Corporate Finanial Managemnt

8/2/2019 Corporate Finanial Managemnt

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Corporate financeBy

R.Masilamani


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Contents

1.Whats Corporate finance2.Capitalinvestment decisions

2.1 The investment decision

2.1.1 Project valuation

2.1.2 Valuing flexibility

2.1.3 Quantifying uncertainty

3. Working capital management 3.1

The financing decision

3.2 The dividend decision

3.3 Corporate finance theory and

research

4.Relatioship with other areas infinance

4.1 Investment banking

4.2 financial risk management

4.3 Personal and public finance

5.Alternate approaches

6.See also

7.rferences


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Whats Corporate finance

14/4/2012 adapted from Wikipedia 3


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Whats Corporate Finance

Corporate finance is the area offinance

dealing with monetary decisions that business

enterprises make

The tools and analysis used to make these

decisions, and

The primary goal of corporate finance is to

maximizeshareholder value

14/4/2012 4adapted from Wikipedia
http://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Shareholder_valuehttp://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Shareholder_valuehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Finance


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Corporate Finance vs Managerial finance

in principle it is different from managerial

finance

Managerial Finance studies the financialdecisions of all firms, rather than corporations

alone

However, main concepts of corporate financeare applicable to the financial problems of all

kinds of firms

http://en.wikipedia.org/wiki/Managerial_financehttp://en.wikipedia.org/wiki/Managerial_financehttp://en.wikipedia.org/wiki/Managerial_financehttp://en.wikipedia.org/wiki/Managerial_finance


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The Discipline of Corporate Finance

The discipline of CF can be divided into,

long-term and

short-term

decisions and techniques



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Long term decisions

Capital investment decisions are long-term

choices about which projects receive

investment, whether to finance that

investment with equity or debt, and when or

whether to pay dividends to shareholders

http://en.wikipedia.org/wiki/Capital_investmenthttp://en.wikipedia.org/wiki/Ownership_equityhttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Dividendshttp://en.wikipedia.org/wiki/Shareholdershttp://en.wikipedia.org/wiki/Shareholdershttp://en.wikipedia.org/wiki/Dividendshttp://en.wikipedia.org/wiki/Debthttp://en.wikipedia.org/wiki/Ownership_equityhttp://en.wikipedia.org/wiki/Capital_investment


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Short term Decisions

short term decisions deal with the short-term

balance ofcurrent assets and current liabilities

the focus here is on managing cash,

inventories, and short-term borrowing and

lending (such as the terms on credit extended

to customers

http://en.wikipedia.org/wiki/Assetshttp://en.wikipedia.org/wiki/Liabilitieshttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Liabilitieshttp://en.wikipedia.org/wiki/Liabilitieshttp://en.wikipedia.org/wiki/Assets


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Investment Banking

The terms corporate finance and corporate

financier are also associated with investment

banking

The typical role of an investment bank is to

evaluate the company's financial needs and

raise the appropriate type of capital that best

fits those needs

http://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_bankhttp://en.wikipedia.org/wiki/Investment_bankhttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_banking


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Capital investment decisions



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The Definition

Capital investment decisions are long-term

corporate finance decisions relating to fixed

assets and capital structure

Capital investment decisions comprise an

investment decision, a financing decision, and

a dividend decision

http://en.wikipedia.org/wiki/Fixed_assetshttp://en.wikipedia.org/wiki/Fixed_assetshttp://en.wikipedia.org/wiki/Capital_structurehttp://en.wikipedia.org/wiki/Capital_structurehttp://en.wikipedia.org/wiki/Fixed_assetshttp://en.wikipedia.org/wiki/Fixed_assets


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CIP decisions are based on several inter-related criteria: (1) Corporate management seeks to maximize the value of the

firm by investing in projects which yield a positive

net present value when valued using an

appropriate discount rate in consideration of risk

(2) These projects must also be financed appropriately

(3) If no such opportunities exist, maximizing shareholder

value dictates that management must return excess cash

to shareholders (i.e., distribution viadividends)14/4/2012 12adapted from Wikipedia
http://en.wikipedia.org/wiki/Projecthttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Discount_ratehttp://en.wikipedia.org/wiki/Financinghttp://en.wikipedia.org/wiki/Financinghttp://en.wikipedia.org/wiki/Discount_ratehttp://en.wikipedia.org/wiki/Discount_ratehttp://en.wikipedia.org/wiki/Discount_ratehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Project


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The investment decision Management must allocate limited resources

between competing opportunities (projects)

in a process known as capital

this investment, or capital allocation, decision

requires estimating the value of each

opportunity or project, which is a function of

the size, timing and predictability of future

cash flows al budgeting.

http://en.wikipedia.org/wiki/Capital_budgetinghttp://en.wikipedia.org/wiki/Capital_budgetinghttp://en.wikipedia.org/wiki/Capital_budgetinghttp://en.wikipedia.org/wiki/Capital_budgeting


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Project valuation In general, each project's value will be estimated using a

discounted cash flow (DCF) valuation, and the opportunity

with the highest value, as measured by the resultant net

present value (NPV) will be selected This requires estimating the size and timing of all of the

incrementalcash flows resulting from the project

Such future cash flows are then discounted to determine

theirpresent value (see Time value of money). These presentvalues are then summed, and this sum net of the initial

investment outlay is the NPV.

http://en.wikipedia.org/wiki/Discounted_cash_flowhttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Discounts_and_allowanceshttp://en.wikipedia.org/wiki/Present_valuehttp://en.wikipedia.org/wiki/Time_value_of_moneyhttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Time_value_of_moneyhttp://en.wikipedia.org/wiki/Present_valuehttp://en.wikipedia.org/wiki/Discounts_and_allowanceshttp://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Discounted_cash_flow


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Project valuation The NPV is greatly affected by the discount rate.

Thus, identifying the proper discount rate often termed, the project

"hurdle rate"[5] is critical to making an appropriate decision.

The hurdle rate is the minimum acceptable return on an investmenti.e.the project appropriate discount rate.

The hurdle rate should reflect the riskiness of the investment, typically

measured by volatility of cash flows, and must take into account the project-

relevant financing mix.

Managers use models such as the CAPM or the APT to estimate a discount

rate appropriate for a particular project, and use the weighted average cost

of capital (WACC) to reflect the financing mix selected.

http://en.wikipedia.org/wiki/Discount_ratehttp://en.wikipedia.org/wiki/Return_on_investmenthttp://en.wikipedia.org/wiki/Capital_asset_pricing_modelhttp://en.wikipedia.org/wiki/Volatility_(finance)http://en.wikipedia.org/wiki/Capital_asset_pricing_modelhttp://en.wikipedia.org/wiki/Arbitrage_pricing_theoryhttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Arbitrage_pricing_theoryhttp://en.wikipedia.org/wiki/Capital_asset_pricing_modelhttp://en.wikipedia.org/wiki/Volatility_(finance)http://en.wikipedia.org/wiki/Capital_asset_pricing_modelhttp://en.wikipedia.org/wiki/Return_on_investmenthttp://en.wikipedia.org/wiki/Discount_rate


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Valuing flexibility

In many cases, for example R&D projects, a project may open (or

close) various paths of action to the company, but this reality will not

(typically) be captured in a strict NPV approach.

Management will therefore (sometimes) employ tools which place an

explicit value on these options.

whereas in a DCF valuation the most likely or average or scenario

specificcash flows are discounted, here the flexible and staged

nature of the investment is modelled, and hence "all" potentialpayoffs are considered.

The difference between the two valuations is the "value of flexibility"

inherent in the project.

http://en.wikipedia.org/wiki/R%26Dhttp://en.wikipedia.org/wiki/Expected_valuehttp://en.wikipedia.org/wiki/Scenario_planninghttp://en.wikipedia.org/wiki/Scenario_planninghttp://en.wikipedia.org/wiki/Mathematical_modelhttp://en.wikipedia.org/wiki/Moneynesshttp://en.wikipedia.org/wiki/Moneynesshttp://en.wikipedia.org/wiki/Mathematical_modelhttp://en.wikipedia.org/wiki/Scenario_planninghttp://en.wikipedia.org/wiki/Scenario_planninghttp://en.wikipedia.org/wiki/Expected_valuehttp://en.wikipedia.org/wiki/R%26D


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Valuing flexibility

The two most common tools are Decision Tree

Analysis (DTA) and Real options analysis

(ROA); they may often be used

interchangeably

http://en.wikipedia.org/wiki/Decision_treehttp://en.wikipedia.org/wiki/Decision_treehttp://en.wikipedia.org/wiki/Real_options_analysishttp://en.wikipedia.org/wiki/Real_options_analysishttp://en.wikipedia.org/wiki/Decision_treehttp://en.wikipedia.org/wiki/Decision_tree


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Valuing flexibility In conjunction with NPV, there are several other

measures used as (secondary) selection criteria in

corporate finance. These are visible from the DCF and

include discounted payback period, IRR, Modified IRR,equivalent annuity, capital efficiency, and ROI.

