STRUCTURE OF THE BOOK
Our target audience is a student taking hisor her first, and perhaps only, finance course. Some of these students willdecide to major in finance and go on to take courses in investments, money andcapital markets, and advanced corporate finance. Others will choose marketing,management, or some other nonfinance business major. Still others will major inareas other than business and take finance plus a few other business courses togain information that will help them in law, real estate, or other fields. Ourchallenge has been to provide a book that serves all of these audiences well.We concluded that we should focus on the core principles of finance, includingthe basic topics of time value of money, risk analysis, and valuation. Moreover,we concluded that we should address these topics from two points of view: (1)that of an investor who is seeking to make intelligent investment choicesand(2) that of a business manager tryingto maximize the value of his or her firm’s stock. Both investors and managersneed to understand the same set of principles, so the core topics are importantto students regardless of what they choose to do after they finish the course.In planning the book’s structure, we first listed the core topics in financethat are important to virtually everyone. Included were an overview offinancial markets, methods used to estimate the cash flows that determine assetvalues, the time value of money, the determinants of interest rates, the basicsof risk analysis, and the basics of bond and stock valuation procedures. Wecover these core topics in the first nine chapters. Next, because most studentsin the course will probably work for a business firm, we want to show them howthe core ideas are implemented in practice. Therefore, we go on to discuss costof capital, capital budgeting, capital structure, dividend policy, workingcapital management, financial forecasting, and international operations.Nonfinance majors sometimes wonder why they need to learn finance. As westructured the book, it quickly becomes obvious to everyone why they need tounderstand time value, risk, markets, and valuation. Virtually all studentsenrolled in the basic course expect at some point to have money to invest, andthey quickly realize that the knowledge gained from Chapters 1 through 9 will helpthem make better investment decisions. Moreover, students who plan to go into thebusiness world soon realize that their own success requires that their firms besuccessful, and the topics covered in Chapters 10 through 17 will be helpfulhere. For example, good capital budgeting decisions require accurate forecastsfrom people in sales, marketing, production, and human resources, and non-financial people need to understand how their actions affect the firm’s profitsand future performance.
Fundamentals_of_Financial_Management-_Concise_8th_edition.pdf
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