{"product_id":"lessons-in-corporate-finance-isbn-9781119537830","title":"Lessons in Corporate Finance","description":"\u003cp\u003e\u003cb\u003eAn intuitive introduction to fundamental corporate finance concepts and methods \u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003ci\u003eLessons in Corporate Finance, Second Edition \u003c\/i\u003eoffers a comprehensive introduction to the subject, using a unique interactive question and answer-based approach. Asking a series of increasingly difficult questions, this text provides both conceptual insight and specific numerical examples. Detailed case studies encourage class discussion and provide real-world context for financial concepts. The book provides a thorough coverage of corporate finance including ratio and pro forma analysis, capital structure theory, investment and financial policy decisions, and valuation and cash flows provides a solid foundational knowledge of essential topics. This revised and updated second edition includes new coverage of the U.S. Tax Cuts and Jobs Act of 2017 and its implications for corporate finance valuation.\u003c\/p\u003e \u003cp\u003eWritten by acclaimed professors from MIT and Tufts University, this innovative text integrates academic research with practical application to provide an in-depth learning experience. Chapter summaries and appendices increase student comprehension. Material is presented from the perspective of real-world chief financial officers making decisions about how firms obtain and allocate capital, including how to:\u003c\/p\u003e \u003cul\u003e \u003cli\u003eManage cash flow and make good investment and financing decisions\u003c\/li\u003e \u003c\/ul\u003e \u003cul\u003e \u003cli\u003eUnderstand the five essential valuation methods and their sub-families\u003c\/li\u003e \u003cli\u003eExecute leveraged buyouts, private equity financing, and mergers and acquisitions\u003c\/li\u003e \u003cli\u003eApply basic corporate finance tools, techniques, and policies\u003c\/li\u003e \u003c\/ul\u003e \u003cp\u003e\u003ci\u003e \u003c\/i\u003e\u003ci\u003eLessons in Corporate Finance\u003c\/i\u003e\u003ci\u003e, Second Edition \u003c\/i\u003eprovides an accessible and engaging introduction to the basic methods and principles of corporate finance. From determining a firm’s financial health to valuation nuances, this text provides the essential groundwork for independent investigation and advanced study. \u003c\/p\u003e \u003cp\u003eAbout the Authors xiii\u003c\/p\u003e \u003cp\u003eAcknowledgments xv\u003c\/p\u003e \u003cp\u003ePreface xvii\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 Introduction 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eTwo Markets: Product and Capital 2\u003c\/p\u003e \u003cp\u003eThe Basics: Tools and Techniques 3\u003c\/p\u003e \u003cp\u003eA Diagram of Corporate Finance 4\u003c\/p\u003e \u003cp\u003eA Brief History of Modern Finance 5\u003c\/p\u003e \u003cp\u003eReading This Book 6\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart One Financial Health of a Firm and Cash Flow Management\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 Determining a Firm’s Financial Health (PIPES-A) 11\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Conversation with the Banker Is Like a Job Interview 11\u003c\/p\u003e \u003cp\u003eStarting with the Product Market Strategy 13\u003c\/p\u003e \u003cp\u003eIs PIPES Profitable? 