Alternatives (complements) to NPV includeMVA / EVA

(Joel Stern Stewart & Co) and APV (Stewart Myers). See listof valuation topics.


http://en.wikipedia.org/wiki/Decision_makinghttp://en.wikipedia.org/wiki/Discounted_payback_periodhttp://en.wikipedia.org/wiki/Internal_rate_of_returnhttp://en.wikipedia.org/wiki/Modified_Internal_Rate_of_Returnhttp://en.wikipedia.org/wiki/Equivalent_Annual_Costhttp://en.wikipedia.org/wiki/Return_on_investmenthttp://en.wikipedia.org/wiki/Market_value_addedhttp://en.wikipedia.org/wiki/Economic_value_addedhttp://en.wikipedia.org/wiki/Stern_Stewart_%26_Cohttp://en.wikipedia.org/wiki/Adjusted_present_valuehttp://en.wikipedia.org/wiki/Stewart_Myershttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/Stewart_Myershttp://en.wikipedia.org/wiki/Adjusted_present_valuehttp://en.wikipedia.org/wiki/Stern_Stewart_%26_Cohttp://en.wikipedia.org/wiki/Economic_value_addedhttp://en.wikipedia.org/wiki/Market_value_addedhttp://en.wikipedia.org/wiki/Return_on_investmenthttp://en.wikipedia.org/wiki/Equivalent_Annual_Costhttp://en.wikipedia.org/wiki/Modified_Internal_Rate_of_Returnhttp://en.wikipedia.org/wiki/Internal_rate_of_returnhttp://en.wikipedia.org/wiki/Discounted_payback_periodhttp://en.wikipedia.org/wiki/Decision_making


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Valuing flexibility

The two most common tools are

Decision Tree Analysis (DTA) and

Real options analysis (ROA)

they may often be used interchangeably

http://en.wikipedia.org/wiki/Decision_treehttp://en.wikipedia.org/wiki/Real_options_analysishttp://en.wikipedia.org/wiki/Real_options_analysishttp://en.wikipedia.org/wiki/Decision_tree


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Valuing flexibility DTA values flexibility by incorporatingpossible events

(or states) and consequent management decisions.

(For example, a company would build a factory given

that demand for its product exceeded a certain level

during the pilot-phase, and outsource production

otherwise. In turn, given further demand, it would

similarly expand the factory,and maintain itotherwise. In a DCF model, by contrast, there is no

"branching" each scenario must be modelled

separately.)

http://en.wikipedia.org/wiki/Event_(probability_theory)http://en.wikipedia.org/wiki/State_priceshttp://en.wikipedia.org/wiki/Decision_makinghttp://en.wikipedia.org/wiki/Outsourcehttp://en.wikipedia.org/wiki/Outsourcehttp://en.wikipedia.org/wiki/Decision_makinghttp://en.wikipedia.org/wiki/State_priceshttp://en.wikipedia.org/wiki/Event_(probability_theory)


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Valuing flexibility In the decision tree, each management decision in response to an "event"

generates a "branch" or "path" which the company could follow; the

probabilities of each event are determined or specified by management.

Once the tree is constructed:

(1) "all" possible events and their resultant paths are visible to

management; (2) given this knowledge of the events that could follow, and

assuming rational decision making, management chooses the actionscorresponding to the highest value path probability weighted;

(3) this path is then taken as representative of project value. See

Decision theory#Choice under uncertainty

http://en.wikipedia.org/wiki/Decision_treehttp://en.wikipedia.org/wiki/Optimal_decisionhttp://en.wikipedia.org/wiki/Probabilityhttp://en.wikipedia.org/wiki/Decision_theoryhttp://en.wikipedia.org/wiki/Decision_theoryhttp://en.wikipedia.org/wiki/Decision_theoryhttp://en.wikipedia.org/wiki/Probabilityhttp://en.wikipedia.org/wiki/Optimal_decisionhttp://en.wikipedia.org/wiki/Decision_tree


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Valuing flexibility

ROA is usually used when the value of a project is

contingenton the value of some other asset or

underlying variable. (For example, the viability of amining project is contingent on the price ofgold; if

the price is too low, management will abandon the

mining rights, if sufficiently high, management will

develop the ore body. Again, a DCFvaluation wouldcapture only one of these outcomes.)

http://en.wikipedia.org/wiki/Contingent_claim_valuationhttp://en.wikipedia.org/wiki/Value_(economics)http://en.wikipedia.org/wiki/Underlyinghttp://en.wikipedia.org/wiki/Economic_geologyhttp://en.wikipedia.org/wiki/Mininghttp://en.wikipedia.org/wiki/Goldhttp://en.wikipedia.org/wiki/Mineral_rightshttp://en.wikipedia.org/wiki/Underground_mining_(hard_rock)http://en.wikipedia.org/wiki/Orehttp://en.wikipedia.org/wiki/Orehttp://en.wikipedia.org/wiki/Underground_mining_(hard_rock)http://en.wikipedia.org/wiki/Mineral_rightshttp://en.wikipedia.org/wiki/Goldhttp://en.wikipedia.org/wiki/Mininghttp://en.wikipedia.org/wiki/Economic_geologyhttp://en.wikipedia.org/wiki/Underlyinghttp://en.wikipedia.org/wiki/Value_(economics)http://en.wikipedia.org/wiki/Contingent_claim_valuation


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Valuing flexibility

Here: (1) using financial option theory as a framework, the decision to be

taken is identified as corresponding to either a call option or a putoption;

(2) an appropriate valuation technique is then employed usually a

variant on the Binomial options model or a bespokesimulation model,while Black Scholes type formulae are used less often; see Contingent claim

valuation. (3) The "true" value of the project is then the NPV of the "most likely"

scenario plus the option value.

http://en.wikipedia.org/wiki/Option_(finance)http://en.wikipedia.org/wiki/Call_optionhttp://en.wikipedia.org/wiki/Put_optionhttp://en.wikipedia.org/wiki/Put_optionhttp://en.wikipedia.org/wiki/Binomial_options_modelhttp://en.wikipedia.org/wiki/Monte_Carlo_methods_in_financehttp://en.wikipedia.org/wiki/Black-Scholes_formulahttp://en.wikipedia.org/wiki/Contingent_claim_valuationhttp://en.wikipedia.org/wiki/Contingent_claim_valuationhttp://en.wikipedia.org/wiki/Contingent_claim_valuationhttp://en.wikipedia.org/wiki/Contingent_claim_valuationhttp://en.wikipedia.org/wiki/Black-Scholes_formulahttp://en.wikipedia.org/wiki/Monte_Carlo_methods_in_financehttp://en.wikipedia.org/wiki/Binomial_options_modelhttp://en.wikipedia.org/wiki/Put_optionhttp://en.wikipedia.org/wiki/Put_optionhttp://en.wikipedia.org/wiki/Call_optionhttp://en.wikipedia.org/wiki/Option_(finance)


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Quantifying uncertainty

Using a related technique, analysts also run

scenario based forecasts of NPV. Here, a

scenario comprises a particular outcome for

economy-wide, "global" factors (demand for

the product, exchange rates, commodity

prices, etc...) as well as for company-specificfactors (unit costs, etc...).

http://en.wikipedia.org/wiki/Scenario_planninghttp://en.wikipedia.org/wiki/Demandhttp://en.wikipedia.org/wiki/Demandhttp://en.wikipedia.org/wiki/Exchange_ratehttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Unit_costhttp://en.wikipedia.org/wiki/Unit_costhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Exchange_ratehttp://en.wikipedia.org/wiki/Demandhttp://en.wikipedia.org/wiki/Demandhttp://en.wikipedia.org/wiki/Scenario_planning


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Quantifying uncertainty

A further advancement is to construct stochastic or probabilistic

financial models as opposed to the traditional static and

deterministic models as above.

For this purpose, the most common method is to use Monte Carlo

simulationto analyze the projects NPV.

This method was introduced to finance byDavid B. Hertz in 1964,although it has only recently become common: today analysts are

even able to run simulations in spreadsheet based DCF models,

typically using a risk-analysis add-in, such as @Riskor Crystal

Ball.

http://en.wikipedia.org/wiki/Stochastichttp://en.wikipedia.org/wiki/Probabilistichttp://en.wikipedia.org/wiki/Deterministic_system_(mathematics)http://en.wikipedia.org/wiki/Monte_Carlo_methodshttp://en.wikipedia.org/wiki/Monte_Carlo_methodshttp://en.wikipedia.org/wiki/David_B._Hertzhttp://en.wikipedia.org/wiki/Spreadsheethttp://en.wikipedia.org/wiki/Comparison_of_risk_analysis_Microsoft_Excel_add-inshttp://en.wikipedia.org/wiki/Comparison_of_risk_analysis_Microsoft_Excel_add-inshttp://en.wikipedia.org/wiki/Comparison_of_risk_analysis_Microsoft_Excel_add-inshttp://en.wikipedia.org/wiki/Comparison_of_risk_analysis_Microsoft_Excel_add-inshttp://en.wikipedia.org/wiki/Comparison_of_risk_analysis_Microsoft_Excel_add-inshttp://en.wikipedia.org/wiki/Comparison_of_risk_analysis_Microsoft_Excel_add-inshttp://en.wikipedia.org/wiki/Spreadsheethttp://en.wikipedia.org/wiki/David_B._Hertzhttp://en.wikipedia.org/wiki/Monte_Carlo_methodshttp://en.wikipedia.org/wiki/Monte_Carlo_methodshttp://en.wikipedia.org/wiki/Deterministic_system_(mathematics)http://en.wikipedia.org/wiki/Probabilistichttp://en.wikipedia.org/wiki/Stochastic


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The financing decision Achieving the goals of corporate finance requires that any corporate

investment be financed appropriately.

