, CORPORATE
FINANCE
FIFTH EDITION
SIXTH EDITION
GLOBAL E DIT ION
JONATHAN BERK
STANFORD UNIVERSITY
PETER D E MARZO
STANFORD UNIVERSITY
Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney • Dubai • Singapore • Hong Kong
Tokyo • Seoul • Taipei • New Delhi • Cape Town • Sao Paulo • Mexico City • Madrid • Amsterdam • Munich • Paris • Milan
,Brief Contents
PART 1 Chapter 1 The Corporation And Financial Markets 32
Chapter 2 Introduction To Financial Statement Analysis 57
INTRODUCTION 31
Chapter 3 Financial Decision Making And The Law Of One Price 95
PART 2 Chapter 4 The Time Value Of Money 132
TIME, MONEY, AND Chapter 5 Interest Rates 177
INTEREST RATES 131 Chapter 6 Valuing Bonds 207
PART 3 Chapter 7 Investment Decision Rules 246
VALUING PROJECTS Chapter 8 Fundamentals Of Capital Budgeting 273
AND FIRMS 245 Chapter 9 Valuing Stocks 311
PART 4 Chapter 10 Capital Markets And The Pricing Of Risk 354
Chapter 11 Optimal Portfolio Choice And The Capital
RISK AND RETU RN 353
Asset Pricing Model 393
Chapter 12 Estimating The Cost Of Capital 443
Chapter 13 Investor Behavior And Capital Market Efficiency 481
PART 5 Chapter 14 Capital Structure In A Perfect Market 524
Chapter 15 Debt And Taxes 555
CAPITAL STRUCTU RE 523
Chapter 16 Financial Distress, Managerial Incentives, And Information 589
Chapter 17 Payout Policy 635
PART 6 Chapter 18 Capital Budgeting And Valuation With Leverage 678
ADVANCE D 677 Chapter 19 Valuation And Financial Modeling: A Case 729
VAL UA T IO N Study
PART 7 Chapter 20 Financial Options 762
Chapter 21 Option Valuation 795
OPTIONS 761
Chapter 22 Real Options 831
PART 8 Chapter 23 Raising Equity Capital 866
Chapter 24 Debt Financing 903
LONG-TERM FINANCING 865
Chapter 25 Leasing 927
PART 9 Chapter 26 Working Capital Management 956
SHORT -T E RM 955 Chapter 27 Short-Term Financial Planning 979
FINANCING
PART 10 Chapter 28 Mergers And Acquisitions 1000
Chapter 29 Corporate Governance 1031
SPECIAL TOPICS 999
Chapter 30 Risk Management 1055
Chapter 31 International Corporate Finance 1097
3
, Detailed Contents
PART 1 INTRODUCTION Chapter 2 Introduction To Financial
31 Statement Analysis 57
2.1 Firms’ Disclosure Of
Chapter 1 The Corporation And Financial Information 58
Financial Markets 32 Preparation Of Financial Statements 58
■ International Financial Reporting
1.1 The Four Types Of Firms 33 Standards 58
Sole Proprietorships 33
■ INTERVIEW With Ruth Porat
Partnerships 34
59 Types Of Financial Statements 60
Limited Liability Companies 35
2.2 The Balance Sheet 60
Corporations 35
Assets 61
Tax Implications For Corporate Entities 36
Liabilities 62
■ Corporate Taxation Around
The World 37 Stockholders’ Equity 63
Market Value Versus Book Value 63
1.2 Ownership Versus Control
Of Corporations 37 Enterprise Value 64
The Corporate Management Team 37 2.3 The Income Statement 64
■ INTERVIE W With David Viniar Earnings Calculations 65
38 The Financial Manager 39 2.4 The Statement Of Cash Flows 66
■ GLO BAL FINAN CIAL CRISIS Operating Activity 67
The Investment Activity 68
Dodd-Frank Act 40 Financing Activity 68
The Goal Of The Firm 40
2.5 Other Financial Statement Information
The Firm And Society
69 Statement Of Stockholders’ Equity 69
41
Management Discussion And Analysis 70
Ethics And Incentives Within
Corporations 41 Notes To The Financial Statements 70
■ GLO BAL FINAN CIA L CRISI S The 2.6 Financial Statement Analysis 71
Dodd- Profitability Ratios 71
Frank Act On Corporate Compensation Liquidity Ratios 72
And Governance 42 Working Capital Ratios 73
■ Citizens United V. Federal Interest Coverage Ratios 74
Election Commission 42
Leverage Ratios 75
■ Airlines In Bankruptcy 44
Valuation Ratios 77
1.3 The Stock Market 44 ■ COMMO N MISTAKE
Primary And Secondary Stock Markets 45 Mismatched Ratios 77
Traditional Trading Venues 45 Operating Returns 78
■ INTERVIEW With Frank Hatheway The Dupont Identity 80
46 New Competition And Market 2.7 Financial Reporting In Practice 82
Changes 47
Enron 82
Dark Pools 48
Worldcom 82
1.4 Fintech: Finance And Technology 49 Sarbanes-Oxley Act 83
Telecommunications 49 ■ GLO BAL FINAN CIAL CRISIS Bernard
Security And Verification 49 Madoff’s Ponzi Scheme 84
Automation Of Banking Services 50 Dodd-Frank Act 84
Big Data And Machine Learning 50
Competition 51
Mylab Finance 51 ■ Key Terms 52 ■
Further Readin g 53 ■ Problems 53
