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Empowering you for success, Brigham/Ehrhardt’s FINANCIAL MANAGEMENT: THEORY AND PRACTICE, 16th edition, equips you with a solid understanding of key theoretical concepts along with practical tools to make effective financial decisions. It emphasizes corporate valuation and its relevance to financial decisions to ensure you see the details as well as the big picture. Chapters connect concepts, value and tools–usually within a fully integrated Excel model that can be applied to situations you may face on the job. Topics expand from fundamentals to strategic finance, linking recent events to the role of finance in business and your personal life. The MindTap Finance digital learning solution is also available. With its relevant and engaging presentation, numerous examples and emphasis on Excel applications, this text provides a comprehensive resource for your academic and business career. Cover Brief Contents Contents Preface Part 1: The Company and Its Environment Chapter 1: An Overview of Financial Management and the Financial Environment 1-1 The Five-Minute MBA 1-2 Finance from 40,000 Feet Above 1-3 The Corporate Life Cycle 1-4 Governing a Corporation 1-5 An Overview of Financial Markets 1-6 Claims on Future Cash Flows: Types of Financial Securities 1-7 Claims on Future Cash Flows: The Required Rate of Return (the Cost of Money) 1-8 The Functions of Financial Institutions 1-9 Financial Markets 1-10 Overview of the U.S. Stock Markets 1-11 Trading in the Modern Stock Markets 1-12 Finance and the Great Recession of 2007 1-13 The Big Picture e-Resources Summary Questions Mini Case Chapter 2: Financial Statements, Cash Flow, and Taxes 2-1 Financial Statements and Reports 2-2 The Balance Sheet 2-3 The Income Statement 2-4 Statement of Stockholders' Equity 2-5 Statement of Cash Flows 2-6 Net Cash Flow 2-7 Free Cash Flow: The Cash Flow Available for Distribution to Investors 2-8 Performance Evaluation 2-9 Corporate Income Taxes 2-10 Personal Taxes Summary Questions Self-Test Problem Problems Spreadsheet Problems Mini Case Chapter 3: Analysis of Financial Statements 3-1 Financial Analysis 3-2 Profitability Ratios 3-3 Asset Management Ratios 3-4 Liquidity Ratios 3-5 Debt Management Ratios 3-6 Market Value Ratios 3-7 Trend Analysis, Common Size Analysis, and Percentage Change Analysis 3-8 Tying the Ratios Together: The DuPont Equation 3-9 Comparative Ratios and Benchmarking 3-10 Uses and Limitations of Ratio Analysis 3-11 Looking beyond the Numbers Summary Questions Self-Test Problems Problems Spreadsheet Problems Mini Case Selected Additional Cases Part 2: Fixed Income Securities Chapter 4: Time Value of Money 4-1 Time Lines 4-2 Future Values 4-3 Present Values 4-4 Finding the Interest Rate, I 4-5 Finding the Number of Years, N 4-6 Perpetuities 4-7 Annuities 4-8 Future Value of an Ordinary Annuity 4-9 Future Value of an Annuity Due 4-10 Present Value of Ordinary Annuities and Annuities Due 4-11 Finding Annuity Payments, Periods, and Interest Rates 4-12 Uneven, or Irregular, Cash Flows 4-13 Future Value of an Uneven Cash Flow Stream 4-14 Solving for I with Irregular Cash Flows 4-15 Semiannual and Other Compounding Periods 4-16 Fractional Time Periods 4-17 Amortized Loans 4-18 Growing Annuities Summary Questions Self-Test Problems Problems Spreadsheet Problem Mini Case Chapter 5: Bonds, Bond Valuation, and Interest Rates 5-1 Who Issues Bonds? 5-2 Key Characteristics of Bonds 5-3 Bond Valuation 5-4 Changes in Bond Values over Time 5-5 Bonds with Semiannual Coupons 5-6 Bond Yields 5-7 The Pre-Tax Cost of Debt: Determinants of Market Interest Rates 5-8 The Risk-Free Interest Rate: Nominal (rRF) and Real (r*) 5-9 The Inflation Premium (IP) 5-10 The Maturity Risk Premium (MRP) 5-11 The Default Risk Premium (DRP) 5-12 The Liquidity Premium (LP) 5-13 The Term Structure of Interest Rates 5-14 Financing with Junk Bonds 5-15 Bankruptcy and Reorganization Summary Questions Self-Test Problem Problems Spreadsheet Problem Mini Case Selected Additional Cases Part 3: Stocks and Options Chapter 6: Risk and Return 6-1 Investment Returns and Risk 6-2 Measuring Risk for Discrete Distributions 6-3 Risk in a Continuous Distribution 6-4 Using Historical Data to Estimate Risk 6-5 Risk in a Portfolio