The sources of financing are, generically, capital self-generated by

the firm and capital from external funders, obtained by issuing newdebt and equity (and hybrid- or convertible securities).

Since both hurdle rate and cash flows (and hence the riskiness of

the firm) will be affected, the financing mix will impact the

valuation of the firm (as well as the otherlong-term financialmanagement decisions).

http://en.wikipedia.org/wiki/Internal_financinghttp://en.wikipedia.org/wiki/Internal_financinghttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Equity_investmenthttp://en.wikipedia.org/wiki/Hybrid_securityhttp://en.wikipedia.org/wiki/Convertible_securityhttp://en.wikipedia.org/wiki/Convertible_securityhttp://en.wikipedia.org/wiki/Hybrid_securityhttp://en.wikipedia.org/wiki/Hybrid_securityhttp://en.wikipedia.org/wiki/Equity_investmenthttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Internal_financinghttp://en.wikipedia.org/wiki/Internal_financinghttp://en.wikipedia.org/wiki/Internal_financinghttp://en.wikipedia.org/wiki/Internal_financing


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The financing decision

There are two interrelated decisions:

Management must identify the "optimal mix"

of financing

Management must attempt to match the long-

term financing mix to the assets being

financed as closely as possible, in terms of

both timing and cash flows

http://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Asset


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financing decision

Continuing the above example:

instead of assigning three discrete values to revenue

growth, and to the other relevant variables, theanalyst would assign an appropriate probability

distribution to each variable (commonly triangular or

beta), and, where possible, specify the observed or

supposed correlation between the variables

http://en.wikipedia.org/wiki/Probability_distributionhttp://en.wikipedia.org/wiki/Probability_distributionhttp://en.wikipedia.org/wiki/Triangular_distributionhttp://en.wikipedia.org/wiki/Beta_distributionhttp://en.wikipedia.org/wiki/Correlationhttp://en.wikipedia.org/wiki/Correlationhttp://en.wikipedia.org/wiki/Beta_distributionhttp://en.wikipedia.org/wiki/Triangular_distributionhttp://en.wikipedia.org/wiki/Probability_distributionhttp://en.wikipedia.org/wiki/Probability_distribution


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The dividend decision

Whether to issue dividends,[17] and what amount, is

calculated mainly on the basis of the company's

unappropriated profit and its earning prospects forthe coming year.

The amount is also often calculated based on

expectedfree cash flows i.e. cash remaining after all

business expenses, and capital investment needs

have been met

http://en.wikipedia.org/wiki/Profit_(accounting)http://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Cash_flowhttp://en.wikipedia.org/wiki/Profit_(accounting)


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Corporate finance theory and research

Most of the MBA level corporate finance falls under

the umbrella of the Trade-Off Theory in which firms

are assumed to trade-off the tax benefits of debtwith the bankruptcy costs of debt when making their

decisions.

However economists have developed a set of

alternative theories about financing decisions

http://en.wikipedia.org/wiki/Trade-Off_Theoryhttp://en.wikipedia.org/wiki/Tax_benefits_of_debthttp://en.wikipedia.org/wiki/Bankruptcy_costs_of_debthttp://en.wikipedia.org/wiki/Bankruptcy_costs_of_debthttp://en.wikipedia.org/wiki/Tax_benefits_of_debthttp://en.wikipedia.org/wiki/Trade-Off_Theoryhttp://en.wikipedia.org/wiki/Trade-Off_Theoryhttp://en.wikipedia.org/wiki/Trade-Off_Theory


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Corporate finance theory and research

alternative theories of how firms make their

financing decisions

-thePecking Order Theory (Stewart Myers)

-the,Capital structure substitution theory

-the Market timing hypothesis

http://en.wikipedia.org/wiki/Pecking_Order_Theoryhttp://en.wikipedia.org/wiki/Stewart_Myershttp://wiki/Capital_structure_substitution_theoryhttp://en.wikipedia.org/wiki/Market_timing_hypothesishttp://en.wikipedia.org/wiki/Market_timing_hypothesishttp://en.wikipedia.org/wiki/Market_timing_hypothesishttp://en.wikipedia.org/wiki/Market_timing_hypothesishttp://en.wikipedia.org/wiki/Market_timing_hypothesishttp://en.wikipedia.org/wiki/Market_timing_hypothesishttp://en.wikipedia.org/wiki/Market_timing_hypothesishttp://wiki/Capital_structure_substitution_theoryhttp://wiki/Capital_structure_substitution_theoryhttp://wiki/Capital_structure_substitution_theoryhttp://wiki/Capital_structure_substitution_theoryhttp://wiki/Capital_structure_substitution_theoryhttp://wiki/Capital_structure_substitution_theoryhttp://wiki/Capital_structure_substitution_theoryhttp://wiki/Capital_structure_substitution_theoryhttp://en.wikipedia.org/wiki/Stewart_Myershttp://en.wikipedia.org/wiki/Stewart_Myershttp://en.wikipedia.org/wiki/Stewart_Myershttp://en.wikipedia.org/wiki/Pecking_Order_Theoryhttp://en.wikipedia.org/wiki/Pecking_Order_Theoryhttp://en.wikipedia.org/wiki/Pecking_Order_Theoryhttp://en.wikipedia.org/wiki/Pecking_Order_Theoryhttp://en.wikipedia.org/wiki/Pecking_Order_Theory


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Working capital management



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Decisions relating to working capital and short

term financing are referred to as working

capital management

These involve managing the relationship

between a firm's short-term assets and its

short-term liabilities

http://en.wikipedia.org/wiki/Working_capitalhttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Current_liabilityhttp://en.wikipedia.org/wiki/Current_liabilityhttp://en.wikipedia.org/wiki/Current_liabilityhttp://en.wikipedia.org/wiki/Current_liabilityhttp://en.wikipedia.org/wiki/Current_liabilityhttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Working_capital


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Decision criteria:

Working capital is the amount of capital which

is readily available to an organization. That is,

working capital is the difference between

resources in cash or readily convertible into

cash (Current Assets), and cash requirements

(Current Liabilities). As a result, the decisionsrelating to working capital are always current ,

i.e. short term.



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Working capital management decisions are

therefore not taken on the same basis as long

term decisions, and working capital

management applies different criteria indecision making: the main considerations are:

(1) cash flow / liquidity and

(2) profitability / return on capital (of which cashflow is probably the most important

http://en.wikipedia.org/wiki/Decision_makinghttp://en.wikipedia.org/wiki/Decision_making


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Management of working capital

Guided by the above criteria, management

will use a combination of policies and

techniques for the management of working

capital. These policies aim at managing the

current assets (generally cash and cash

equivalents, inventories and debtors) and theshort term financing, such that cash flows and

returns are acceptable

http://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Cashhttp://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Debtorhttp://en.wikipedia.org/wiki/Debtorhttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/Cash_and_cash_equivalentshttp://en.wikipedia.org/wiki/Cashhttp://en.wikipedia.org/wiki/Asset


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Relationship with other areas in

finance



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financeInvestment banking Use of the term corporate finance varies

considerably across the world.

In the United States it is used, as above, to describe

activities, decisions and techniques that deal with

many aspects of a companys finances and capital.

In the United Kingdom and Commonwealth

countries, the terms corporate finance andcorporate financier tend to be associated with

investment banking i.e. with transactions in which

capital is raised for the corporation


l h h h
http://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Commonwealth_of_Nationshttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Commonwealth_of_Nationshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_States


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finance

Financial risk management

Risk management is the process of measuring risk and then

developing and implementing strategies to manage ("hedge")

that risk.

Financial risk management, typically, is focused on the impact

on corporate value due to adverse changes in commodity

prices, interest rates, foreign exchange rates andstock prices

(market risk). It will also play an important role in short termcash- and treasury management


l i hi i h h i
http://en.wikipedia.org/wiki/Risk_managementhttp://en.wikipedia.org/wiki/Risk_managementhttp://en.wikipedia.org/wiki/Riskhttp://en.wikipedia.org/wiki/Hedge_(finance)http://en.wikipedia.org/wiki/Financial_risk_managementhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Interest_ratehttp://en.wikipedia.org/wiki/Exchange_ratehttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Market_riskhttp://en.wikipedia.org/wiki/Cash_managementhttp://en.wikipedia.org/wiki/Treasury_managementhttp://en.wikipedia.org/wiki/Treasury_managementhttp://en.wikipedia.org/wiki/Treasury_managementhttp://en.wikipedia.org/wiki/Cash_managementhttp://en.wikipedia.org/wiki/Cash_managementhttp://en.wikipedia.org/wiki/Market_riskhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Exchange_ratehttp://en.wikipedia.org/wiki/Interest_ratehttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Financial_risk_managementhttp://en.wikipedia.org/wiki/Hedge_(finance)http://en.wikipedia.org/wiki/Riskhttp://en.wikipedia.org/wiki/Risk_managementhttp://en.wikipedia.org/wiki/Risk_managementhttp://en.wikipedia.org/wiki/Risk_management


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finance

This area or risk is related to corporate finance

in two ways:

Firstly, firm exposure to business and market

risk is a direct result of previous Investment

and Financing decisions.

