Title:

Guide to financial analysis

Author:

Bowlin, Oswald Doniece, 1928-

Personal Author:

Publication Information:

New York : McGraw-Hill, [1980]

©1980

Physical Description:

xii, 335 pages ; 24 cm.

General Note:

Includes index.

Language:

English

ISBN:

9780070067813

Format :

Book

### On Order

### Table of Contents

Preface | p. xi |

Chapter 1 Financial Management | p. 1 |

Financial Decisions | p. 1 |

The Financial Manager | p. 2 |

The Objective of Financial Management | p. 3 |

Valuation in an Efficient Market | p. 5 |

Spreadsheets in Financial Analysis | p. 8 |

Outline of the Book | p. 10 |

References | p. 11 |

Chapter 2 Financial Analysis | p. 13 |

A Brief Review of the Firm's Financial Statements | p. 13 |

Financial Statement Analysis | p. 24 |

Financial Performance and the Creation of Shareholder Wealth | p. 35 |

Limitations of Ratio Analysis | p. 39 |

Using Ratios to Predict Corporate Bankruptcy | p. 40 |

Statistical Studies of Financial Ratios | p. 41 |

Chapter Summary | p. 42 |

Problems | p. 43 |

References | p. 46 |

Chapter 3 Financial Forecasting, Planning, and Control | p. 47 |

Forecasting Sales | p. 48 |

Cash Budget | p. 55 |

Pro Forma Financial Statements | p. 61 |

Financial Spreadsheets | p. 67 |

Chapter Summary | p. 69 |

Problems | p. 70 |

References | p. 72 |

Appendix 3A Analyzing Forecast Accuracy | p. 73 |

Chapter 4 Valuation | p. 80 |

The Concept of Valuation | p. 80 |

Estimating Market Value | p. 83 |

Computation of the Time-Adjusted Rate of Return | p. 88 |

Solved Problems | p. 91 |

The Valuation of Corporate Securities and Business Firms | p. 93 |

Valuation of the Total Equity of a Firm | p. 106 |

Chapter Summary | p. 106 |

Solved Problems | p. 107 |

Problems | p. 110 |

References | p. 112 |

Appendix 4A Summing a Geometric Progression | p. 113 |

Chapter 5 Capital Budgeting Techniques | p. 115 |

The Investment Cash Flows | p. 116 |

Evaluation of Investment Proposals | p. 123 |

Capital Rationing | p. 143 |

Chapter Summary | p. 144 |

Solved Problems | p. 145 |

Problems | p. 148 |

References | p. 153 |

Appendix 5A Federal Taxation of Business Income | p. 154 |

Chapter 6 The Effect and Measurement of Risk of New Investments | p. 161 |

Investment Risk of an Individual Asset: Project Risk | p. 162 |

Measurement of Project Risk | p. 168 |

Investment Risk to the Firm: Firm Risk | p. 174 |

Risk of a Project to the Firm's Stockholders: Systematic Risk | p. 180 |

Portfolio Theory | p. 181 |

Capital Asset Pricing | p. 185 |

Chapter Summary | p. 189 |

Solved Problems | p. 191 |

Problems | p. 193 |

References | p. 197 |

Appendix 6A Interest Rate Risk | p. 198 |

Appendix 6B Evaluating Option Components of Capital Expenditures | p. 202 |

Chapter 7 Estimating the Required Rate of Return on Investment Proposals | p. 208 |

Cost of Individual Sources of Capital | p. 209 |

Deriving a Weighted-Average Cost of Capital | p. 229 |

Setting Required Rates for Risk Categories | p. 236 |

Cost of Capital for Company Divisions | p. 236 |

Acquisitions of Other Firms | p. 237 |

Chapter Summary | p. 240 |

Problems | p. 240 |

References | p. 243 |

Chapter 8 Managing Cash and Marketable Securities | p. 245 |

Rationale for Holding Cash | p. 245 |

Objectives and Decisions | p. 248 |

Collection and Disbursement Procedures | p. 249 |

Cost/Benefit Analysis of Cash Management Services | p. 257 |

Marketable Securities Portfolio Structure | p. 257 |

Chapter Summary | p. 266 |

Problems | p. 267 |

References | p. 269 |

Chapter 9 Credit and Inventory Management | p. 272 |

Credit Management | p. 272 |

Credit Analysis | p. 274 |

Collections | p. 277 |

Inventories | p. 278 |

The Inventory Investment | p. 278 |

Chapter Summary | p. 286 |

Solved Problems | p. 287 |

Problems | p. 289 |

References | p. 293 |

Chapter 10 Credit Policy Decisions | p. 294 |

The Investment Required in Offering Credit | p. 295 |

Net Cash Benefits | p. 299 |

The Evaluation of Credit Policy Proposals: Specifics | p. 300 |

Variations in Cash Flows Over Time | p. 313 |

Chapter Summary | p. 315 |

Solved Problem | p. 315 |

Problems | p. 318 |

References | p. 322 |

Chapter 11 Determining the Financing Mix | p. 325 |

Business Risk and Financial Risk | p. 325 |

The Concept of Operating Leverage | p. 327 |

Financial Leverage | p. 332 |

Total Leverage | p. 334 |

The Debt Maturity Financing Decision | p. 336 |

Choosing the Appropriate Financing Mix | p. 340 |

The Cost of Financing in Practice | p. 345 |

Chapter Summary | p. 347 |

Problems | p. 348 |

References | p. 350 |

Appendix 11A Debt Refunding | p. 351 |

Chapter 12 Dividend Policy | p. 359 |

The Irrelevance of Dividend Policy | p. 360 |

Factors Influencing Dividend Policy | p. 361 |

Dividend Payment Strategies | p. 367 |

Dividend Payment Procedure | p. 369 |

Alternatives to Cash Dividends | p. 370 |

Chapter Summary | p. 376 |

Problems | p. 377 |

References | p. 378 |

Appendix A Present-Value and Future-Value Tables | p. 381 |

A-1 Present Value of $1 | p. 382 |

A-2 Present Value of an Annuity of $1 | p. 386 |

A-3 Future Value of $1 | p. 390 |

A-4 Future Value of an Annuity of $1 | p. 393 |

Appendix B Cumulative Normal Distribution | p. 396 |

Appendix C Answers to Selected Study Problems | p. 398 |

Appendix D Glossary | p. 403 |

Index | p. 413 |