Detailed Index

Following is a detailed index not included in the printed textbook.

absolute purchasing power parity, 716
accounting break-even, 355, 361
accounts receivable, 670
acquisition, net present value of cash, 782
adjusted present value, 487, 489
all-equity firm, value of, 561
announcement, 423
annuity
	due value, 164
	future value factor, 162
	present value, 158, 191
	present value factor, 158, 164
	present value of growing, 168
assets, value of, 28
average accounting return, 273
average cash balance, 665
average collection period, 675
average daily float, 645, 646
average daily receipts, 646
average maturity, 225–226
balance sheet identity, 28–29, 601
basic present value equation, 140, 141
beta, 454
	equity, 537
	portfolio, 432, 433, 489
	unlevered firm, 489, 490
Black-Scholes formula, 865–867
bond
	market price, non-callable, 228
	value, 196, 199
	yield on, 199
bottom-up approach to OCF, 312
break-even point, 678
business risk of equity, 537
call option
	Black-Scholes formula, 865–867
	combined value, with riskless asset, 837
	at expiration date, 834
	lower bound, 835
	present value, 865
	upper bound, 835
	value, 833, 834, 837, 838
capital asset pricing model, 452–454
capital gains yield, 382
capital intensity ratio, 125
carrying costs, 695
cash, 601
cash balance, 663, 665
cash break-even, 359, 361
cash collections, 617
cash coverage ratio, 72
cash cycle, 604, 607
cash flow, 549
	from assets, 35, 37, 59
	claims against, 550
	discounted, 138
	incremental, 773
	new policy, 677
	old policy, 677
	operating, 303, 311
	present value of future incremental, 677
	project, 303
cash flow identity, 35
cash ratio, 70
CCA
	payments, growth rate in, 315
	present value of tax shield on, 316
collection float, 644
costs
	carrying, 695
	of debt, 479
	of equity, 462, 536
	of equity capital, 534
	opportunity, 662, 663
	of preferred stock, 464, 479
	of switching, 678
	total, 352, 662, 694
	total carrying, 693
	total restocking, 694
	trading, 662
	upper limit of costs of holding cash, 665
	variable, 351
	weighted average costs of capital. See weighted average cost of capital
	weighted average flotation, 475, 477
credit extension, net present value, 683
credit score, 686
current ratio, 68
days' sales in inventory, 72
days' sales in receivables, 73
debt/equity ratio, 71
degree of financial leverage, 528, 529
degree of operating leverage, 362
disbursement float, 643
discounted cash flow, 138
dividend growth model, 240–243, 458–461
dividend valuation model growth rate, 479
dividends, 251
	effective tax rate on, 43
	payout ratio, 103
	present value of future, 437
	in t periods, 239
	yield, 382
Du Pont identity, 78
earnings
	before interest and taxes, 311
	next year, 460
	next year to this year, 460
	per share, 251
economic reorder quantity (EOQ), 695, 696
effective annual rate (EAR), 170
	and quoted rate, 171
	upper limit, 173
effective tax rate on dividends, 43
equity beta, 537
equity multiplier, 71
ex-rights date, value of rights after, 513
exchange rate
	expected at time t, 726
	expected percentage change, over next year, 718
	expected percentage change, sometime in future, 718
expected exchange rate at time t, 726
expected future spot rate, 722
expected percentage change in exchange rate, 718
expected return, 410, 433
	on portfolio, 414
external finance needed, 109, 128
	and growth, 109
	no outside equity, 112
financial break-even, 359, 361
financial risk of equity, 537
firm value. See value of firm
Fisher effect, 215
fixed asset turnover, 74
float, 643, 644
	average daily, 645, 646
	collection, 644
	disbursement, 643
forward rate, 722
future value
	annuity future value factor, 162
	factor, 140
	relationship with present value, 140
	for t periods, 132
growth, 460
income statement, 32
incremental cash flow, 773
incremental cash inflow, 677
incremental net gain from acquisition, 772
interest rate parity (IRP), 721
internal growth rate, 110–111, 117
international Fisher effect, 723
interval measure, 70
inventory period, 606
inventory turnover, 72, 606
lease, net present value, 752
leasing, net advantage to, 751
levered firm, value of, 539, 560, 561
long-term debt ratio, 71
lower bound of call option, 835
market portfolio, variance of, 453
market-to-book ratio, 76
market value of debt and equity, 466
merged firm, value of, 772
merger, net incremental gain, 781
merger, net present value, 781
merger, value of Firm A after, 782
M&M Proposition I, 533
	with taxes, 539
M&M Proposition II, 534
	with taxes, 540
net advantage to leasing, 751
net income, project, 354