Secondly, both disciplines share the goal of

enhancing, or preserving, firm value.


l i hi i h h i
http://en.wikipedia.org/wiki/Market_riskhttp://en.wikipedia.org/wiki/Market_riskhttp://en.wikipedia.org/wiki/Value_(economics)http://en.wikipedia.org/wiki/Value_(economics)http://en.wikipedia.org/wiki/Market_riskhttp://en.wikipedia.org/wiki/Market_risk


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finance


Personal and public finance

Corporate finance utilizes tools from almost all

areas of finance. Some of the tools developed

by and for corporations have broad

application to entities other than

corporations, for example,

to partnerships, sole proprietorships, not-for-profit organizations, governments, mutual funds,

and personal wealth management


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Alternate Approaches



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Alternate Approaches

The approaches standard assumption in Corporate finance is that shareholders are the

residual claimants and that the primary goal of executives should be to

maximizeshareholder value.

Recently, however, legal scholars (e.g. Lynn Stout [23]) have questionedthis assumption, implyingthat the assumed goal of maximizing

shareholder value is inappropriatefor a public corporation. This criticism in turn brings into question the advice of corporate finance,

particularly related to stock buybacks made purportedly to "return value

to shareholders," which ispredicated on a legally erroneous assumption

http://en.wikipedia.org/wiki/Shareholder_valuehttp://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Lynn_Stouthttp://en.wikipedia.org/wiki/Lynn_Stouthttp://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Shareholder_value


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See also

Lists: List of accounting topics

List of finance topics

List of corporate finance topics

List of valuation topics

Business organizations

Financial modeling

Financial planning

Investment bank

Venture capital

Right-financing

Factoring (finance)

http://en.wikipedia.org/wiki/List_of_accounting_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/Business_organizationshttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Financial_planninghttp://en.wikipedia.org/wiki/Investment_bankhttp://en.wikipedia.org/wiki/Venture_capitalhttp://en.wikipedia.org/wiki/Right-financinghttp://en.wikipedia.org/wiki/Factoring_(finance)http://en.wikipedia.org/wiki/Factoring_(finance)http://en.wikipedia.org/wiki/Factoring_(finance)http://en.wikipedia.org/wiki/Right-financinghttp://en.wikipedia.org/wiki/Right-financinghttp://en.wikipedia.org/wiki/Right-financinghttp://en.wikipedia.org/wiki/Right-financinghttp://en.wikipedia.org/wiki/Venture_capitalhttp://en.wikipedia.org/wiki/Venture_capitalhttp://en.wikipedia.org/wiki/Investment_bankhttp://en.wikipedia.org/wiki/Investment_bankhttp://en.wikipedia.org/wiki/Financial_planninghttp://en.wikipedia.org/wiki/Financial_planninghttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Business_organizationshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_finance_topicshttp://en.wikipedia.org/wiki/List_of_accounting_topicshttp://en.wikipedia.org/wiki/List_of_accounting_topics


46/51

References

http://wiki/Investment_bankinghttp://wiki/Investment_banking


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Corporate finance and investment banking

Capital structureSenior secured debt Senior debt Second lien debt Subordinated debt Mezzanine debt ConvertibledebtExchangeable debtPreferred equityWarrantShareholder loanCommon equityPari passu

/wiki/File:Met_life_tower_crop.jpg/wiki/File:Met_life_tower_crop.jpg

Transactions(terms / conditions)

Equity offeringsInitial public offering (IPO) Secondary market offering (SEO) Follow-on offering Rights issue PrivateplacementSpin outEquity carve-outGreenshoe (Reverse) Book buildingBookrunnerUnderwriterMergers andacquisitionsTakeoverReverse takeoverTender offerProxy fightPoison pillStaggered boardSqueeze outTag-alongright Drag-along right Pre-emption right Control premium Due diligence Divestment Sell side Buy side DemergerSuper-majorityPitch book

Leverage

Leveraged buyout Leveraged recap Financial sponsor Private equity Bond offering High-yield debt DIPfinancingProject financeDebt restructuring

Financial modelingFree cash flowBusiness valuationFairness opinionStock valuationAPVDCFNet present value (NPV)Cost of capital (Weighted average) Comparable company analysisAccretion/dilution analysisEnterprise valueTax shieldMinority interestAssociate companyEVAMVATerminal valueReal options valuation

