Understanding Financial Management A Practical Guide [Paperback]

Designed for those who want to gain an understanding of the fundamental concepts and techniques used in financial management. An underlying premise of the book is that the objective of the firm is to maximize value or wealth. Drawing on a wealth of experience in the academic and professional worlds, the authors discuss how firms can accomplish this objective by making appropriate investment and financing decisions.

Bridging the gap between financial theory and practice, the authors present fundamental concepts in an intuitive and nontechnical way, and provide numerous practical financial tips to readers. The focus is on current practice, using results from recent surveys to show the most popular techniques and approaches used by financial managers today.

A range of instructor’s resources are available at the accompanying website. Visit www.blackwellpublishing.com/baker for full details.

List of Figures ix

List of Tables xi

About the Authors xiv

Preface xvi

Acknowledgments xx

Part I The Foundation 1

Chapter 1 Introduction to Financial Management 3

1.1 Financial Management and the Financial Manager 4

1.2 Corporate Form of Business Organization 8

1.3 The Goal of Financial Management 10

1.4 Accounting Profit versus Economic Profit 12

1.5 The Agency Relationship 14

1.6 Organization of the Book 15

Chapter 2 Interpreting Financial Statements 18

2.1 Basics of Annual Reports and Financial Statements 18

2.2 Balance Sheet 20

2.3 Income Statement 25

2.4 Statement of Cash Flows 31

2.5 Statement of Retained lS˜