14\u003c\/p\u003e \u003cp\u003eDoing the Math 14\u003c\/p\u003e \u003cp\u003eSources and Uses of Funds 16\u003c\/p\u003e \u003cp\u003eRatio Analysis 20\u003c\/p\u003e \u003cp\u003eThe Cash Cycle 26\u003c\/p\u003e \u003cp\u003eSummary 28\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 Pro Forma Forecasts (PIPES-B) 31\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eFirst, Let’s Take a Closer Look at Ratio Analysis 31\u003c\/p\u003e \u003cp\u003ePro Forma Forecasts 33\u003c\/p\u003e \u003cp\u003eCircular Relationships 40\u003c\/p\u003e \u003cp\u003eBack to (Forecasting) the Future 42\u003c\/p\u003e \u003cp\u003eProjecting Out to 2018 and 2019 43\u003c\/p\u003e \u003cp\u003eEvaluating the Loan 45\u003c\/p\u003e \u003cp\u003eSummary 50\u003c\/p\u003e \u003cp\u003eAppendix 3A: Accounting Is Not Economic Reality 52\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 The Impact of Seasonality on a Firm’s Funding (PIPES-C) 57\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eMonthly Pro Forma Income Statements 58\u003c\/p\u003e \u003cp\u003eMonthly Pro Forma Balance Sheets 60\u003c\/p\u003e \u003cp\u003eA Different Picture of the Firm 68\u003c\/p\u003e \u003cp\u003eSummary 72\u003c\/p\u003e \u003cp\u003eAppendix 4A: PIPES Monthly Pro Forma Income Statements and Balance Sheets, 2018 73\u003c\/p\u003e \u003cp\u003eAppendix 4B: PIPES Monthly Pro Forma Income Statements and Balance Sheets, 2019 76\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart Two Firm Financing and Financial Policies\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 Why Financing Matters (Massey Ferguson) 81\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eProduct Market Position and Strategy 81\u003c\/p\u003e \u003cp\u003ePolitical Risk and Economies of Scale in Production 82\u003c\/p\u003e \u003cp\u003eMassey Ferguson, 1971–1976 83\u003c\/p\u003e \u003cp\u003eSustainable Growth 85\u003c\/p\u003e \u003cp\u003eThe Period after 1976 87\u003c\/p\u003e \u003cp\u003eConrad Runs Away 90\u003c\/p\u003e \u003cp\u003eThe Competitors 91\u003c\/p\u003e \u003cp\u003eBack to Massey 93\u003c\/p\u003e \u003cp\u003eMassey’s Restructuring 96\u003c\/p\u003e \u003cp\u003ePostscript: What Happened to Massey 100\u003c\/p\u003e \u003cp\u003eSummary 100\u003c\/p\u003e \u003cp\u003eAppendix 5A: Massey Ferguson Financial Statements 102\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 An Introduction to Capital Structure Theory 107\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eOptimal Capital Structure 108\u003c\/p\u003e \u003cp\u003eM\u0026amp;M and Corporate Finance 111\u003c\/p\u003e \u003cp\u003eTaxes 116\u003c\/p\u003e \u003cp\u003eCosts of Financial Distress 126\u003c\/p\u003e \u003cp\u003eThe Textbook View of Capital Structure 131\u003c\/p\u003e \u003cp\u003eThe Cost of Capital 133\u003c\/p\u003e \u003cp\u003eSummary 134\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 Capital Structure Decisions (Marriott Corporation and Gary Wilson) 137\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCapital Structure 137\u003c\/p\u003e \u003cp\u003eThe Cost of Capital 144\u003c\/p\u003e \u003cp\u003eHow Firms Set Capital Structure in Practice 147\u003c\/p\u003e \u003cp\u003eCorporate Financial Policies 148\u003c\/p\u003e \u003cp\u003eSustainable Growth and Excess Cash Flow 151\u003c\/p\u003e \u003cp\u003eWhat to Do with Excess Cash? 152\u003c\/p\u003e \u003cp\u003eSummary 154\u003c\/p\u003e \u003cp\u003eAppendix 7A: Marriott Corporation Income Statements and Balance Sheets 156\u003c\/p\u003e \u003cp\u003eAppendix 7B: Marriott Corporation Selected Ratios 158\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8 Investment Decisions (Marriott Corporation and Gary Wilson) 159\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhat Is the Correct Price? 160\u003c\/p\u003e \u003cp\u003eHow Should Marriott Buy Its Shares? 160\u003c\/p\u003e \u003cp\u003eThe Loan Covenants 164\u003c\/p\u003e \u003cp\u003eThe Impact of the Product Market on Financial Policies 165\u003c\/p\u003e \u003cp\u003eThe Capital Market Impact and the Future 167\u003c\/p\u003e \u003cp\u003eSummary 173\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 Financial Policy Decisions (AT\u0026amp;T: Before and After the 1984 Divestiture) 177\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eBackground on AT\u0026amp;T 178\u003c\/p\u003e \u003cp\u003eM\u0026amp;M and the Practice of Corporate Finance 178\u003c\/p\u003e \u003cp\u003eOld (pre-1984) AT\u0026amp;T 180\u003c\/p\u003e \u003cp\u003eNew (post-1984) AT\u0026amp;T 