References
http://wiki/Investment_bankinghttp://wiki/Secured_loanhttp://wiki/Senior_debthttp://wiki/Second_lien_loanhttp://wiki/Subordinated_debthttp://wiki/Mezzanine_capitalhttp://wiki/Convertible_bondhttp://wiki/Convertible_bondhttp://wiki/Exchangeable_bondhttp://wiki/Preferred_stockhttp://wiki/Warrant_(finance)http://wiki/Shareholder_loanhttp://wiki/Stockhttp://wiki/Pari_passuhttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/Stockhttp://wiki/Initial_public_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Follow-on_offeringhttp://wiki/Rights_issuehttp://wiki/Private_placementhttp://wiki/Private_placementhttp://wiki/Spin_outhttp://wiki/Equity_carve-outhttp://wiki/Greenshoehttp://wiki/Reverse_greenshoehttp://wiki/Book_buildinghttp://wiki/Bookrunnerhttp://wiki/Underwriterhttp://wiki/Mergers_and_acquisitionshttp://wiki/Takeoverhttp://wiki/Reverse_takeoverhttp://wiki/Tender_offerhttp://wiki/Proxy_fighthttp://wiki/Poison_pillhttp://wiki/Staggered_board_of_directorshttp://wiki/Squeeze_outhttp://wiki/Tag-along_righthttp://wiki/Tag-along_righthttp://wiki/Drag-along_righthttp://wiki/Pre-emption_righthttp://wiki/Control_premiumhttp://wiki/Management_due_diligencehttp://wiki/Divestmenthttp://wiki/Sell_sidehttp://wiki/Buy_sidehttp://wiki/Demergerhttp://wiki/Super-majority_amendmenthttp://wiki/Pitch_bookhttp://wiki/Leverage_(finance)http://wiki/Leveraged_buyouthttp://wiki/Leveraged_recapitalizationhttp://wiki/Financial_sponsorhttp://wiki/Private_equityhttp://wiki/Bond_(finance)http://wiki/High-yield_debthttp://wiki/Debtor-in-possession_financinghttp://wiki/Debtor-in-possession_financinghttp://wiki/Project_financehttp://wiki/Debt_restructuringhttp://wiki/Financial_modelinghttp://wiki/Free_cash_flowhttp://wiki/Business_valuationhttp://wiki/Fairness_opinionhttp://wiki/Stock_valuationhttp://wiki/Adjusted_present_valuehttp://wiki/Discounted_cash_flowhttp://wiki/Net_present_valuehttp://wiki/Cost_of_capitalhttp://wiki/Weighted_average_cost_of_capitalhttp://wiki/Valuation_using_multipleshttp://wiki/Accretion/dilution_analysishttp://wiki/Enterprise_valuehttp://wiki/Tax_shieldhttp://wiki/Minority_interesthttp://wiki/Associate_companyhttp://wiki/Economic_Value_Addedhttp://wiki/Market_value_addedhttp://wiki/Terminal_value_(finance)http://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Terminal_value_(finance)http://wiki/Terminal_value_(finance)http://wiki/Terminal_value_(finance)http://wiki/Market_value_addedhttp://wiki/Economic_Value_Addedhttp://wiki/Associate_companyhttp://wiki/Associate_companyhttp://wiki/Associate_companyhttp://wiki/Minority_interesthttp://wiki/Minority_interesthttp://wiki/Minority_interesthttp://wiki/Tax_shieldhttp://wiki/Tax_shieldhttp://wiki/Tax_shieldhttp://wiki/Enterprise_valuehttp://wiki/Enterprise_valuehttp://wiki/Enterprise_valuehttp://wiki/Accretion/dilution_analysishttp://wiki/Accretion/dilution_analysishttp://wiki/Accretion/dilution_analysishttp://wiki/Valuation_using_multipleshttp://wiki/Valuation_using_multipleshttp://wiki/Valuation_using_multipleshttp://wiki/Valuation_using_multipleshttp://wiki/Valuation_using_multipleshttp://wiki/Weighted_average_cost_of_capitalhttp://wiki/Weighted_average_cost_of_capitalhttp://wiki/Weighted_average_cost_of_capitalhttp://wiki/Cost_of_capitalhttp://wiki/Cost_of_capitalhttp://wiki/Cost_of_capitalhttp://wiki/Cost_of_capitalhttp://wiki/Cost_of_capitalhttp://wiki/Net_present_valuehttp://wiki/Net_present_valuehttp://wiki/Net_present_valuehttp://wiki/Net_present_valuehttp://wiki/Net_present_valuehttp://wiki/Net_present_valuehttp://wiki/Net_present_valuehttp://wiki/Discounted_cash_flowhttp://wiki/Adjusted_present_valuehttp://wiki/Stock_valuationhttp://wiki/Stock_valuationhttp://wiki/Stock_valuationhttp://wiki/Fairness_opinionhttp://wiki/Fairness_opinionhttp://wiki/Fairness_opinionhttp://wiki/Business_valuationhttp://wiki/Business_valuationhttp://wiki/Business_valuationhttp://wiki/Free_cash_flowhttp://wiki/Free_cash_flowhttp://wiki/Free_cash_flowhttp://wiki/Free_cash_flowhttp://wiki/Free_cash_flowhttp://wiki/Financial_modelinghttp://wiki/Financial_modelinghttp://wiki/Financial_modelinghttp://wiki/Debt_restructuringhttp://wiki/Debt_restructuringhttp://wiki/Debt_restructuringhttp://wiki/Debt_restructuringhttp://wiki/Project_financehttp://wiki/Project_financehttp://wiki/Project_financehttp://wiki/Debtor-in-possession_financinghttp://wiki/Debtor-in-possession_financinghttp://wiki/Debtor-in-possession_financinghttp://wiki/High-yield_debthttp://wiki/High-yield_debthttp://wiki/High-yield_debthttp://wiki/High-yield_debthttp://wiki/High-yield_debthttp://wiki/Bond_(finance)http://wiki/Bond_(finance)http://wiki/Bond_(finance)http://wiki/Private_equityhttp://wiki/Private_equityhttp://wiki/Private_equityhttp://wiki/Financial_sponsorhttp://wiki/Financial_sponsorhttp://wiki/Financial_sponsorhttp://wiki/Leveraged_recapitalizationhttp://wiki/Leveraged_recapitalizationhttp://wiki/Leveraged_recapitalizationhttp://wiki/Leveraged_buyouthttp://wiki/Leveraged_buyouthttp://wiki/Leveraged_buyouthttp://wiki/Leverage_(finance)http://wiki/Pitch_bookhttp://wiki/Pitch_bookhttp://wiki/Pitch_bookhttp://wiki/Pitch_bookhttp://wiki/Super-majority_amendmenthttp://wiki/Super-majority_amendmenthttp://wiki/Super-majority_amendmenthttp://wiki/Demergerhttp://wiki/Buy_sidehttp://wiki/Buy_sidehttp://wiki/Buy_sidehttp://wiki/Sell_sidehttp://wiki/Sell_sidehttp://wiki/Sell_sidehttp://wiki/Divestmenthttp://wiki/Management_due_diligencehttp://wiki/Management_due_diligencehttp://wiki/Management_due_diligencehttp://wiki/Control_premiumhttp://wiki/Control_premiumhttp://wiki/Control_premiumhttp://wiki/Pre-emption_righthttp://wiki/Pre-emption_righthttp://wiki/Pre-emption_righthttp://wiki/Pre-emption_righthttp://wiki/Pre-emption_righthttp://wiki/Drag-along_righthttp://wiki/Drag-along_righthttp://wiki/Drag-along_righthttp://wiki/Drag-along_righthttp://wiki/Drag-along_righthttp://wiki/Tag-along_righthttp://wiki/Tag-along_righthttp://wiki/Tag-along_righthttp://wiki/Tag-along_righthttp://wiki/Tag-along_righthttp://wiki/Squeeze_outhttp://wiki/Squeeze_outhttp://wiki/Squeeze_outhttp://wiki/Staggered_board_of_directorshttp://wiki/Staggered_board_of_directorshttp://wiki/Staggered_board_of_directorshttp://wiki/Poison_pillhttp://wiki/Poison_pillhttp://wiki/Poison_pillhttp://wiki/Proxy_fighthttp://wiki/Proxy_fighthttp://wiki/Proxy_fighthttp://wiki/Tender_offerhttp://wiki/Tender_offerhttp://wiki/Tender_offerhttp://wiki/Reverse_takeoverhttp://wiki/Reverse_takeoverhttp://wiki/Reverse_takeoverhttp://wiki/Takeoverhttp://wiki/Mergers_and_acquisitionshttp://wiki/Mergers_and_acquisitionshttp://wiki/Mergers_and_acquisitionshttp://wiki/Mergers_and_acquisitionshttp://wiki/Underwriterhttp://wiki/Underwriterhttp://wiki/Bookrunnerhttp://wiki/Book_buildinghttp://wiki/Book_buildinghttp://wiki/Book_buildinghttp://wiki/Reverse_greenshoehttp://wiki/Greenshoehttp://wiki/Equity_carve-outhttp://wiki/Equity_carve-outhttp://wiki/Equity_carve-outhttp://wiki/Equity_carve-outhttp://wiki/Equity_carve-outhttp://wiki/Spin_outhttp://wiki/Spin_outhttp://wiki/Spin_outhttp://wiki/Private_placementhttp://wiki/Private_placementhttp://wiki/Private_placementhttp://wiki/Rights_issuehttp://wiki/Rights_issuehttp://wiki/Rights_issuehttp://wiki/Follow-on_offeringhttp://wiki/Follow-on_offeringhttp://wiki/Follow-on_offeringhttp://wiki/Follow-on_offeringhttp://wiki/Follow-on_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Stockhttp://wiki/Stockhttp://wiki/Stockhttp://wiki/Stockhttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/File:Met_life_tower_crop.jpghttp://wiki/Pari_passuhttp://wiki/Pari_passuhttp://wiki/Pari_passuhttp://wiki/Stockhttp://wiki/Stockhttp://wiki/Stockhttp://wiki/Shareholder_loanhttp://wiki/Shareholder_loanhttp://wiki/Shareholder_loanhttp://wiki/Warrant_(finance)http://wiki/Preferred_stockhttp://wiki/Preferred_stockhttp://wiki/Preferred_stockhttp://wiki/Exchangeable_bondhttp://wiki/Exchangeable_bondhttp://wiki/Exchangeable_bondhttp://wiki/Convertible_bondhttp://wiki/Convertible_bondhttp://wiki/Convertible_bondhttp://wiki/Mezzanine_capitalhttp://wiki/Mezzanine_capitalhttp://wiki/Mezzanine_capitalhttp://wiki/Subordinated_debthttp://wiki/Subordinated_debthttp://wiki/Subordinated_debthttp://wiki/Second_lien_loanhttp://wiki/Second_lien_loanhttp://wiki/Second_lien_loanhttp://wiki/Second_lien_loanhttp://wiki/Second_lien_loanhttp://wiki/Senior_debthttp://wiki/Senior_debthttp://wiki/Senior_debthttp://wiki/Secured_loanhttp://wiki/Secured_loanhttp://wiki/Secured_loanhttp://wiki/Secured_loanhttp://wiki/Secured_loanhttp://wiki/Investment_bankinghttp://wiki/Investment_banking


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References

Corporate Finance: First Principles, Aswath Damodaran, New York University's Stern School of Business^ The

framework for this section is based on Notes by Aswath Damodaran at New York University's Stern School of Business^

See: Investment Decisions and Capital Budgeting, Prof. Campbell R. Harvey; The Investment Decision of the

Corporation, Prof. Don M. Chance ^ See: Valuation, Prof. Aswath Damodaran; Equity Valuation, Prof. Campbell R.

Harvey ^ See for example Campbell R. Harvey's Hypertextual Finance Glossary or investopedia.com^ See: Real

Options Analysis and the Assumptions of the NPV Rule, Tom Arnold & Richard Shockley ^ See: Decision Tree Analysis,

mindtools.com; Decision Tree Primer, Prof. Craig W. Kirkwood Arizona State University ^ ab See: "Capital Budgeting

Under Risk". Ch.9 in Schaum's outline of theory and problems of financial management, Jae K. Shim and Joel G. Siegel.^ See:Identifying real options, Prof. Campbell R. Harvey; Applications of option pricing theory to equity valuation, Prof.Aswath Damodaran; How Do You Assess The Value of A Company's "Real Options"? , Prof. Alfred Rappaport Columbia

University & Michael Mauboussin ^ ab See Probabilistic Approaches: Scenario Analysis, Decision Trees and

Simulations, Prof. Aswath Damodaran ^ For example, mining companiessometimes employ the Hill of Valuemethodology in their planning; see, e.g., B. E. Hall, "How Mining Companies Improve Share Price by Destroying

Shareholder Value"^ See: Quantifying Corporate Financial Risk, David Shimko. ^The Flaw of Averages, Prof. Sam

Savage, Stanford University. ^ See: The Financing Decision of the Corporation, Prof. Don M. Chance; Capital Structure,

Prof. Aswath Damodaran ^Capital Structure: Implications, Prof. John C. Groth, Texas A&M University; A GeneralisedProcedure for Locating the Optimal Capital Structure, Ruben D. Cohen, Citigroup^ See:Optimal Balance of Financial

