Summary Print Book of David Hillier's CorporateFinance 4/e Book cover image

Summary Print Book of David Hillier's CorporateFinance 4/e

ISBN-10 1526848082 ISBN-13 9781526848086
256 Flashcards & Notes
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A snapshot of the summary - Print Book of David Hillier's CorporateFinance 4/e Author: HILLIER ISBN: 9781526848086

  • 1 introduction

  • How to manage short term operating cash flows
    Net working capital
  • Creditors, bondholders, debtholders
    People, institutions that lend money to firm
  • Why is little net working capital dangerous
    1. Cant finance short term operations
    2. No money for emergencies
  • High net working capital
    Company not using money efficiently, extra cash be used for investments
  • Financial's managers job
    Create value from firm's capital budgeting, financing, net working capital activities
  • How is firm's value created
    Ensuring that firm generates more cash flow than it uses
    1. Through buying assets that generate more money than they cost
    2. Selling bonds, shares that raise more cash than they cost
  • Features to consider when analysing cash flows
    1. Timing, prefer to receive cash flows early 
    2. Risk, amount+timing of cash flows are usually unknown
  • Most important principle corporate finance
    $x is now worth more than same amount $x in future 
    receiving cash flows better earlier
    investors choose investment with least risk due to aversion to risk
  • Goal financial management
    Maximise value of company's equity shares
    studies relationship between business decisions and value of shares in the business
  • When firms require cash to invest in new projects
    1. Borrow funds
    2. Sell part of firm's ownership
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