Context 6-6 The Relevant Risk of a Stock: The Capital Asset Pricing Model (CAPM) 6-7 The Relationship between Risk and Return in the Capital Asset Pricing Model 6-8 The Efficient Markets Hypothesis 6-9 The Fama-French Three-Factor Model 6-10 Behavioral Finance 6-11 The CAPM and Market Efficiency: Implications for Corporate Managers and Investors Summary Questions Self-Test Problems Problems Spreadsheet Problem Mini Case Selected Additional Cases Chapter 7: Corporate Valuation and Stock Valuation 7-1 Legal Rights and Privileges of Common Stockholders 7-2 Classified Stock and Tracking Stock 7-3 Stock Market Reporting 7-4 Valuing Common Stocks-Introducing the Free Cash Flow (FCF) Valuation Model 7-5 The Constant Growth Model: Valuation When Expected Free Cash Flow Grows at a Constant Rate 7-6 The Multistage Model: Valuation When Expected Short-Term Free Cash Flow Grows at a Nonconstant Rate 7-7 Application of the FCF Valuation Model to MicroDrive 7-8 Do Stock Values Reflect Long-Term or Short-Term Cash Flows? 7-9 Value-Based Management: Using the Free Cash Flow Valuation Model to Identify Value Drivers 7-10 Why Are Stock Prices So Volatile? 7-11 Dividend Valuation Models 7-12 The Market Multiple Method 7-13 Comparing the FCF Valuation Model, the Dividend Growth Model, and the Market Multiple Method 7-14 Preferred Stock Summary Questions Self-Test Problems Problems Spreadsheet Problems Mini Case Selected Additional Cases Chapter 8: Financial Options and Applications in Corporate Finance 8-1 Overview of Financial Options 8-2 The Single-Period Binomial Option Pricing Approach 8-3 The Single-Period Binomial Option Pricing Formula 8-4 The Multi-Period Binomial Option Pricing Model 8-5 The Black-Scholes Option Pricing Model (OPM) 8-6 The Valuation of Put Options 8-7 Applications of Option Pricing in Corporate Finance Summary Questions Self-Test Problems Problems Spreadsheet Problem Mini Case Part 4: Projects and Their Valuation Chapter 9: The Cost of Capital 9-1 The Weighted Average Cost of Capital 9-2 Choosing Weights for the Weighted Average Cost of Capital 9-3 The Cost of Debt 9-4 Cost of Preferred Stock, rps 9-5 Cost of Common Stock: The Market Risk Premium, RPM 9-6 Using the CAPM to Estimate the Cost of Common Stock, rs 9-7 Using the Dividend Growth Approach to Estimate the Cost of Common Stock 9-8 The Weighted Average Cost of Capital (WACC) 9-9 Adjusting the Cost of Equity for Flotation Costs 9-10 Privately Owned Firms and Small Businesses 9-11 The Divisional Cost of Capital 9-12 Estimating the Cost of Capital for Individual Projects 9-13 Managerial Issues and the Cost of Capital Summary Questions Self-Test Problem Problems Spreadsheet Problems Mini Case Selected Additional Cases Chapter 10: The Basics of Capital Budgeting: Evaluating Cash Flows 10-1 An Overview of Capital Budgeting 10-2 The First Step in Project Analysis 10-3 Net Present Value (NPV) 10-4 Internal Rate of Return (IRR) 10-5 Modified Internal Rate of Return (MIRR) 10-6 Profitability Index (PI) 10-7 Payback Period 10-8 How to Use the Different Capital Budgeting Methods 10-9 Other Issues in Capital Budgeting Summary Questions Self-Test Problem Problems Spreadsheet Problem Mini Case Selected Additional Cases Chapter 11: Cash Flow Estimation and Risk Analysis 11-1 Identifying Relevant Cash Flows 11-2 Analysis of an Expansion Project 11-3 Risk Analysis in Capital Budgeting 11-4 Measuring Stand-Alone Risk 11-5 Sensitivity Analysis 11-6 Scenario Analysis 11-7 Monte Carlo Simulation Analysis 11-8 Project Risk Conclusions 11-9 Replacement Analysis 11-10 Phased Decisions and Decision Trees 11-11 Other Real Options Summary Questions Self-Test Problems Problems Spreadsheet Problems Mini Case Selected Additional Cases Appendix 11A: Depreciation for Tax Purposes Part 5: Corporate Valuation and Governance Chapter 12: Corporate Valuation and Financial Planning 12-1 Overview of Financial Planning 12-2 Financial Planning at MicroDrive Inc. 12-3 Forecasting Operations 12-4 Evaluating MicroDrive's Strategic Initiatives 12-5 Projecting MicroDrive's Financial Statements 12-6 Analysis and Selection of a Strategic Plan 12-7 The CFO's Model 12-8 Additional Funds Needed (AFN) Equation 12-9 Forecasting When the Ratios Change Summary Questions Self-Test Problems Problems