net incremental gain to merger, 781
net investment in fixed assets, 36
net present value
	cash acquisition, 782
	credit, extension of, 683
	lease, 752
	loan, 488
	merger, 781
	merger to Firm A, 783
	per bond of refunding equation, 230
	of switching, 678
net working capital, 601
	addition to, 37
	to total assets, 70
	turnover, 74
nominal rate, 215, 727
number of new shares, 510
number of rights needed to buy share, 510
operating cash flow, 303, 311, 356, 357
	bottom-up approach, 312
	percentage of change, 362
	tax shield approach, 313
	top-down approach, 312–313
operating cycle, 603, 606
opportunity costs, 662, 663
payables period, 607
payables turnover, 607
percentage forward premium, 721
percentages of capital represented by debt and equity, 466
perpetuity
	present value, 164
	present value of growing, 164, 240
plowback ratio, 104
portfolio
	beta, 432, 433, 489
	expected return, 414
	market, variance of, 453
	standard deviation, 418
	standard variance, 418
	variance, 415, 452
present value
	adjusted, 487, 489
	annuity, 158, 191
	annuity present value factor, 158, 164
	basic present value equation, 140, 141
	factor, 140
	future dividends, 437
	of future incremental cash flow, 677
	growing annuity, 168
	growing perpetuity, 166, 240, 315
	net. See net present value
	perpetuity, 164
	relationship with future value, 140
	single period, 137
	stock, 237, 238, 569
	for t periods, 138
	tax shield on CCA, 316
price/earning (P/E) ratio, 76, 253
profit margin, 74
project cash flow, 303
quick ratio, 69
ratios
	capital intensity, 125
	cash, 70
	cash coverage, 72
	common financial, 77
	current, 68
	days' sales in inventory, 72
	days' sales in receivables, 73
	debt/equity, 71
	dividend payout, 103
	equity multiplier, 71
	fixed asset turnover, 74
	interval measure, 70
	inventory turnover, 72
	long-term debt, 71
	market-to-book, 76
	NWC to total assets, 70
	NWC turnover, 74
	plowback, 104
	price/earning (P/E), 76, 253
	profit margin, 74
	quick, 69
	receivables turnover, 73
	retention, 104
	return on assets (ROA), 75
	return on equity (ROE), 75, 77–78
	reward-to-risk, 434, 436, 438
	times interest earned, 71
	total asset turnover, 74
	total debt, 70
real rate, 339
receivables period, 606
receivables turnover, 73, 606
required return, 244–245, 458, 461, 471, 536
retention ratio, 104
return
	on assets (ROA), 75, 608
	on equity (ROE), 75, 77–78, 128
	expected. See expected return
	if stock sold, 380
	required. See required return
	standard deviation of, 391
	total, 422, 425, 443
	total dollar, 380
reward-to-risk ratio, 434, 436, 438
rights needed to buy share, 510
risk and return relationship, 444
risk premium, 410
riskless asset, combined value with call option, 837
Rule of 72, 143, 144
sales volume, 358
security market line (SML), 440, 454
	cost of equity, 536
	required return from, 461
	slope, 440
shareholders' equity, 30
standard deviation
	generalized equation, 411
	portfolio, 418
	of return, 391
stock value
	commitment to new project, 253
	constant growth case, 245, 315
	dividend growth model, 245
	firm as cash cow, 252
	general case, 245
	per-share value, 239
	present value, 237, 238, 569
	required return, 245
	supernormal growth, 245
	at time t, 240
	value in t periods, 237
sustainable growth rate, 112, 114, 117, 128
switching, cost of, 678
systematic risk, 454
tax shield, value of, 539
tax shield approach to OCF, 313
taxes, 311
theoretical value of a right, 512
times interest earned ratio, 71
top-down approach to OCF, 312–313
total asset turnover, 74, 608
total carrying costs, 693
total cash if stock sold, 380
total costs, 352, 662, 694
total debt ratio, 70
total dollar return, 380
total restocking cost, 694
total return, 422, 425, 443
total risk, 428
total surprise, 425
trading costs, 662
uncovered interest parity, 722
unlevered firm, value of, 539
upper bound of call option, 835
upper limit of costs of holding cash, 665
value of all-equity firm, 561
value of dollar in one period, 720
value of firm, 539, 847
value of Firm A after merger, 782
value of Firm B to Firm A, 772, 781, 782
value of interest tax shield, 539
value of levered firm, 539, 560, 561
value of merged firm, 772, 782
value of rights after ex-rights date, 513
value of unlevered firm, 539
variable cost, 351
variance
	generalized equation, 411
	historical, 391
	market portfolio, 453
	portfolio, 415, 452
	portfolio standard, 418
weighted average cost of capital
	with taxes, 467, 468
	without taxes, 534
weighted average delay, 646
weighted average flotation cost, 475, 477
yield on bond, 199