Instruments: Long-Term Management, Market Volatility & Proposed Changes, Nishant Choudhary, LL.M. 2011

(Business & finance), George Washington University Law School ^ See Dividend Policy, Prof. Aswath Damodaran ^ See

The theory of Corporate Finance, Princeton University Press^ See Working Capital Management, Studyfinance.com;

Working Capital Management, treasury.govt.nz^

See The 20 Principles of Financial Management, Prof. Don M. Chance,Louisiana State University^ Beaney, Shaun, "Defining corporate finance in the UK", Corporate Finance Faculty,

ICAEW, April 2005 (revised January 2011) ^ See: Global Association of Risk Professionals (GARP); Professional Risk

Managers' International Association (PRMIA)^Lynn A. Stout (2002). Bad and Not-So-Bad Arguments for Shareholder

Primacy, University of California, Los Angeles School of Law Research Paper No. 25; Lynn A. Stout (2007). The

Mythical Benefits of Shareholder Control, REGULATIONSpring 2007
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/AppldCF/other/Image2.gifhttp://wiki/Aswath_Damodaranhttp://wiki/New_York_Universityhttp://wiki/Stern_School_of_Businesshttp://l%20%22cite_ref-1/http://pages.stern.nyu.edu/~adamodar/New_Home_Page/AppldCF/other/Image2.gifhttp://wiki/Aswath_Damodaranhttp://wiki/New_York_Universityhttp://wiki/Stern_School_of_Businesshttp://l%20%22cite_ref-2/http://www.duke.edu/~charvey/Classes/ba350_1997/vcf2/vcf2.htmhttp://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/FinancialManagementDecisions.ppt%22%20/l%20%22257,2,Slidehttp://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/FinancialManagementDecisions.ppt%22%20/l%20%22257,2,Slidehttp://l%20%22cite_ref-3/http://pages.stern.nyu.edu/~adamodar/New_Home_Page/lectures/val.htmlhttp://www.duke.edu/~charvey/Classes/ba350_1997/vcf1/vcf1.htmhttp://l%20%22cite_ref-4/http://biz.yahoo.com/f/g/hh.htmlhttp://www.investopedia.com/terms/h/hurdlerate.asphttp://l%20%22cite_ref-5/http://www.realoptions.org/papers2002/SchockleyOptionNPV.pdf.http://www.realoptions.org/papers2002/SchockleyOptionNPV.pdf.http://l%20%22cite_ref-6/http://www.mindtools.com/pages/article/newTED_04.htmhttp://www.public.asu.edu/~kirkwood/DAStuff/decisiontrees/index.htmlhttp://wiki/Arizona_State_Universityhttp://l%20%22cite_ref-shim_.26_siegel_7-0/http://l%20%22cite_ref-shim_.26_siegel_7-1/http://books.google.com/books?id=_lnmxnhoAUEC&printsec=frontcover&dq=related:ISBN0070580316%22%20/l%20%22v=onepage&q&f=falsehttp://l%20%22cite_ref-8/http://faculty.fuqua.duke.edu/~charvey/Teaching/BA456_2002/Identifying_real_options.htmhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/lectures/opt.htmlhttp://www.expectationsinvesting.com/tutorial11.shtmlhttp://wiki/Columbia_Universityhttp://wiki/Columbia_Universityhttp://wiki/Michael_Mauboussinhttp://l%20%22cite_ref-damodaran_risk_9-0/http://l%20%22cite_ref-damodaran_risk_9-1/http://www.stern.nyu.edu/~adamodar/pdfiles/papers/probabilistic.pdfhttp://www.stern.nyu.edu/~adamodar/pdfiles/papers/probabilistic.pdfhttp://l%20%22cite_ref-10/http://wiki/Category:Mining_companieshttps://www.u-cursos.cl/ingenieria/2008/1/MI75E/1/material_docente/bajar?id_material=167438https://www.u-cursos.cl/ingenieria/2008/1/MI75E/1/material_docente/bajar?id_material=167438http://l%20%22cite_ref-shimko_11-0/http://www.qfinance.com/financial-risk-management-best-practice/quantifying-corporate-financial-risk?fullhttp://l%20%22cite_ref-savage_12-0/http://www.analycorp.com/uncertainty/flawarticle.htmhttp://wiki/Stanford_Universityhttp://l%20%22cite_ref-13/http://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/FinancialManagementDecisions.ppt%22%20/l%20%22256,1,Slidehttp://pages.stern.nyu.edu/~adamodar/pdfiles/ovhds/capstr.pdfhttp://l%20%22cite_ref-14/http://www.qfinance.com/mergers-and-acquisitions-best-practice/capital-structure-implications?fullhttp://wiki/Texas_A%26M_Universityhttp://rdcohen.50megs.com/genOCS.pdfhttp://rdcohen.50megs.com/genOCS.pdfhttp://wiki/Citigrouphttp://l%20%22cite_ref-15/http://www.lawyersclubindia.com/articles/Optimal-Balance-of-Financial-Instruments-Long-Term-Management-Market-Volatility-Proposed-Changes-3765.asphttp://www.lawyersclubindia.com/articles/Optimal-Balance-of-Financial-Instruments-Long-Term-Management-Market-Volatility-Proposed-Changes-3765.asphttp://l%20%22cite_ref-16/http://pages.stern.nyu.edu/~adamodar/pdfiles/ovhds/divid.pdfhttp://l%20%22cite_ref-17/http://press.princeton.edu/titles/8123.htmlhttp://wiki/Princeton_University_Presshttp://l%20%22cite_ref-18/http://www.studyfinance.com/lessons/workcap/index.mvhttp://www.treasury.govt.nz/publicsector/workingcapital/chap2.asphttp://l%20%22cite_ref-19/http://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/PrinciplesofFinancialManagement.htmhttp://wiki/Louisiana_State_Universityhttp://l%20%22cite_ref-20/http://www.icaew.com/en/technical/corporate-finance/corporate-finance-faculty/what-is-corporate-finance-122299http://l%20%22cite_ref-21/http://www.garp.com/http://www.primia.org/http://www.primia.org/http://l%20%22cite_ref-22/http://wiki/Lynn_Stouthttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://wiki/University_of_California,_Los_Angeleshttp://www.lccge.bbk.ac.uk/publications-and-resources/docs/Stout%202007.pdfhttp://www.lccge.bbk.ac.uk/publications-and-resources/docs/Stout%202007.pdfhttp://www.lccge.bbk.ac.uk/publications-and-resources/docs/Stout%202007.pdfhttp://www.lccge.bbk.ac.uk/publications-and-resources/docs/Stout%202007.pdfhttp://wiki/University_of_California,_Los_Angeleshttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://www.uclouvain.be/cps/ucl/doc/etes/documents/Stout_-SSRN-id331464.pdfhttp://wiki/Lynn_Stouthttp://l%20%22cite_ref-22/http://www.primia.org/http://www.primia.org/http://www.garp.com/http://l%20%22cite_ref-21/http://www.icaew.com/en/technical/corporate-finance/corporate-finance-faculty/what-is-corporate-finance-122299http://l%20%22cite_ref-20/http://wiki/Louisiana_State_Universityhttp://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/PrinciplesofFinancialManagement.htmhttp://l%20%22cite_ref-19/http://www.treasury.govt.nz/publicsector/workingcapital/chap2.asphttp://www.studyfinance.com/lessons/workcap/index.mvhttp://l%20%22cite_ref-18/http://wiki/Princeton_University_Presshttp://press.princeton.edu/titles/8123.htmlhttp://l%20%22cite_ref-17/http://pages.stern.nyu.edu/~adamodar/pdfiles/ovhds/divid.pdfhttp://l%20%22cite_ref-16/http://www.lawyersclubindia.com/articles/Optimal-Balance-of-Financial-Instruments-Long-Term-Management-Market-Volatility-Proposed-Changes-3765.asphttp://www.lawyersclubindia.com/articles/Optimal-Balance-of-Financial-Instruments-Long-Term-Management-Market-Volatility-Proposed-Changes-3765.asphttp://www.lawyersclubindia.com/articles/Optimal-Balance-of-Financial-Instruments-Long-Term-Management-Market-Volatility-Proposed-Changes-3765.asphttp://www.lawyersclubindia.com/articles/Optimal-Balance-of-Financial-Instruments-Long-Term-Management-Market-Volatility-Proposed-Changes-3765.asphttp://l%20%22cite_ref-15/http://wiki/Citigrouphttp://rdcohen.50megs.com/genOCS.pdfhttp://rdcohen.50megs.com/genOCS.pdfhttp://wiki/Texas_A%26M_Universityhttp://www.qfinance.com/mergers-and-acquisitions-best-practice/capital-structure-implications?fullhttp://l%20%22cite_ref-14/http://pages.stern.nyu.edu/~adamodar/pdfiles/ovhds/capstr.pdfhttp://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/FinancialManagementDecisions.ppt%22%20/l%20%22256,1,Slidehttp://l%20%22cite_ref-13/http://wiki/Stanford_Universityhttp://www.analycorp.com/uncertainty/flawarticle.htmhttp://l%20%22cite_ref-savage_12-0/http://www.qfinance.com/financial-risk-management-best-practice/quantifying-corporate-financial-risk?fullhttp://l%20%22cite_ref-shimko_11-0/https://www.u-cursos.cl/ingenieria/2008/1/MI75E/1/material_docente/bajar?id_material=167438https://www.u-cursos.cl/ingenieria/2008/1/MI75E/1/material_docente/bajar?id_material=167438http://wiki/Category:Mining_companieshttp://l%20%22cite_ref-10/http://www.stern.nyu.edu/~adamodar/pdfiles/papers/probabilistic.pdfhttp://www.stern.nyu.edu/~adamodar/pdfiles/papers/probabilistic.pdfhttp://l%20%22cite_ref-damodaran_risk_9-1/http://l%20%22cite_ref-damodaran_risk_9-0/http://wiki/Michael_Mauboussinhttp://wiki/Columbia_Universityhttp://wiki/Columbia_Universityhttp://www.expectationsinvesting.com/tutorial11.shtmlhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/lectures/opt.htmlhttp://faculty.fuqua.duke.edu/~charvey/Teaching/BA456_2002/Identifying_real_options.htmhttp://l%20%22cite_ref-8/http://books.google.com/books?id=_lnmxnhoAUEC&printsec=frontcover&dq=related:ISBN0070580316%22%20/l%20%22v=onepage&q&f=falsehttp://l%20%22cite_ref-shim_.26_siegel_7-1/http://l%20%22cite_ref-shim_.26_siegel_7-0/http://wiki/Arizona_State_Universityhttp://www.public.asu.edu/~kirkwood/DAStuff/decisiontrees/index.htmlhttp://www.mindtools.com/pages/article/newTED_04.htmhttp://l%20%22cite_ref-6/http://www.realoptions.org/papers2002/SchockleyOptionNPV.pdf.http://www.realoptions.org/papers2002/SchockleyOptionNPV.pdf.http://l%20%22cite_ref-5/http://www.investopedia.com/terms/h/hurdlerate.asphttp://biz.yahoo.com/f/g/hh.htmlhttp://l%20%22cite_ref-4/http://www.duke.edu/~charvey/Classes/ba350_1997/vcf1/vcf1.htmhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/lectures/val.htmlhttp://l%20%22cite_ref-3/http://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/FinancialManagementDecisions.ppt%22%20/l%20%22257,2,Slidehttp://www.bus.lsu.edu/academics/finance/faculty/dchance/Instructional/FinancialManagementDecisions.ppt%22%20/l%20%22257,2,Slidehttp://www.duke.edu/~charvey/Classes/ba350_1997/vcf2/vcf2.htmhttp://l%20%22cite_ref-2/http://wiki/Stern_School_of_Businesshttp://wiki/New_York_Universityhttp://wiki/Aswath_Damodaranhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/AppldCF/other/Image2.gifhttp://l%20%22cite_ref-1/http://wiki/Stern_School_of_Businesshttp://wiki/New_York_Universityhttp://wiki/Aswath_Damodaranhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/AppldCF/other/Image2.gifhttp://wiki/Financial_modeling


