Test Bank for Essentials of Corporate Finance, 7th Edition: Stephen A. Ross

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Product details:

• ISBN-10 ‏ : ‎ 0073382469
• ISBN-13 ‏ : ‎ 978-0073382463
• Author: Stephen Ross; Bradford D. Jordan; Randoloph W. Westerfield

Essentials of Corporate Finance, 7th edition by Ross, Westerfield, and Jordan is written to convey the most important concepts and principles of corporate finance at a level that is approachable for a wide audience. The authors retain their modern approach to finance, but have distilled the subject down to the essential topics in 18 chapters. They believe that understanding the “why” is just as important, if not more so, than understanding the “how,” especially in an introductory course. Three basic themes emerge as their central focus:

1. An emphasis on intuition–separate and explain the principles at work on a common sense, intuitive level before launching into specifics. Underlying ideas are discussed first in general terms, then followed by specific examples that illustrate in more concrete terms how a financial manager might proceed in a given situation.

2. A unified valuation approach–Net Present Value is treated as the basic concept underlying corporate finance. Every subject the authors cover is firmly rooted in valuation, and care is taken to explain how decisions have valuation effects.

3. A managerial focus–Students learn that financial management concerns management. The role of financial manager as decision maker is emphasised and they stress the need for managerial input and judgment.

Table of contents:

PART ONE OVERVIEW OF FINANCIAL MANAGEMENT

Introduction to Financial Management

Finance: A Quick Look

2(2)

The Four Basic Areas

2(1)

Corporate Finance

2(1)

Investments

2(1)

Financial Institutions

3(1)

International Finance

3(1)

Why Study Finance?

3(1)

Marketing and Finance

3(1)

Accounting and Finance

3(1)

Management and Finance

4(1)

You and Finance

4(1)

Business Finance and the Financial Manager

4(3)

What Is Business Finance?

4(1)

The Financial Manager

5(1)

Financial Management Decisions

5(1)

Capital Budgeting

5(1)

Capital Structure

5(1)

Working Capital Management

6(1)

Conclusion

6(1)

Forms of Business Organization

7(3)

Sole Proprietorship

7(1)

Partnership

7(1)

Corporation

8(1)

A Corporation by Another Name

9(1)

The Goal of Financial Management

10(2)

Profit Maximization

10(1)

The Goal of Financial Management in a Corporation

10(1)

A More General Financial Management Goal

11(1)

Sarbanes-Oxley Act

12(1)

The Agency Problem and Control of the Corporation

12(3)

Agency Relationships

12(1)

Management Goals

13(1)

Do Managers Act in the Stockholders’ Interests?

13(1)

Managerial Compensation

13(1)

Control of the Firm

14(1)

Conclusion

15(1)

Stakeholders

15(1)

Financial Markets and the Corporation

15(3)

Cash Flows to and from the Firm

16(1)

Primary versus Secondary Markets

16(1)

Primary Markets

17(1)

Secondary Markets

17(1)

Summary and Conclusions

18(1)

Critical Thinking and Concepts Review

19(1)

What’s on the Web?

20(1)

Chapter Case: The McGee Cake Company

21(2)

PART TWO UNDERSTANDING FINANCIAL STATEMENTS AND CASH FLOW

Financial Statements, Taxes, and Cash Flow

The Balance Sheet

23(4)

Assets: The Left-Hand Side

23(1)

Liabilities and Owners’ Equity: The Right-Hand Side

23(1)

Net Working Capital

24(1)

Liquidity

25(1)

Debt versus Equity

26(1)

Market Value versus Book Value

26(1)

The Income Statement

27(4)

GAAP and the Income Statement

28(1)

Noncash Items

29(1)

Time and Costs

29(1)

Earnings Management

30(1)

Taxes

31(3)

Corporate Tax Rates

32(1)

Average versus Marginal Tax Rates

32(2)

Cash Flow

34(7)

Cash Flow from Assets

34(1)

Operating Cash Flow

34(1)

Capital Spending

35(1)

Change in Net Working Capital

36(1)

Conclusion

36(1)

A Note on “Free” Cash Flow

36(1)

Cash Flow to Creditors and Stockholders

36(1)

Cash Flow to Creditors

37(1)

Cash Flow to Stockholders

37(1)

Conclusion

37(2)

An Example: Cash Flows for Dole Cola

39(1)

Operating Cash Flow

39(1)

Net Capital Spending

39(1)

Change in NWC and Cash Flow from Assets

39(1)

Cash Flow to Creditors and Stockholders

40(1)

Summary and Conclusions

41(1)

Chapter Review and Self-Test Problem

41(1)

Answer to Chapter Review and Self-Test Problem

42(2)

Critical Thinking and Concepts Review

44(1)

Questions and Problems

45(3)

What’s on the Web?

48(2)

Chapter Case: Cash Flows and Financial Statements at Sunset Boards, Inc.

50(2)

Working with Financial Statements

Standardized Financial Statements

52(3)

Common-Size Balance Sheets

53(1)

Common-Size Income Statements

54(1)

Ratio Analysis

55(9)

Short-Term Solvency, or Liquidity, Measures

56(1)

Current Ratio

56(1)

Quick (or Acid-Test) Ratio

57(1)

Cash Ratio

57(1)

Long-Term Solvency Measures

58(1)

Total Debt Ratio

58(1)

Times Interest Earned

58(1)

Cash Coverage

58(1)

Asset Management, or Turnover, Measures

59(1)

Inventory Turnover and Days’ Sales in Inventory

59(1)

Recivables Turnover and Days’ Sales in Receivables

60(1)

Total Asset Turnover

61(1)

Profitability Measures

61(1)

Profit Margin

61(1)

Return on Assets

62(1)

Return on Equity

62(1)

Market Value Measures

62(1)

Price-Earnings Ratio

62(1)

Price-Sales Ratio

63(1)

Market-to-Book Ratio

63(1)

The Du Pont Identity

64(4)

An Expanded Du Pont Analysis

66(2)

Internal and Sustainable Growth

68(4)

Dividend Payout and Earnings Retention

68(1)

ROA, ROE, and Growth

69(1)

The Internal Growth Rate

69(1)

The Sustainable Growth Rate

70(1)

Determinants of Growth

70(1)

A Note of Sustainable Growth Rate Calculations

71(1)

Using Financial Statement Information

72(8)

Why Evaluate Financial Statements?

72(1)

Internal Uses

72(1)

External Uses

73(1)

Choosing a Benchmark

73(1)

Time-Trend Analysis

73(1)

Peer Group Analysis

73(5)

Problems with Financial Statement Analysis

78(2)

Summary and conclusions

80(1)

Chapter Review and Self-Test Problems

80(2)

Answers to Chapter Review and Self-Test Problems

82(1)

Critical Thinking and Concepts Review

83(2)

Questions and Problems

85(6)

What’s on the Web?

91(2)

Chapter Case: Ratios and Financial Planning at S&S Air, Inc.

93(3)

PART THREE VALUATION OF FUTURE CASH FLOWS

Introduction to Valuation: The Time Value of Money

Future Value and Compounding

96(7)

Investing for a Single Period

96(1)

Investing for More Than One Period

96(7)

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