Reinforcing Prerequisite Knowledge

Employers of business graduates report that the most successful analysts, planners, and executives are both effective and confident in their financial skills. We concur.

One of the best ways to increase your facility in finance is to integrate your knowledge from prerequisite courses. Therefore, the text is designed to build on your basic knowledge from courses in accounting and economics. By applying tools learned in these courses, you can develop a conceptual and analytical understanding of financial management.

We realize, however, that for some students time has passed since you have completed your accounting courses. Therefore, we have included Chapter 2, a thorough review of accounting principles, finance terminology, and financial statements. With a working knowledge of Chapter 2, you will have a more complete understanding of the impact of business decisions on financial statements. Furthermore, as you are about to begin your career you will be much better prepared when called upon to apply financial concepts.

Content Improvements

The 13th edition specifically covers the following new topics:

Changes in the Capital Markets Chapter 1 provides a discussion of the major stock exchanges that have gone public since the last edition and the continuing consolidation of global securities markets. These topics also receive significant additional coverage in Chapter 14 (Capital Markets).

Misuse of Accounting Data Chapter 2 provides a lively discussion of the backdating of stock options as an improper tool to enhance the compensation of top management. Other similar good and bad practices by top management are discussed throughout the text and are related to stockholder wealth maximization.

Expanded Coverage of the Use of Technology to Manage Investments in Working Capital In Chapters 6, 7, and 8, examples are provided of how Hewlett-Packard, Wal-Mart, General Motors, and other firms use advanced technology (including the Internet) to manage working capital.

The Collapse of the Subprime Lending Market In Chapter 8, the reasons and consequences of the downfall in this market are discussed.

The Power of the Time Value of Money In Chapter 9, an updated feature on the time value of money indicates what would happen at 4 percent inflation over 50 years. Tuition would go to over one million dollars. Other similar numbers are presented.

The Use of Debt by Major U.S. Corporations In the discussion of the cost of capital in Chapter 11, new debt related information is provided for major U.S. corporations.

The Movement to Capitalism in the Soviet Union, China, and Elsewhere In Chapter 14, this topic is discussed along with the impact of free trade agreements on international capital markets.

Reorganization of Material Related to the U.S. Capital Markets Electronic Communication Networks (ECNs) and advanced technology have changed the way the financial markets operate in the United States, and Chapter 14 is reorganized and updated to reflect this transition. Faculty and students will view this material in the most current context possible.