Business Finance And The Capital Market (macmillan Student Editions)

The scope and rationale of this book is discussed at some length in the introductory chapter. Business finance is no longer, if it ever was, an esoteric study, of interest only to a narrow sector of the public. We are all financiers in a small way. We borrow from building societies, banks and hire-purchase companies, and invest in houses, furniture and cars. We provide funds for business and Government through a variety of channels. Financial matters more frequently than ever encroach on to the front pages of our newspapers: mergers, tax measures, Bank rate changes, business failures, international loans -such news items readily capture the headlines nowadays. In spite of a growing public interest there are comparatively few books on business finance which cover the subject as a whole, and we hope that this book will assist practising businessmen to view the subject of finance in a wider perspective than that to which they may be accustomed, as well as provide a useful aid to students in their preparation for examinations. The syllabuses which are substantially covered by the contents of this book are those in business finance for the final examinations of professional bodies, Higher National Diplomas and Certificates in Business Studies, degree level examinations, and Diplomas and Certificates in Management Studies. To assist the student in tracking down particular topics, there are included, in addition to the usual index, a detailed list of contents at the front of the book, and brief introductory summaries to chapters. We give some indication of the help we have received from other writers in the footnotes and reading lists, and we thank the publishers and authors of works which have been quoted. Our thanks are also extended to colleagues who have read and criticised certain chapters, and not least to our wives, whose privations during the long silent hours of preparation evoked some penetrating criticisms well beyond the subject of finance. K. M. R.G. B. 1 Bank of England Quarterly BuUetiv (March 1971). 2 J. Revell andJ. Moyle, The Owners of Q)toted Ordinary Shares (1966) andJohn Moyle's 'The Pattern of Ordinary Share Ownership 1957-70'. 3 The largest to date has been the £120m B.P. rights issue of 1971. 8 BUSINESS FINANCE AND THE CAPITAL MARKET TABLE 1.2: Selection of Assets Held: End 1970 (.£m.) Insurance Private-Building Investment Trustee Unit companies sector societies trusts savings trusts pension banks funds Values Book Market Book Market Market Market (or nominal) Gilt-edged: 0-5 years 79\* 49 }790 }56 }320 9 Over 5 years 3,184\* 495 16 U.K. localauthority long-term debt Securities 419\* 146 52 280 Other 506 691 Overseas government and municipal 124 37 3 4 securities Company securities: Debenture Front Matter....Pages i-viii Front Matter....Pages 281-281 Conclusion....Pages 283-284 Front Matter....Pages 1-1 The Capital Market....Pages 3-10 Front Matter....Pages 11-11 Finance of a New Business....Pages 13-28 Forming a Limited Company....Pages 29-44 Capital Structures....Pages 45-66 Other Methods of Raising Finance, Including the Use of Special Institutions....Pages 67-81 Financing Export Trade....Pages 82-91 Front Matter....Pages 93-93 The Management of Funds, Planning and Budgeting....Pages 95-114 Some Accounting Problems....Pages 115-135 Evaluating the Return on Capital Expenditure....Pages 136-155 The Allocation of Profits....Pages 156-171 Front Matter....Pages 173-173 Reasons for Expansion....Pages 175-184 Business Combinations....Pages 185-205 Front Matter....Pages 207-207 Business Taxation....Pages 209-226 Front Matter....Pages 227-227 Channelling Savings....Pages 229-244 Market Behaviour and the Stock Exchange....Pages 245-263 Savers and their Portfolios....Pages 264-280 Back Matter....Pages 285-292