Hill R.A. Strategic Financial Management

BoBoCoAe, RAH & Ventus Publishing ApS – 2008, 108 pages
ISBN: 8776814250, 9788776814250This book reviews the subject within the context of current events. Each chapter contains activities (with solutions) to test understanding at your own pace.
In a world of geo-political, social and economic uncertainty, Strategic Financial Management is under pressure.
Comprehensive, yet concise, the material is also presented logically as a guide to further study.
First, the investment decision, which maximises net present value and shareholder wealth.
Next, the finance decision, which allocates least-cost combinations of capital resources.
Finally, the wealth decision, which examines how internal investment and financial decisions should be externally monitored by the market.Part One: An Introduction
Finance – An Overview
Financial Objectives and Shareholder Wealth
Wealth Creation and Value Added
The Investment and Finance Decision
Decision Structures and Corporate Governance
The Developing Finance Function
The Principles of Investment
Perfect Markets and the Separation Theorem
Summary and Conclusions
Selected ReferencesPart Two: The Investment Decision
Capital Budgeting Under Conditions of Certainty
The Role of Capital Budgeting
Liquidity, Profitability and Present Value
The Internal Rate of Return (IRR)
The Inadequacies of IRR and the Case for NPV
Summary and Conclusions
Capital Budgeting and the Case for NPV
Ranking and Acceptance Under IRR and NPV
The Incremental IRR
Capital Rationing, Project Divisibility and NPV
Relevant Cash Flows and Working Capital
Capital Budgeting and Taxation
NPV and Purchasing Power Risk
Summary and Conclusions
The Treatment of Uncertainty
Dysfunctional Risk Methodologies
Decision Trees, Sensitivity and Computers
Mean-Variance Methodology
Mean-Variance Analyses
The Mean-Variance Paradox
Certainty Equivalence and Investor Utility
Summary and ConclusionsPart Three: The finance decision
Equity Valuation and the Cost of Capital
The Capitalisation Concept
Single-Period Dividend Valuation
Finite Dividend Valuation
General Dividend Valuation
Constant Dividend Valuation
The Dividend Yield and Corporate Cost of Equity
Dividend Growth and the Cost of Equity
Capital Growth and the Cost of Equity
Growth Estimates and the Cut-Off Rate
Earnings Valuation and the Cut-Off Rate
Summary and Conclusions
Selected References
Debt Valuation and the Cost of Capital
Capital Gearing (Leverage): An Introduction
The Value of Debt Capital and Capital Cost
The Tax-Deductibility of Debt
The Impact of Issue Costs
Summary and Conclusions
Capital Gearing and the Cost of Capital
The Weighted Average Cost of Capital (WACC)
WACC Assumptions
The Real-World Problems of WACC Estimation
Summary and Conclusions
Selected ReferencePart Four: The Wealth Decision
Shareholder Wealth and Value Added
The Concept of Economic Value Added (EVA)
The Concept of Market Value Added (MVA)
Profit and Cash Flow
EVA and Periodic MVA
NPV Maximisation, Value Added and Wealth
Summary and Conclusions
Selected References