Spreadsheet Problems Mini Case Selected Additional Cases Chapter 13: Corporate Governance 13-1 Agency Conflicts 13-2 Corporate Governance 13-3 Employee Stock Ownership Plans (ESOPs) Summary Questions Mini Case Part 6: Cash Distributions and Capital Structure Chapter 14: Distributions to Shareholders: Dividends and Repurchases 14-1 An Overview of Cash Distributions 14-2 Procedures for Cash Distributions 14-3 Cash Distributions and Firm Value 14-4 Clientele Effect 14-5 Signaling Hypothesis 14-6 Implications for Dividend Stability 14-7 Setting the Target Distribution Level: The Residual Distribution Model 14-8 The Residual Distribution Model in Practice 14-9 A Tale of Two Cash Distributions: Dividends versus Stock Repurchases 14-10 The Pros and Cons of Dividends and Repurchases 14-11 Other Factors Influencing Distributions 14-12 Summarizing the Distribution Policy Decision 14-13 Stock Splits and Stock Dividends 14-14 Dividend Reinvestment Plans Summary Questions Self-Test Problems Problems Spreadsheet Problems Mini Case Selected Additional Cases Chapter 15: Capital Structure Decisions 15-1 An Overview of Capital Structure 15-2 Business Risk and Financial Risk 15-3 Capital Structure Theory: The Modigliani and Miller Models 15-4 Capital Structure Theory: Beyond the Modigliani and Miller Models 15-5 Capital Structure Evidence and Implications 15-6 Estimating the Optimal Capital Structure 15-7 Anatomy of a Recapitalization 15-8 Risky Debt and Equity as an Option 15-9 Managing the Maturity Structure of Debt Summary Questions Self-Test Problems Problems Spreadsheet Problems Mini Case Selected Additional Cases Part 7: Managing Global Operations Chapter 16: Supply Chains and Working Capital Management 16-1 Overview of Supply Chain Management 16-2 Using and Financing Operating Current Assets 16-3 The Cash Conversion Cycle 16-4 Inventory Management 16-5 Receivables Management 16-6 Accruals and Accounts Payable (Trade Credit) 16-7 The Cash Budget 16-8 Cash Management and the Target Cash Balance 16-9 Cash Management Techniques 16-10 Managing Short-Term Investments 16-11 Short-Term Bank Loans 16-12 Commercial Paper 16-13 Use of Security in Short-Term Financing Summary Questions Self-Test Problems Problems Spreadsheet Problems Mini Case Selected Additional Cases Chapter 17: Multinational Financial Management 17-1 Multinational, or Global, Corporations 17-2 Multinational versus Domestic Financial Management 17-3 Exchange Rates 17-4 The Fixed Exchange Rate System 17-5 Floating Exchange Rates 17-6 Government Intervention in Foreign Exchange Markets 17-7 Other Exchange Rate Systems: No Local Currency, Pegged Rates, and Managed Floating Rates 17-8 Forward Exchange Rates and Risk Management 17-9 Interest Rate Parity 17-10 Purchasing Power Parity 17-11 Inflation, Interest Rates, and Exchange Rates 17-12 International Money and Capital Markets 17-13 Multinational Capital Budgeting 17-14 International Capital Structures 17-15 Multinational Working Capital Management Summary Questions Self-Test Problem Problems Spreadsheet Problem Mini Case Selected Additional Cases Part 8: Tactical Financing Decisions Chapter 18: Public and Private Financing: Initial Offerings, Seasoned Offerings, Investment Banks 18-1 The Financial Life Cycle of a Start-Up Company 18-2 The Decision to Go Public 18-3 The Process of Going Public: An Initial Public Offering 18-4 Equity Carve-Outs: A Special Type of IPO 18-5 Other Ways to Raise Funds in the Capital Markets 18-6 Investment Banking Activities 18-7 The Decision to Go Private Summary Questions Self-Test Problems Problems Spreadsheet Problem Mini Case Selected Additional Cases Chapter 19: Lease Financing 19-1 Types of Leases 19-2 Reporting Leases on Financial Statements 19-3 Lease Analysis: Determination of Tax Status by the Internal Revenue Service (IRS) 19-4 Lease Analysis: Non-Tax-Oriented Leases 19-5 Lease Analysis: Tax-Oriented Lease 19-6 Evaluation by the Lessor 19-7 Leases, Taxes, and the 2017 Tax Cuts and Jobs Act 19-8 Other Issues in Lease Analysis 19-9 Other Reasons for Leasing Summary Questions Self-Test Problem Problems Spreadsheet Problem Mini Case Selected Additional Cases Chapter 20: Hybrid Financing: Preferred Stock, Warrants, and Convertibles 20-1 Preferred Stock 20-2 Warrants 20-3 Convertible