Financial Management: Theory and Practice

South Western College – 2008, 1104 pages, 12th Edition
ISBN: 0324422695, 9780324422696Written for and praised by students just like you, Financial Management: Theory and Practice gives you relevant, practical, and easy-to-understand information covering all of the financial management topics you need to succeed in this course. Underlying theory is presented first in an accessible style and then followed by the practical application.
The book begins with fundamental concepts, including background on the economic and financial environment, the time value of money, financial statements (with an emphasis on cash flows), bond valuation, risk analysis, and stock valuation. With this background, we go on to discuss how specific techniques and decision rules can be used to help maximize the value of the firm. This organization provides four important advantages:
I. Covering time value of money early helps students see how and why expected future cash flows determine the value of the firm. Also, it takes time for students to digest TVM concepts and to learn how to do the required calculations, so it is good to cover TVM concepts early and often.
II. Managers should try to maximize the fundamental value of a firm, which is determined by cash flows as revealed in financial statements. Our early coverage of financial statements thus helps students see how particular financial decisions affect the various parts of the firm and the resulting cash flow. Also, financial statement analysis provides an excellent vehicle for illustrating the usefulness of spreadsheets.
III. Most students—even those who do not plan to major in finance—are interested in stock and bond values, rates of return on investments, and the like. The ability to learn is a function of individual interest and motivation, so Financial Management’s early coverage of securities and security markets is pedagogically sound.
IV. Once basic concepts have been established, it is easier for students to understand both how and why corporations make specific decisions in the areas of capital budgeting, raising capital, working capital management, mergers, and the like.