Business finance : Theory and practice / Eddie McLaney.

Includes bibliographical references (pages 507-513) and index.

Part 1 The business finance environment; 1 Introduction; Objectives; 1.1 The role of business finance; 1.2 Risk and business finance; 1.3 The relationship between business finance and accounting; 1.4 The organisation of businesses â#x80;#x93; the limited company; 1.5 Corporate governance and the role of directors; 1.6 Long-term financing of companies; 1.7 Liquidation; 1.8 Derivatives; 1.9 Private equity funds; Summary; Further reading; REVIEW QUESTIONS; 2 A framework for financial decision making. Objectives2.1 Financial decision making; 2.2 Business objectives; 2.3 Conflicts of interest: shareholders versus managers â#x80;#x93; the â#x80;#x98;agencyâ#x80;#x99; problem; 2.4 Financing, investment and separation; 2.5 Behavioural finance; 2.6 Theory and practice; Summary; Further reading; REVIEW QUESTIONS; PROBLEM; APPENDIX: Formal derivation of the separation theorem; 3 Financial (accounting) statements and their interpretation; Objectives; 3.1 Introduction; 3.2 The financial statements; 3.3 Definitions and conventions of accounting; 3.4 Problems with using accounting information for decision making. 3.5 Creative accounting3.6 Ratio analysis; 3.7 Using accounting ratios to predict financial failure; Summary; Further reading; REVIEW QUESTIONS; PROBLEMS; APPENDIX: Jackson plcâ#x80;#x99;s income statement and statement of financial position for 2013; Part 2 Investment decisions; 4 Investment appraisal methods; Objectives; 4.1 Introduction; 4.2 Net present value; 4.3 Internal rate of return; 4.4 Payback period; 4.5 Accounting (or unadjusted) rate of return; 4.6 Investment appraisal methods used in practice; Summary; Further reading; REVIEW QUESTIONS; PROBLEMS. 5 Practical aspects of investment appraisalObjectives; 5.1 Introduction; 5.2 Cash flows or accounting flows?; 5.3 Do cash flows really occur at year ends?; 5.4 Which cash flows?; 5.5 Taxation; 5.6 Inflation; 5.7 An example of an investment appraisal; 5.8 Capital rationing; 5.9 Replacement decisions; 5.10 Routines for identifying, assessing, implementing and reviewing investment projects; 5.11 Investment appraisal and strategic planning; 5.12 Value-based management; 5.13 Real options; Summary; Further reading; REVIEW QUESTIONS; PROBLEMS; 6 Risk in investment appraisal; Objectives. 6.1 Introduction6.2 Sensitivity analysis; 6.3 Use of probabilities; 6.4 Expected value; 6.5 Systematic and specific risk; 6.6 Utility theory; 6.7 Attitudes to risk and expected value; 6.8 Particular risks associated with making investments overseas; 6.9 Some evidence on risk analysis in practice; 6.10 Risk â#x80;#x93; the story so far; Summary; Further reading; REVIEW QUESTIONS; PROBLEMS; 7 Portfolio theory and its relevance to real investment decisions; Objectives; 7.1 The relevance of security prices; 7.2 The expected value/variance (or mean/variance) criterion; 7.3 Security investment and risk.

Now in its 10th edition, Business Finance is an essential introduction to financial decision-making in businesses. Taking a user-friendly approach, it explores the type of investments a business should make and how they should be financed, and successfully blends the theoretical, analytical and practical aspects of finance and investments. The new edition has a strong real world focus, exploring the theories surrounding financial decision making and relating these theories to what happens in the real business world