tailieunhanh - Applied corporate finance

Let me begin this preface with a confession of a few of my own biases. First, I believe that theory, and the models that flow from it, should provide us with the tools to understand, analyze and solve problems. The test of a model or theory then should not be based upon its elegance but upon its usefulness in problem solving. Second, there is little in corporate financial theory, in my view, that is new and revolutionary. The core principles of corporate finance are common sense ones, and have changed little over time | Preface Let me begin this preface with a confession of a few of my own biases. First I believe that theory and the models that flow from it should provide us with the tools to understand analyze and solve problems. The test of a model or theory then should not be based upon its elegance but upon its usefulness in problem solving. Second there is little in corporate financial theory in my view that is new and revolutionary. The core principles of corporate finance are common sense ones and have changed little over time. That should not be surprising. Corporate finance is only a few decades old and people have been running businesses for thousands of years and it would be exceedingly presumptuous of us to believe that they were in the dark until corporate finance theorists came along and told them what to do. To be fair it is true that corporate financial theory has made advances in taking common sense principles and providing them with structure but these advances have been primarily on the details. The story line in corporate finance has remained remarkably consistent over time. Talking about story lines allows me to set the first theme of this book. This book tells a story which essentially summarizes the corporate finance view of the world. It classifies all decisions made by any business into three groups -decisions on where to invest the resources or funds that the business has raised either internally or externally the investment decision decisions on where and how to raise funds to finance these investments the financing decision and decisions on how much and in what form to return funds back to the owners the dividend decision . As I see it the first principles of corporate finance can be summarized in figure 1 which also lays out a site map for the book. Every section of this book relates to some part of this picture and each chapter is introduced with it with emphasis on that portion that will be analyzed in that chapter. Note the chapter numbers below .