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Financial modelingFree cash flow

Business valuation

Fairness opinionStock valuation

APVDCF

Net present value (NPV)Cost of capital (Weighted average)

Comparable company analysisAccretion/dilution analysis

Enterprise valueTax shield

Minority interest

Associate companyEVAMVA

Terminal valueReal options valuation

Corporate finance and investment banking
http://wiki/Financial_modelinghttp://wiki/Free_cash_flowhttp://wiki/Business_valuationhttp://wiki/Fairness_opinionhttp://wiki/Stock_valuationhttp://wiki/Adjusted_present_valuehttp://wiki/Discounted_cash_flowhttp://wiki/Net_present_valuehttp://wiki/Cost_of_capitalhttp://wiki/Weighted_average_cost_of_capitalhttp://wiki/Valuation_using_multipleshttp://wiki/Accretion/dilution_analysishttp://wiki/Enterprise_valuehttp://wiki/Tax_shieldhttp://wiki/Minority_interesthttp://wiki/Associate_companyhttp://wiki/Economic_Value_Addedhttp://wiki/Market_value_addedhttp://wiki/Terminal_value_(finance)http://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://wiki/Terminal_value_(finance)http://wiki/Market_value_addedhttp://wiki/Market_value_addedhttp://wiki/Economic_Value_Addedhttp://wiki/Associate_companyhttp://wiki/Associate_companyhttp://wiki/Minority_interesthttp://wiki/Tax_shieldhttp://wiki/Tax_shieldhttp://wiki/Enterprise_valuehttp://wiki/Enterprise_valuehttp://wiki/Accretion/dilution_analysishttp://wiki/Accretion/dilution_analysishttp://wiki/Valuation_using_multipleshttp://wiki/Weighted_average_cost_of_capitalhttp://wiki/Cost_of_capitalhttp://wiki/Net_present_valuehttp://wiki/Discounted_cash_flowhttp://wiki/Adjusted_present_valuehttp://wiki/Stock_valuationhttp://wiki/Fairness_opinionhttp://wiki/Business_valuationhttp://wiki/Free_cash_flowhttp://wiki/Financial_modelinghttp://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_banking


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Corporate finance and investment banking1. Capital structure

Senior secured debtSenior debtSecond lien debtSubordinated debtMezzanine debt

Convertible debtPreferred equityWarrantShareholder loanCommon equityPari passu

2. Transactions(terms / conditions)Equity offerings. Initial public offering (IPO) Secondary market offering (SEO)

Follow-on offeringRights issuePrivate placementSpin outEquity carve-out Greenshoe

(Reverse) Book buildingBookrunnerUnderwriter

Mergers andacquisitions.TakeoverReverse takeoverTender offerProxy fight Poison

pillStaggered board Squeeze outTag-along rightDrag-along rightPre-emption rightControl premiumDue diligenceDivestmentSell side Buy sideDemergerSuper-

majorityPitch book

Leverage .Leveraged buyoutLeveraged recapFinancial sponsorPrivate equity Bond

offeringHigh-yield debtDIP financingProject finance Debt restructuring

3.Valuation

.Financial modelingFree cash flowBusiness valuationFairness opinionStock valuationAPV

DCF Net present value (NPV) Cost of capital (Weighted average) Comparable company

analysisAccretion/dilution analysisEnterprise valueTax shieldMinority interestAssociate