Securities 20-4 A Final Comparison of Warrants and Convertibles 20-5 Reporting Earnings When Warrants or Convertibles Are Outstanding Summary Questions Self-Test Problem Problems Spreadsheet Problem Mini Case Selected Additional Cases Part 9: Strategic Finance in a Dynamic Environment Chapter 21: Dynamic Capital Structures and Corporate Valuation 21-1 The Adjusted Present Value (APV) Approach 21-2 The Modigliani and Miller Models 21-3 The Compressed Adjusted Present Value (CAPV) Model 21-4 The Free Cash Flow to Equity (FCFE) Model 21-5 Multistage Valuation When the Capital Structure Is Stable 21-6 Illustration of the Three Valuation Approaches for a Constant Capital Structure 21-7 Analysis of a Dynamic Capital Structure Summary Questions Self-Test Problem Problems Spreadsheet Problem Mini Case Selected Additional Cases Chapter 22: Mergers and Corporate Control 22-1 Rationale for Mergers 22-2 Types of Mergers: Business Types, Acquisition Methods, and Hidden Liabilities 22-3 Level of Merger Activity 22-4 Hostile versus Friendly Takeovers 22-5 Merger Regulation 22-6 Overview of Merger Analysis 22-7 Estimating a Target's Value 22-8 Setting the Bid Price 22-9 Who Wins: The Empirical Evidence 22-10 The Role of Investment Bankers 22-11 Other Business Combinations 22-12 Divestitures 22-13 Merger Tax Treatments 22-14 Financial Reporting for Mergers Summary Questions Self-Test Problem Problems Spreadsheet Problem Mini Case Selected Additional Cases Chapter 23: Enterprise Risk Management 23-1 Reasons to Manage Risk 23-2 An Overview of Enterprise Risk Management 23-3 A Framework for Enterprise Risk Management 23-4 Categories of Risk Events 23-5 Foreign Exchange (FX) Risk 23-6 Commodity Price Risk 23-7 Interest Rate Risk 23-8 Project Selection Risks 23-9 Managing Credit Risks 23-10 Risk and Human Safety Summary Questions Self-Test Problem Problems Spreadsheet Problem Mini Case Chapter 24: Bankruptcy, Reorganization, and Liquidation 24-1 Financial Distress and Its Consequences 24-2 Issues Facing a Firm in Financial Distress 24-3 Settlements without Going through Formal Bankruptcy 24-4 Federal Bankruptcy Law 24-5 Reorganization in Bankruptcy (Chapter 11 of Bankruptcy Code) 24-6 Liquidation in Bankruptcy 24-7 Anatomy of a Bankruptcy: Transforming the GM Corporation into the GM Company 24-8 Other Motivations for Bankruptcy 24-9 Some Criticisms of Bankruptcy Laws Summary Questions Self-Test Problem Problems Spreadsheet Problem Mini Case Selected Additional Case Part 10: Special Topics Chapter 25: Portfolio Theory and Asset Pricing Models 25-1 Efficient Portfolios 25-2 Choosing the Optimal Portfolio 25-3 The Basic Assumptions of the Capital Asset Pricing Model 25-4 The Capital Market Line and the Security Market Line 25-5 Calculating Beta Coefficients 25-6 Empirical Tests of the CAPM 25-7 Arbitrage Pricing Theory Summary Questions Self-Test Problem Problems Spreadsheet Problem Mini Case Selected Additional Case Chapter 26: Real Options 26-1 Valuing Real Options 26-2 The Investment Timing Option: An Illustration 26-3 The Growth Option: An Illustration 26-4 Concluding Thoughts on Real Options Summary Questions Self-Test Problem Problems Spreadsheet Problem Mini Case Appendices Appendix A: Solutions to Self-Test Problems Appendix B: Answers to End-of-Chapter Problems Appendix C: Selected Equations Glossary and Indexes Glossary Name Index Subject Index Empowering you for success, Brigham/Ehrhardt's Financial management theory & practice, 16th edition, equips you with a solid understanding of key theoretical concepts along with practical tools to make effective financial decisions. It emphasizes corporate valuation and its relevance to financial decisions to ensure you see the details as well as the big picture. Chapters connect concepts, value and tools--usually within a fully integrated Excel model that can be applied to situations you may face on the job. Topics expand from fundamentals to strategic finance, linking recent events to the role of finance in business and your personal life. The MindTap Finance digital learning solution is also available. With its relevant and engaging presentation, numerous examples and emphasis on Excel applications, this text provides a comprehensive resource for your academic and business career.-- Amazon