195\u003c\/p\u003e \u003cp\u003eSummary 207\u003c\/p\u003e \u003cp\u003eAppendix 9A: Development of AT\u0026amp;T Pro Formas, 1984–1988 (Expected-Case) 208\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 The Impact of Operating Strategy on Corporate Finance Policy (MCI) 211\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eA Brief Summary 211\u003c\/p\u003e \u003cp\u003eA Brief History of MCI 213\u003c\/p\u003e \u003cp\u003eConvertible Preferred Stock and Convertible Bonds 218\u003c\/p\u003e \u003cp\u003eInterest Rates and Debt Ratios 222\u003c\/p\u003e \u003cp\u003eLeases 223\u003c\/p\u003e \u003cp\u003eFinancing Needs of the New MCI 223\u003c\/p\u003e \u003cp\u003eMCI’s Financing Choice 234\u003c\/p\u003e \u003cp\u003eMCI Postscript 235\u003c\/p\u003e \u003cp\u003eSummary 236\u003c\/p\u003e \u003cp\u003eAppendix 10A: Development of MCI’s Pro Formas, 1984–1988 238\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11 Dividends and Stock Repurchases (Apple Inc.) 241\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Theory of Dividend Policy 241\u003c\/p\u003e \u003cp\u003eEmpirical Evidence 245\u003c\/p\u003e \u003cp\u003eApple Inc. and the Decision on Whether to Pay Dividends 248\u003c\/p\u003e \u003cp\u003eWhat Did Apple Do about Dividends? 260\u003c\/p\u003e \u003cp\u003eWhat Happened Next 261\u003c\/p\u003e \u003cp\u003eSummary 264\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12 A Continuation of Capital Structure Theory 265\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Tax Shield of Debt 266\u003c\/p\u003e \u003cp\u003eThe Costs of Financial Distress 267\u003c\/p\u003e \u003cp\u003eTransaction Costs, Asymmetric Information, and Agency Costs 269\u003c\/p\u003e \u003cp\u003eAsymmetric Information and Firm Financing 272\u003c\/p\u003e \u003cp\u003eAgency Costs: Manager Behavior and Capital Structure 279\u003c\/p\u003e \u003cp\u003eLeverage and Agency Conflicts between Equity and Debt Holders 281\u003c\/p\u003e \u003cp\u003eStart with the Amount of Financing Required 286\u003c\/p\u003e \u003cp\u003eSummary 288\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 13 Restructuring and Bankruptcy: When Things Go Wrong (Avaya Holdings) 291\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWhen Things Go Wrong 291\u003c\/p\u003e \u003cp\u003eThe Key Economic Principle of Bankruptcy Is to Save Viable Firms 297\u003c\/p\u003e \u003cp\u003eWhen Should a Firm File for Bankruptcy? 297\u003c\/p\u003e \u003cp\u003eThe Rules of Bankruptcy 300\u003c\/p\u003e \u003cp\u003eMaintaining the Value of a Firm in Bankruptcy 303\u003c\/p\u003e \u003cp\u003eAvaya Emerges from Bankruptcy 304\u003c\/p\u003e \u003cp\u003eSummary 306\u003c\/p\u003e \u003cp\u003eAppendix 13A: The Creditors Coordination Problem 308\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart Three Investments and Valuation\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 14 The Time Value of Money: Discounting and Net Present Values 311\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Time Value of Money 311\u003c\/p\u003e \u003cp\u003eNet Present Value (NPV) 316\u003c\/p\u003e \u003cp\u003ePayback 322\u003c\/p\u003e \u003cp\u003eProjects with Unequal Lives 323\u003c\/p\u003e \u003cp\u003ePerpetuities 325\u003c\/p\u003e \u003cp\u003eSummary 326\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 15 Valuation and Cash Flows (Sungreen A) 327\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eInvestment Decisions 327\u003c\/p\u003e \u003cp\u003eHow to Value a Project 328\u003c\/p\u003e \u003cp\u003eThe Weighted Average Cost of Capital (WACC) 340\u003c\/p\u003e \u003cp\u003eTerminal Values 341\u003c\/p\u003e \u003cp\u003eSummary 343\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 16 Valuation (Sungreen B) 345\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eSungreen’s Projected Cash Flows 345\u003c\/p\u003e \u003cp\u003eThe Weighted Average Cost of Capital (WACC) 346\u003c\/p\u003e \u003cp\u003eTwin