companyEVAMVATerminal valueReal options valuation

http://wiki/Real_options_valuationhttp://wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Capital_structurehttp://en.wikipedia.org/wiki/Secured_loanhttp://en.wikipedia.org/wiki/Senior_debthttp://en.wikipedia.org/wiki/Second_lien_loanhttp://en.wikipedia.org/wiki/Subordinated_debthttp://en.wikipedia.org/wiki/Mezzanine_capitalhttp://en.wikipedia.org/wiki/Convertible_bondhttp://en.wikipedia.org/wiki/Preferred_stockhttp://en.wikipedia.org/wiki/Warrant_(finance)http://en.wikipedia.org/wiki/Shareholder_loanhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Pari_passuhttp://wiki/Stockhttp://wiki/Initial_public_offeringhttp://wiki/Secondary_market_offeringhttp://en.wikipedia.org/wiki/Follow-on_offeringhttp://en.wikipedia.org/wiki/Rights_issuehttp://en.wikipedia.org/wiki/Private_placementhttp://en.wikipedia.org/wiki/Spin_outhttp://en.wikipedia.org/wiki/Equity_carve-outhttp://en.wikipedia.org/wiki/Greenshoehttp://en.wikipedia.org/wiki/Reverse_greenshoehttp://en.wikipedia.org/wiki/Book_buildinghttp://en.wikipedia.org/wiki/Bookrunnerhttp://en.wikipedia.org/wiki/Underwriterhttp://en.wikipedia.org/wiki/Mergers_and_acquisitionshttp://en.wikipedia.org/wiki/Takeoverhttp://en.wikipedia.org/wiki/Takeoverhttp://en.wikipedia.org/wiki/Reverse_takeoverhttp://en.wikipedia.org/wiki/Tender_offerhttp://en.wikipedia.org/wiki/Proxy_fighthttp://en.wikipedia.org/wiki/Poison_pillhttp://en.wikipedia.org/wiki/Poison_pillhttp://en.wikipedia.org/wiki/Staggered_board_of_directorshttp://en.wikipedia.org/wiki/Squeeze_outhttp://en.wikipedia.org/wiki/Tag-along_righthttp://en.wikipedia.org/wiki/Drag-along_righthttp://en.wikipedia.org/wiki/Pre-emption_righthttp://en.wikipedia.org/wiki/Control_premiumhttp://en.wikipedia.org/wiki/Management_due_diligencehttp://en.wikipedia.org/wiki/Divestmenthttp://en.wikipedia.org/wiki/Sell_sidehttp://en.wikipedia.org/wiki/Buy_sidehttp://en.wikipedia.org/wiki/Demergerhttp://en.wikipedia.org/wiki/Super-majority_amendmenthttp://en.wikipedia.org/wiki/Super-majority_amendmenthttp://en.wikipedia.org/wiki/Pitch_bookhttp://en.wikipedia.org/wiki/Leverage_(finance)http://en.wikipedia.org/wiki/Leveraged_buyouthttp://en.wikipedia.org/wiki/Leveraged_recapitalizationhttp://en.wikipedia.org/wiki/Financial_sponsorhttp://en.wikipedia.org/wiki/Private_equityhttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/High-yield_debthttp://en.wikipedia.org/wiki/Debtor-in-possession_financinghttp://en.wikipedia.org/wiki/Project_financehttp://en.wikipedia.org/wiki/Debt_restructuringhttp://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Free_cash_flowhttp://en.wikipedia.org/wiki/Business_valuationhttp://en.wikipedia.org/wiki/Fairness_opinionhttp://en.wikipedia.org/wiki/Stock_valuationhttp://en.wikipedia.org/wiki/Adjusted_present_valuehttp://en.wikipedia.org/wiki/Discounted_cash_flowhttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Cost_of_capitalhttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Valuation_using_multipleshttp://en.wikipedia.org/wiki/Valuation_using_multipleshttp://en.wikipedia.org/wiki/Accretion/dilution_analysishttp://en.wikipedia.org/wiki/Enterprise_valuehttp://en.wikipedia.org/wiki/Tax_shieldhttp://en.wikipedia.org/wiki/Minority_interesthttp://en.wikipedia.org/wiki/Associate_companyhttp://en.wikipedia.org/wiki/Associate_companyhttp://en.wikipedia.org/wiki/Economic_Value_Addedhttp://en.wikipedia.org/wiki/Market_value_addedhttp://en.wikipedia.org/wiki/Terminal_value_(finance)http://en.wikipedia.org/wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Real_options_valuationhttp://en.wikipedia.org/wiki/Terminal_value_(finance)http://en.wikipedia.org/wiki/Terminal_value_(finance)http://en.wikipedia.org/wiki/Terminal_value_(finance)http://en.wikipedia.org/wiki/Market_value_addedhttp://en.wikipedia.org/wiki/Economic_Value_Addedhttp://en.wikipedia.org/wiki/Associate_companyhttp://en.wikipedia.org/wiki/Associate_companyhttp://en.wikipedia.org/wiki/Associate_companyhttp://en.wikipedia.org/wiki/Minority_interesthttp://en.wikipedia.org/wiki/Minority_interesthttp://en.wikipedia.org/wiki/Minority_interesthttp://en.wikipedia.org/wiki/Tax_shieldhttp://en.wikipedia.org/wiki/Tax_shieldhttp://en.wikipedia.org/wiki/Tax_shieldhttp://en.wikipedia.org/wiki/Enterprise_valuehttp://en.wikipedia.org/wiki/Enterprise_valuehttp://en.wikipedia.org/wiki/Enterprise_valuehttp://en.wikipedia.org/wiki/Accretion/dilution_analysishttp://en.wikipedia.org/wiki/Accretion/dilution_analysishttp://en.wikipedia.org/wiki/Accretion/dilution_analysishttp://en.wikipedia.org/wiki/Valuation_using_multipleshttp://en.wikipedia.org/wiki/Valuation_using_multipleshttp://en.wikipedia.org/wiki/Valuation_using_multipleshttp://en.wikipedia.org/wiki/Valuation_using_multipleshttp://en.wikipedia.org/wiki/Valuation_using_multipleshttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Weighted_average_cost_of_capitalhttp://en.wikipedia.org/wiki/Cost_of_capitalhttp://en.wikipedia.org/wiki/Cost_of_capitalhttp://en.wikipedia.org/wiki/Cost_of_capitalhttp://en.wikipedia.org/wiki/Cost_of_capitalhttp://en.wikipedia.org/wiki/Cost_of_capitalhttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Discounted_cash_flowhttp://en.wikipedia.org/wiki/Adjusted_present_valuehttp://en.wikipedia.org/wiki/Stock_valuationhttp://en.wikipedia.org/wiki/Stock_valuationhttp://en.wikipedia.org/wiki/Stock_valuationhttp://en.wikipedia.org/wiki/Fairness_opinionhttp://en.wikipedia.org/wiki/Fairness_opinionhttp://en.wikipedia.org/wiki/Fairness_opinionhttp://en.wikipedia.org/wiki/Business_valuationhttp://en.wikipedia.org/wiki/Business_valuationhttp://en.wikipedia.org/wiki/Business_valuationhttp://en.wikipedia.org/wiki/Free_cash_flowhttp://en.wikipedia.org/wiki/Free_cash_flowhttp://en.wikipedia.org/wiki/Free_cash_flowhttp://en.wikipedia.org/wiki/Free_cash_flowhttp://en.wikipedia.org/wiki/Free_cash_flowhttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Financial_modelinghttp://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Debt_restructuringhttp://en.wikipedia.org/wiki/Debt_restructuringhttp://en.wikipedia.org/wiki/Project_financehttp://en.wikipedia.org/wiki/Debtor-in-possession_financinghttp://en.wikipedia.org/wiki/High-yield_debthttp://en.wikipedia.org/wiki/High-yield_debthttp://en.wikipedia.org/wiki/High-yield_debthttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Private_equityhttp://en.wikipedia.org/wiki/Financial_sponsorhttp://en.wikipedia.org/wiki/Leveraged_recapitalizationhttp://en.wikipedia.org/wiki/Leveraged_buyouthttp://en.wikipedia.org/wiki/Leverage_(finance)http://en.wikipedia.org/wiki/Pitch_bookhttp://en.wikipedia.org/wiki/Pitch_bookhttp://en.wikipedia.org/wiki/Super-majority_amendmenthttp://en.wikipedia.org/wiki/Super-majority_amendmenthttp://en.wikipedia.org/wiki/Super-majority_amendmenthttp://en.wikipedia.org/wiki/Demergerhttp://en.wikipedia.org/wiki/Buy_sidehttp://en.wikipedia.org/wiki/Sell_sidehttp://en.wikipedia.org/wiki/Divestmenthttp://en.wikipedia.org/wiki/Management_due_diligencehttp://en.wikipedia.org/wiki/Control_premiumhttp://en.wikipedia.org/wiki/Pre-emption_righthttp://en.wikipedia.org/wiki/Pre-emption_righthttp://en.wikipedia.org/wiki/Pre-emption_righthttp://en.wikipedia.org/wiki/Drag-along_righthttp://en.wikipedia.org/wiki/Drag-along_righthttp://en.wikipedia.org/wiki/Drag-along_righthttp://en.wikipedia.org/wiki/Tag-along_righthttp://en.wikipedia.org/wiki/Tag-along_righthttp://en.wikipedia.org/wiki/Tag-along_righthttp://en.wikipedia.org/wiki/Squeeze_outhttp://en.wikipedia.org/wiki/Staggered_board_of_directorshttp://en.wikipedia.org/wiki/Poison_pillhttp://en.wikipedia.org/wiki/Poison_pillhttp://en.wikipedia.org/wiki/Proxy_fighthttp://en.wikipedia.org/wiki/Tender_offerhttp://en.wikipedia.org/wiki/Reverse_takeoverhttp://en.wikipedia.org/wiki/Takeoverhttp://en.wikipedia.org/wiki/Mergers_and_acquisitionshttp://en.wikipedia.org/wiki/Underwriterhttp://en.wikipedia.org/wiki/Underwriterhttp://en.wikipedia.org/wiki/Bookrunnerhttp://en.wikipedia.org/wiki/Book_buildinghttp://en.wikipedia.org/wiki/Reverse_greenshoehttp://en.wikipedia.org/wiki/Greenshoehttp://en.wikipedia.org/wiki/Equity_carve-outhttp://en.wikipedia.org/wiki/Equity_carve-outhttp://en.wikipedia.org/wiki/Equity_carve-outhttp://en.wikipedia.org/wiki/Spin_outhttp://en.wikipedia.org/wiki/Private_placementhttp://en.wikipedia.org/wiki/Rights_issuehttp://en.wikipedia.org/wiki/Follow-on_offeringhttp://en.wikipedia.org/wiki/Follow-on_offeringhttp://en.wikipedia.org/wiki/Follow-on_offeringhttp://wiki/Secondary_market_offeringhttp://wiki/Initial_public_offeringhttp://wiki/Stockhttp://en.wikipedia.org/wiki/Pari_passuhttp://en.wikipedia.org/wiki/Pari_passuhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Shareholder_loanhttp://en.wikipedia.org/wiki/Warrant_(finance)http://en.wikipedia.org/wiki/Preferred_stockhttp://en.wikipedia.org/wiki/Convertible_bondhttp://en.wikipedia.org/wiki/Mezzanine_capitalhttp://en.wikipedia.org/wiki/Subordinated_debthttp://en.wikipedia.org/wiki/Second_lien_loanhttp://en.wikipedia.org/wiki/Senior_debthttp://en.wikipedia.org/wiki/Secured_loanhttp://en.wikipedia.org/wiki/Capital_structurehttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_banking


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END

Documents

Corporate Finanial Managemnt