 315
International Financial Reporting Standards (IFRS): The Basicsp. 316
Key Competencies for Internal Auditorsp. 317
The Key Components of an Audit Reportp. 318
MiFID-Its Development and Aimsp. 319
Preparing Financial Statements: Balance Sheetsp. 320
Preparing Financial Statements: Profit and Loss Accounts (P&Ls)p. 321
The Role of the Audit Committeep. 322
Understanding Internal Auditsp. 324
What is Forensic Auditing?p. 325
Funding and Investment
Analysis Using Monte Carlo Simulationp. 327
Applying the Gordon Growth Modelp. 328
Calculating Total Shareholder Returnp. 329
Islamic Microfinancep. 330
Obtaining an Equity Value using the Weighted Average Cost of Capital (WACC)p. 331
Sovereign Wealth Funds-Investment Strategies and Objectiviesp. 332
Steps for Obtaining Bank Financingp. 333
Understanding and using Leverage Ratiosp. 335
Understanding Fixed-Charge Coveragep. 336
Using Dividend Discount Modelsp. 337
Governance and Ethics
Conflicting Interests: The Agency Issuep. 338
Creating a Sustainable Development Policyp. 339
Creating Executive Compensationp. 340
Defining Corporate Governance: Its Aims, Goals, and Responsibilitiesp. 341
Directors' Duties: A Primerp. 342
Governance Practices in Family-Owned Firmsp. 343
Social Return on Investmentp. 345
Understanding Economic Efficiency Theoryp. 346
Mergers and Acquisitions
M&A Regulations: A Global Overviewp. 348
Management Buyoutsp. 349
Planning the Acquisition Processp. 350
Planning the Disposal Processp. 351
Structuring and Negotiating Joint Venturesp. 352
Understanding Anti-Takeover Strategiesp. 354
Using the Market-Value Method for Acquisitionsp. 355
Operations and Performance
Applying Stress-Testing to Business Continuity Managementp. 357
Appraising Investment Opportunitiesp. 358
Assessing Business Performancep. 359
Assessing the Value of Outsourcing and Offshoringp. 360
Basic Steps for Starting a Businessp. 361
Creating a Risk Registerp. 362
Identifying your Continuity Needsp. 363
Managing Bankruptcy and Insolvencyp. 365
Nonperformance and Breach of Contractp. 366
Understanding Real Optionsp. 367
Understanding Strategy Mapsp. 368
What is Benchmarking?p. 369
Calculations and Ratios
Accounts Receivable Turnoverp. 372
Alpha and Beta Values of a Securityp. 372
Amortizationp. 373
Annual Percentage Ratep. 374
Asset Turnoverp. 375
Asset Utilizationp. 375
Basis Point Valuep. 376
Bond Yieldp. 377
Book Valuep. 378
Capital Asset Pricing Modelp. 379
Capital Expenditurep. 380
Capitalization Ratiosp. 380
Contribution Marginp. 381
Conversion Ratiop. 382
Creditor and Debtor Daysp. 383
Current Ratiop. 383
Debt/Equity Ratiop. 384
Depreciationp. 385
Discounted Cash Flowp. 386
Distinguishing between a Capital and an Operating Leasep. 387
Dividend Yieldp. 388
Earnings per Sharep. 389
EBITDAp. 390
Economic Value Addedp. 391
Enterprise Valuep. 391
Fair Value Calculationsp. 392
Future Valuep. 393
Goodwill and Patentsp. 393
Gross Profit Margin Ratiop. 394
Interest Coveragep. 395
Internal Rate of Returnp. 396
Liquidity Ratio Analysisp. 396
Management Accountsp. 397
Marginal Costp. 398
Market/Book Ratiop. 399
Net Added Value (NAV) and Adjusted NAVp. 400
Net Present Valuep. 400
Nominal and Real Interest Ratesp. 401
Option Pricingp. 402
Payback Periodp. 403
Payout Ratiop. 404
Price/Earnings Ratiop. 405
Rate of Returnp. 406
Residual Valuep. 407
Return on Assetsp. 408
Return on Investmentp. 408
Return on Stockholders' Equityp. 409
Risk-Adjusted Rate of Returnp. 410
Time Value of Moneyp. 411
Total Returnp. 411
Treynor Ratiop. 412
Value at Riskp. 413
Weighted Average Cost of Capitalp. 414
Working Capital Cyclep. 414
Yieldp. 416
Dictionaryp. 417
Indexp. 609
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