Firms 351\u003c\/p\u003e \u003cp\u003eThe Cost of Equity 354\u003c\/p\u003e \u003cp\u003eThe Cost of Debt 357\u003c\/p\u003e \u003cp\u003eThe Final Valuation 358\u003c\/p\u003e \u003cp\u003eStrategic Analysis 360\u003c\/p\u003e \u003cp\u003eSummary 361\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 17 Valuation Nuances 363\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCash Flow Nuances 363\u003c\/p\u003e \u003cp\u003eCost of Capital Nuances 365\u003c\/p\u003e \u003cp\u003eNuances on Calculating the Cost of Equity: Levering and Unlevering Beta 371\u003c\/p\u003e \u003cp\u003eSeparating Cash Flows and Terminal Values 376\u003c\/p\u003e \u003cp\u003eNuances of Terminal Value Methods 376\u003c\/p\u003e \u003cp\u003eOther Valuation Techniques: DCF Variations 383\u003c\/p\u003e \u003cp\u003eReal Options (aka Strategic Choices) 386\u003c\/p\u003e \u003cp\u003eSummary 389\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 18 Leveraged Buyouts and Private Equity Financing (Congoleum) 391\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCongoleum: A Short History 391\u003c\/p\u003e \u003cp\u003eLeading up to the LBO: What Makes a Firm a Good LBO Target? 392\u003c\/p\u003e \u003cp\u003eDetails of the Deal 395\u003c\/p\u003e \u003cp\u003ePostscript: What Happened to LBOs? 409\u003c\/p\u003e \u003cp\u003eSummary 411\u003c\/p\u003e \u003cp\u003eThe World Keeps Changing 412\u003c\/p\u003e \u003cp\u003eAppendix 18A: Congoleum’s Pro Formas with and without the LBO 414\u003c\/p\u003e \u003cp\u003eAppendix 18B: Highlights of the Lazard Fairness Opinion 420\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 19 Mergers and Acquisitions: Strategic Issues (The Dollar Stores) 423\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Three Main Competitors 423\u003c\/p\u003e \u003cp\u003eRecent History 424\u003c\/p\u003e \u003cp\u003eShopping a Firm\/Finding a Buyer 428\u003c\/p\u003e \u003cp\u003eSummary 431\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 20 Valuing an Acquisition: Free Cash Flows to the Firm (The Dollar Stores) 433\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Bid for Family Dollar 433\u003c\/p\u003e \u003cp\u003eFree Cash Flows to the Firm 435\u003c\/p\u003e \u003cp\u003eEstimating the Cost of Capital 443\u003c\/p\u003e \u003cp\u003eDiscounted Cash Flows 448\u003c\/p\u003e \u003cp\u003eTerminal Values 448\u003c\/p\u003e \u003cp\u003eThe Three Pieces 451\u003c\/p\u003e \u003cp\u003eSummary 452\u003c\/p\u003e \u003cp\u003eAppendix 20A: Family Dollar Pro Forma Financial Statements with Authors’ Constant Debt Ratio 453\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 21 Understanding Free Cash Flows (The Dollar Stores) 455\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eComparing the Free-Cash-Flows Formulas 455\u003c\/p\u003e \u003cp\u003eBack to Discount Rates 457\u003c\/p\u003e \u003cp\u003eOn to Free Cash Flows to Equity 459\u003c\/p\u003e \u003cp\u003eDiscounting the Free Cash Flows to Equity 462\u003c\/p\u003e \u003cp\u003eSummary 463\u003c\/p\u003e \u003cp\u003eAppendix 21A: Family Dollar Pro Forma Free Cash Flows to Equity with Constant Debt Ratio 464\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 22 Mergers and Acquisitions: Execution (The Dollar Stores) 465\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Time Line 465\u003c\/p\u003e \u003cp\u003eManagerial Discretion 468\u003c\/p\u003e \u003cp\u003eActivist Shareholders 470\u003c\/p\u003e \u003cp\u003eThe Federal Trade Commission (FTC) 472\u003c\/p\u003e \u003cp\u003eShareholder Lawsuits 473\u003c\/p\u003e \u003cp\u003eThe Vote 474\u003c\/p\u003e \u003cp\u003eSummary 475\u003c\/p\u003e \u003cp\u003eAppendix 22A: Key Events in the Bidding for Family Dollar, 2014–2015 476\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 23 Review 477\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eChapters 2–4: Cash Flow Management—Financial Tools 478\u003c\/p\u003e \u003cp\u003eChapters 5–13: Financing Decisions