Outline of the Text
Part I:
Part II:
Part III:
Part IV:
Part V:
Part VI:
Part VII:
Part VIII:
CORPORATE FINANCE
7th Edition
Stephen A. Ross
Randolph W. Westerfield
Jeffrey F. Jaffe
Overview
Value and Capital Budgeting
Risk
Capital Structure and Dividend Policy
Long-Term Financing
Options, Futures, and Corporate Finance
Short-Term Finance
Special Topics
Presented by
Dan Liang
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Lecture 1
Slide 1
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Table of Contents
Table of Contents (continued)
I: Chapter 1
Chapter 2
Chapter 3
II: Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
III: Chapter 9
Chapter 10
Chapter 11
Introduction to Corporate Finance
Accounting Statements and Cash Flow
Financial Planning and Growth
Net Present Value
How to Value Bonds and Stocks
Some Alternative Investment Rules
Net Present Value and Capital Budgeting
Risk Analysis, Real Options, and Capital Budgeting
Capital Market Theory: an Overview
Return and Risk: The Capital-Asset-Pricing Model (CAPM)
An Alternative View of Risk and Return: The Arbitrage
Pricing Theory
Chapter 12 Risk, Cost of Capital, and Capital Budgeting
IV: Chapter 13 Corporate-Financing Decisions and Efficient Capital Markets
Chapter 14 Long-term Financing: an Introduction
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Chapter 15 Capital Structure: Basic Concepts
Chapter 16 Capital Structure: Limits to the Use of Debt
Chapter 17 Valuation and Capital Budgeting for the Levered
Chapter 18
V: Chapter 19
Chapter 20
Chapter 21
Firm
Dividends and Other Payouts
Issuing Securities to the Public
Long-term Debt
Leasing
VI: Chapter 22 Options and Corporate Finance: Basic Concepts
Chapter 23 Options and Corporate Finance: Extensions and
Applications
Chapter 24 Warrants and Convertibles
Chapter 25 Derivatives and Hedging Risk
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T1.1 Chapter Outline
Table of Contents (continued)
Chapter 1
VII: Chapter 26 Short-term Finance and Planning
Chapter 27 Cash Management
Chapter 28 Credit Management
VIII: Chapter 29 Mergers and Acquisitions
Introduction to Corporate Finance
Chapter Organization
Chapter 30 Financial Distress
Chapter 31 International Corporate Finance
„ 1.1 What is Corporate Finance
„ 1.2 Corporate Securities as Contingent Claims
„ 1.3 Forms of Business Organization
„ 1.4 Goals of Corporate Firm
„ 1.5 Financial Markets
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T1.2 The Four Basic Areas of Finance
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T1.2 The Four Basic Areas of Finance - Corporate Finance
The Four Basic Areas of Finance
Corporate Finance
„ Corporate Finance
„ Long-term investments
‹
Capital Budgeting
„ Long-term financing
„ Investments
‹
Capital Structure
„ Short-term financing
„ Financial Institutions
‹
Working Capital Management
„ Risk management
‹
„ International Finance
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Derivative securities
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T1.3 What is Corporate Finance
T1.4 Corporate Securities as Contingent Claims on Total Firm Value
„ What investment opportunity should the firm take?
‹ Fixed asset investment
‹ Capital budgeting (capital expenditures): the process of
making and managing expenditures on long-lived assets.
„ Suppose that one of S possible state of nature can occur
tomorrow. A contingent claim is a security that pays one dollar
in one state s only tomorrow. It is a random variable X (s),
s∈S, representing a payoff at time 1.
„ Debt and equity as contingent claims.
„ How can the firm raise cash for required capital
expenditures?
‹
Capital Structure
„ How should short-term operating cash flows be
managed?
‹
Net working capital
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T1.5 A Simplified Organizational Chart (Figure 1.3)
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T1.6 Forms of Business Organization
„ Organizational Forms
‹ Sole Proprietorship
‹ Partnership
General Partnership / Limited Partnership
‹
Corporation：a distinct legal entity
Limited Liability, ease of ownership transfer, and perpetual
succession
„ Legal Considerations
How do owners’ roles differ across organizational forms?
„ Economic Considerations
Why are corporations generally larger than other forms of
business?
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T1.7 Goals of the Corporate Firm
T1.8 The Agency Problem
The Goal of Financial Management
The Agency Problem and Control of the Firm
„ What are firm decision-makers hired to do?
„ Agency Relationships and Management Goals
“General Motors is not in the business of making automobiles.
General Motors is in the business of making money.”
„ Do managers Act in the Shareholders’ interests?
Agency costs
--Alfred P. Sloan
„ Possible goals
„ Three “equivalent” goals of financial management:
„ Mechanisms to ensure Managers are acting in
shareholders’ interest
Maximize share price
Managerial compensation
Board of directors
Takeover activity
Maximize shareholder wealth
Proxy Contest
Institutional Investors
Maximize firm value
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T1.9 Financial Markets
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T1.10 Cash Flows Between the Firm and the Financial Markets
Financial Markets
„ What is the role of financial markets in corporate
finance?
Cash flows to and from the firm
Money markets and capital markets
Primary versus Secondary markets
„ How do financial markets benefit society?
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