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<p>Preface viii</p> <p>Frequently used symbols xii</p> <p>1 What is Corporate finance? 1</p> <p>Section 1 Financial Analysis? 15</p> <p><b>Part One Fundamental Concepts in Financial Analysis 17</b></p> <p>2 Cash Flow 19</p> <p>3 Earnings 29</p> <p>4 Capital Employed and Invested Capital 44</p> <p>5 Walking Through from Earnings to Cash Flow 57</p> <p>6 Getting to Grips with Consolidated Accounts 71</p> <p>7 How to Cope with the Most Complex Points in Financial Accounts 88</p> <p><b>Part Two Financial Analysis and Forecasting 115</b></p> <p>8 How to Perform a Financial Analysis 117</p> <p>9 Margin Analysis: Structure 141</p> <p>10 Margin Analysis: Risks 164</p> <p>11 Working Capital and Capital Expenditures 179</p> <p>12 Financing 201</p> <p>13 Return on Capital Employed and Return on Equity 216</p> <p>14 Conclusion and Financial Analysis 235</p> <p>Section II Investors and Markets 243</p> <p><b>Part One Investment Decision Rules 245</b></p> <p>15 The Financial Markets 247</p> <p>16 The Time Value of Money and Net Present Value 267</p> <p>17 The Internal Rate of Return 284</p> <p><b>Part Two The Risk of Securities and the Required Rate of Return 297</b></p> <p>18 Risk and Return 299</p> <p>19 The Required Rate of Return 327</p> <p><b>Part Three Financial Securities 345</b></p> <p>20 Bonds 347</p> <p>21 Other DEBT Products 369</p> <p>22 Shares 384</p> <p>23 Options 404</p> <p>24 Hybrid Securities 425</p> <p>25 Selling Securities 443</p> <p><b>Section III Value 469</b></p> <p>26 Value and Corporate Finance 471</p> <p>27 Measuring Value Creation 490</p> <p>28 Investment Criteria 508</p> <p>29 The Cost of Capital 526</p> <p>30 Risk and Investment Analysis 543</p> <p>31 Valuation Techniques 555</p> <p><b>Section IV Corporate Financial Policies 585</b></p> <p><b>Part One Capital Structure Policies 587</b></p> <p>32 Capital Structure and the Theory of Perfect Capital Markets 589</p> <p>33 Capital Structure, Taxes and Organisation Theories 601</p> <p>34 DEBT, Equity and Options Theory 618</p> <p>35 Working Out Details: The Design of the Capital Structure 637</p> <p><b>Part Two Equity Capital 657</b></p> <p>36 Returning Cash to Shareholders 659</p> <p>37 Distribution in Practice: Dividends and Share Buy-Backs 676</p> <p>38 Share Issues 692</p> <p><b>Part Three DEBT Capital 705</b></p> <p>39 Implementing a DEBT Policy 707</p> <p><b>Section V Financial Management 725</b></p> <p>Part One Corporate Governance and Financial Engineering 727</p> <p>40 Setting Up a Company or Financing Start-Ups 729</p> <p>41 Choice of Corporate Structure 748</p> <p>42 Initial Public Offerings (IPOs) 771</p> <p>43 Corporate Governance 783</p> <p>44 Taking Control of A Company 796</p> <p>45 Mergers and Demergers 819</p> <p>46 Leveraged Buyouts (LBOs) 836</p> <p>47 Bankrupicy and Restructing 851</p> <p><b>Part Two Managing Working Capital, Cash Flows, Financial Risks and Real Estate 863</b></p> <p>48 Managing Working Capital 865</p> <p>49 Cash Management 878</p> <p>50 Managing Financial Risks 897</p> <p>51 Managing Operational Real Estate 922</p> <p>Epilogue – Finance and Strategy 935</p> <p>Top 20 Largest Listed Companies 943</p> <p>Contents 951</p> <p>Index 961</p>

<strong>Pierre Vernimmen</strong> (deceased) Graduate of HEC and Harvard, was a founding member and first coordinator of the Finance Department at HEC, where he established himself as a leading academic in the field of corporate finance.?In 1973 he joined Paribas, initially as a private equity banker, moving onto the advisory business line (M&A, privatisations, financial restructurings) which he set up and managed from 1993 until his death in 1996. <p><strong>Pascal Quiry</strong> (Paris, France) is MD in the Corporate Finance department at BNP Paribas, and affiliate professor of finance at HEC.?He leads two 8-member teams which carry out company valuations and stock exchange transactions (takeover bids, exchange offers, demergers etc.). Pascal is board member of the French Finance Association and member of the American Finance Association. <p><strong>Yann Le Fur</strong>?(Paris, France) is a senior associate in the Paris Corporate Finance department of Schroder Salomon Smith Barney, and a lecturer at HEC. He co-manages a team of 5 professionals. <p><strong>Maurizio Dallocchio</strong> (Milan, Italy) former Dean of the leading Italian business school Bocconi (Milan) and Lehman Brothers Chair of Corporate Finance. He is also a board member of several listed and unlisted companies and is one of the most distinguished Italian authorities on finance. <p><strong>Antonio Salvi</strong> (Milan, Italy) is an Assistant Professor of Finance at Bocconi and the University of Venice where he teaches Corporate Finance. His areas of research cover cost of capital, structure of debt finance and corporate governance.

<p>Corporate<b> FINANCE</b> <p><i>Corporate Finance: Theory and Practice</i> continues to hold sway as one of the most popular financial textbooks available, thanks to its four unique features: <ul> <li>A balanced blend of theory and practice: the authors hold academic positions at top-ranking universities and business schools and are also financial managers, private investors or sit on the boards of listed and unlisted companies.</li> <li>A presentation of concepts that explain situations, followed by a discussion of techniques in a direct and succinct style.</li> <li>Content enriched by the <b>www.vernimmen.com</b> website, which, with 1,500 daily visitors, is one of the world's leading sites for teaching finance.</li> <li>Free monthly finance updates with <i>The Vernimmen.com Newsletter,</i> which currently has over 60,000 subscribers.</li> </ul> <p>The authors draw on their dual experience to enhance and expand the content of the book through the inclusion of a new chapter on the financial management of operating real estate. <p>"The Vernimmen: proof that an outstanding teaching approach and genuine accessibility are fully compatible with comprehensive and sharp analyses."<br/> <b>—CHRISTIAN MULLIEZ,</b> Executive Vice-President and Chief Financial Officer, L'Oréal <p>"I opened my first Vernimmen in 1982. After having spent just a few weekends reading it, I felt better equipped for my role in financial management at Paribas. Now at Apax, the Vernimmen remains my companion in my search for value creation (key in the private equity industry)."<br/> <b>—MONIQUE COHEN,</b> Associated Director at Apex Partners <p>"Vernimmen's <i>Corporate Finance</i> is an outstanding clear and complete manual, a wonderful merger of practice and theory. Its coverage of the market aspects of corporate finance distinguishes its content, but its treatment of all the material makes it essential reading for the student, financier or industrialist."<br/> <b>—HOWARD JONES,</b> Senior Research Fellow in Finance at Saïd Business School, University of Oxford <p>"The book itself covers all the important techniques that a financial manager must have in his repertoire of tools. The exposition is clear and concise and, most importantly, relies on commonsense reasoning throughout. This is not a book with obscure formulae, yet is still rigorous and at the same time a model of clarity."<br/> <b>—RICHARD ROLL,</b> Joel Fried Professor of Applied Finance at UCLA Anderson School of Management

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