and Financial Policies 478\u003c\/p\u003e \u003cp\u003eChapters 14–22: Valuation 482\u003c\/p\u003e \u003cp\u003eTools and Concepts Discussed in This Book 485\u003c\/p\u003e \u003cp\u003eFinance as Art, Not Science 486\u003c\/p\u003e \u003cp\u003eBottom Lines 487\u003c\/p\u003e \u003cp\u003eAn Intelligent Approach to Finance 487\u003c\/p\u003e \u003cp\u003eKeeping Current 488\u003c\/p\u003e \u003cp\u003eLarry’s Last (Really a True) Story 489\u003c\/p\u003e \u003cp\u003ePaul’s Theory of Pies 490\u003c\/p\u003e \u003cp\u003eRules to Live By 490\u003c\/p\u003e \u003cp\u003eGlossary 493\u003c\/p\u003e \u003cp\u003eIndex 503\u003c\/p\u003e  \u003cp\u003e\u003cb\u003ePAUL ASQUITH\u003c\/b\u003e is the Gordon Y. Billard professor of finance at M.I.T.’s Sloan School. He is a specialist in corporate finance and has written on all areas of corporate finance including mergers, LBOs, equity issues, dividend policy, and more. \u003c\/p\u003e\u003cp\u003e\u003cb\u003eLAWRENCE A. WEISS\u003c\/b\u003e is professor of International Accounting at Tufts University. He is a specialist in accounting and finance and has written on corporate bankruptcy, firm performance, international accounting, mergers, and more.   \u003c\/p\u003e\u003cp\u003eA business can withstand bad products, ineffective marketing, and negative earnings yet still \u003ci\u003estay in business\u003c\/i\u003e—as long as there’s positive cash flow. Managing cash flow is one of the key responsibilities of the chief financial officer (CFO), who also makes decisions on how to obtain and invest capital. All successful CFOs use a specialized set of financial tools to make value-enhancing business decisions, and \u003ci\u003eLessons in Corporate Finance\u003c\/i\u003e is your state-of-the-art toolbox. \u003c\/p\u003e\u003cp\u003eThis refreshingly original treatment of corporate finance looks at case studies from the business world, as early as the 1970s up to today, and sheds light on the theory and practical formulas driving the decision-making process in all areas of corporate finance, including capital structure and financing, pro forma forecasts, valuation, dividends, debt maturity, asymmetric information, and more. Written by award-winning professors at M.I.T. and Tufts University, this versatile guide incorporates years of research and instructional expertise to deliver a personable, interactive resource. The masterful discussion-based format goes beyond simple memorization and facilitates applicable learning that enables you to simultaneously develop your knowledge, skills, and instincts. By the end, you will know how to: \u003c\/p\u003e\u003cul\u003e\n\u003cli\u003eEvaluate a firm’s financial health using ratios and other financial tools\u003c\/li\u003e \u003cli\u003eMake certain a business does not run out of cash by proficiently managing and forecasting cash flows\u003c\/li\u003e \u003cli\u003eChoose the best capital structure for a company and navigate the trade-offs between the various financing alternatives\u003c\/li\u003e \u003cli\u003eMake good investment decisions by accurately valuing investment projects, including determining relevant cash flows and proper discount rate\u003c\/li\u003e \u003cli\u003eEffectively combine investment and financing decisions to facilitate leveraged buyouts, private equity, and mergers and acquisitions\u003c\/li\u003e\n\u003c\/ul\u003e \u003cp\u003e\u003ci\u003eLessons in Corporate Finance\u003c\/i\u003e gives you everything you need to maneuver in the intricate operations of corporate finance with a deep and instinctual understanding of the broad concepts and practical methods used every day.\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47989524725989,"sku":"NP9781119537830","price":84.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781119537830.jpg?v=1761784456","url":"https:\/\/k12savings.com\/es\/products\/lessons-in-corporate-finance-isbn-9781119537830","provider":"K12savings","version":"1.0","type":"link"}