In finance our goal is to create wealth. We learn from experience how to cope with routine problems. The most successful are those who are able to respond to change. To do so we need more than time-honored rules of thumb; we must understand why companies and financial markets behave the way they do. In other words, we need a theory and principles of finance.
Much of this book is concerned with understanding what financial managers do and why. But we also say what financial managers should do to increase company value. The book provides an introduction to these burning topics in the field of finance. We begin introduction to finance, where we introduce you to financial planning, financial control, profit maximization analysis, functions of finance, the basic tools of finance and decision-making. We present the decision-making which includes capital budgeting, capital structure and the management of working capital. We have also put more emphasis on financial planning and the management of working capital. For example, the discussion of financial statements and ratios and common-size balance sheets and income statements.
The book helps you to grasp what is going on in the world around you. It helps you to ask the right questions when times change and new problems need to be analyzed. It also tells you which things you do not need to worry about. Throughout this book we show how managers use financial principles to solve practical problems.
Chapter 1. Finance and Business Development
Chapter 2. Long-term Finance and Capital Structure
Chapter 3. Analysis of Financial Statements
Chapter 4. Fund Flow Statements and Cash Flow Statements
Chapter 5. Working Capital Management
Chapter 6. Investment Decisions
Chapter 7. Profit Planning and Dividend Decision
Chapter 8. Investment Appraisals
Chapter 9. Budgeting
Terms and Terminology in Financial and Investment