4
FINANCE
FIFTH EDITION
SIXTH EDITION
GLOBAL E DIT ION
JONATHAN BERK
STANFORD UNIVERSITY
PETER D E MARZO
STANFORD UNIVERSITY
Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney • Dubai • Singapore • Hong Kong
Tokyo • Seoul • Taipei • New Delhi • Cape Town • Sao Paulo • Mexico City • Madrid • Amsterdam • Munich • Paris • Milan
,Brief Contents
PART 1 Chapter 1 The Corporation And Financial Markets 32
Chapter 2 Introduction To Financial Statement Analysis 57
INTRODUCTION 31
Chapter 3 Financial Decision Making And The Law Of One Price 95
PART 2 Chapter 4 The Time Value Of Money 132
TIME, MONEY, AND Chapter 5 Interest Rates 177
INTEREST RATES 131 Chapter 6 Valuing Bonds 207
PART 3 Chapter 7 Investment Decision Rules 246
VALUING PROJECTS Chapter 8 Fundamentals Of Capital Budgeting 273
AND FIRMS 245 Chapter 9 Valuing Stocks 311
PART 4 Chapter 10 Capital Markets And The Pricing Of Risk 354
Chapter 11 Optimal Portfolio Choice And The Capital
RISK AND RETU RN 353
Asset Pricing Model 393
Chapter 12 Estimating The Cost Of Capital 443
Chapter 13 Investor Behavior And Capital Market Efficiency 481
PART 5 Chapter 14 Capital Structure In A Perfect Market 524
Chapter 15 Debt And Taxes 555
CAPITAL STRUCTU RE 523
Chapter 16 Financial Distress, Managerial Incentives, And Information 589
Chapter 17 Payout Policy 635
PART 6 Chapter 18 Capital Budgeting And Valuation With Leverage 678
ADVANCE D 677 Chapter 19 Valuation And Financial Modeling: A Case 729
VAL UA T IO N Study
PART 7 Chapter 20 Financial Options 762
Chapter 21 Option Valuation 795
OPTIONS 761
Chapter 22 Real Options 831
PART 8 Chapter 23 Raising Equity Capital 866
Chapter 24 Debt Financing 903
LONG-TERM FINANCING 865
Chapter 25 Leasing 927
PART 9 Chapter 26 Working Capital Management 956
SHORT -T E RM 955 Chapter 27 Short-Term Financial Planning 979
FINANCING
PART 10 Chapter 28 Mergers And Acquisitions 1000
Chapter 29 Corporate Governance 1031
SPECIAL TOPICS 999
Chapter 30 Risk Management 1055
Chapter 31 International Corporate Finance 1097
3
, Detailed Contents
PART 1 INTRODUCTION Chapter 2 Introduction To Financial
31 Statement Analysis 57
2.1 Firms’ Disclosure Of
Chapter 1 The Corporation And Financial Information 58
Financial Markets 32 Preparation Of Financial Statements 58
■ International Financial Reporting
1.1 The Four Types Of Firms 33 Standards 58
Sole Proprietorships 33
■ INTERVIEW With Ruth Porat
Partnerships 34
59 Types Of Financial Statements 60
Limited Liability Companies 35
2.2 The Balance Sheet 60
Corporations 35
Assets 61
Tax Implications For Corporate Entities 36
Liabilities 62
■ Corporate Taxation Around
The World 37 Stockholders’ Equity 63
Market Value Versus Book Value 63
1.2 Ownership Versus Control
Of Corporations 37 Enterprise Value 64
The Corporate Management Team 37 2.3 The Income Statement 64
■ INTERVIE W With David Viniar Earnings Calculations 65
38 The Financial Manager 39 2.4 The Statement Of Cash Flows 66
■ GLO BAL FINAN CIAL CRISIS Operating Activity 67
The Investment Activity 68
Dodd-Frank Act 40 Financing Activity 68
The Goal Of The Firm 40
2.5 Other Financial Statement Information
The Firm And Society
69 Statement Of Stockholders’ Equity 69
41
Management Discussion And Analysis 70
Ethics And Incentives Within
Corporations 41 Notes To The Financial Statements 70
■ GLO BAL FINAN CIA L CRISI S The 2.6 Financial Statement Analysis 71
Dodd- Profitability Ratios 71
Frank Act On Corporate Compensation Liquidity Ratios 72
And Governance 42 Working Capital Ratios 73
■ Citizens United V. Federal Interest Coverage Ratios 74
Election Commission 42
Leverage Ratios 75
■ Airlines In Bankruptcy 44
Valuation Ratios 77
1.3 The Stock Market 44 ■ COMMO N MISTAKE
Primary And Secondary Stock Markets 45 Mismatched Ratios 77
Traditional Trading Venues 45 Operating Returns 78
■ INTERVIEW With Frank Hatheway The Dupont Identity 80
46 New Competition And Market 2.7 Financial Reporting In Practice 82
Changes 47
Enron 82
Dark Pools 48
Worldcom 82
1.4 Fintech: Finance And Technology 49 Sarbanes-Oxley Act 83
Telecommunications 49 ■ GLO BAL FINAN CIAL CRISIS Bernard
Security And Verification 49 Madoff’s Ponzi Scheme 84
Automation Of Banking Services 50 Dodd-Frank Act 84
Big Data And Machine Learning 50
Competition 51
Mylab Finance 51 ■ Key Terms 52 ■
Further Readin g 53 ■ Problems 53
4
