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Principles of Finance 2e

by Julie Dahlquist and Rainford Knight

Published by OpenStax

BusinessCollege

Designed to meet the scope and sequence of your course, Principles of Finance 2e provides a strong foundation in financial applications using an innovative use-case approach to explore their role in business decision-making. An array of financial calculator and downloadable Microsoft Excel data exercises also engage students in experiential learning throughout. With flexible integration of technical instruction and data, this title prepares students for current practice and continual evolution. The first edition of Principles of Finance by OpenStax is available in web view here .

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Attribution

Adapted from Principles of Finance 2e by Julie Dahlquist and Rainford Knight, published by OpenStax (Rice University) under CC BY-NC-SA 4.0 (https://creativecommons.org/licenses/by-nc-sa/4.0/). Access the original for free at https://openstax.org/details/books/principles-finance-2e. Changes: converted to CuraCourse lessons, with interactive practice added.

Table of contents

151 pages in 21 modules. Sign up to read and adopt them.

  1. Preface1 page
    1. Preface
  2. 1Introduction to Finance10 pages
    1. Why It Matters
    2. 1.1What Is Finance?
    3. 1.2The Role of Finance in an Organization
    4. 1.3Importance of Data and Technology
    5. 1.4Careers in Finance
    6. 1.5Markets and Participants
    7. 1.6Microeconomic and Macroeconomic Matters
    8. 1.7Financial Instruments
    9. 1.8Concepts of Time and Value
    10. Practice
  3. 2Corporate Structure and Governance8 pages
    1. Why It Matters
    2. 2.1Business Structures
    3. 2.2Relationship between Shareholders and Company Management
    4. 2.3Role of the Board of Directors
    5. 2.4Agency Issues: Shareholders and Corporate Boards
    6. 2.5Interacting with Investors, Intermediaries, and Other Market Participants
    7. 2.6Companies in Domestic and Global Markets
    8. Practice
  4. 3Economic Foundations: Money and Rates8 pages
    1. Why It Matters
    2. 3.1Microeconomics
    3. 3.2Macroeconomics
    4. 3.3Business Cycles and Economic Activity
    5. 3.4Interest Rates
    6. 3.5Foreign Exchange Rates
    7. 3.6Sources and Characteristics of Economic Data
    8. Practice
  5. 4Accrual Accounting Process7 pages
    1. Why It Matters
    2. 4.1Cash versus Accrual Accounting
    3. 4.2Economic Basis for Accrual Accounting
    4. 4.3How Does a Company Recognize a Sale and an Expense?
    5. 4.4When Should a Company Capitalize or Expense an Item?
    6. 4.5What Is “Profit” versus “Loss” for the Company?
    7. Practice
  6. 5Financial Statements10 pages
    1. Why It Matters
    2. 5.1The Income Statement
    3. 5.2The Balance Sheet
    4. 5.3The Relationship between the Balance Sheet and the Income Statement
    5. 5.4The Statement of Owner’s Equity
    6. 5.5The Statement of Cash Flows
    7. 5.6Operating Cash Flow and Free Cash Flow to the Firm (FCFF)
    8. 5.7Common-Size Statements
    9. 5.8Reporting Financial Activity
    10. Practice
  7. 6Measures of Financial Health8 pages
    1. Why It Matters
    2. 6.1Ratios: Condensing Information into Smaller Pieces
    3. 6.2Operating Efficiency Ratios
    4. 6.3Liquidity Ratios
    5. 6.4Solvency Ratios
    6. 6.5Market Value Ratios
    7. 6.6Profitability Ratios and the DuPont Method
    8. Practice
  8. 7Time Value of Money I: Single Payment Value6 pages
    1. Why It Matters
    2. 7.1Now versus Later Concepts
    3. 7.2Time Value of Money (TVM) Basics
    4. 7.3Methods for Solving Time Value of Money Problems
    5. 7.4Applications of TVM in Finance
    6. Practice
  9. 8Time Value of Money II: Equal Multiple Payments7 pages
    1. Why It Matters
    2. 8.1Perpetuities
    3. 8.2Annuities
    4. 8.3Loan Amortization
    5. 8.4Stated versus Effective Rates
    6. 8.5Equal Payments with a Financial Calculator and Excel
    7. Practice
  10. 9Time Value of Money III: Unequal Multiple Payment Values4 pages
    1. Why It Matters
    2. 9.1Timing of Cash Flows
    3. 9.2Unequal Payments Using a Financial Calculator or Microsoft Excel
    4. Practice
  11. 10Bonds and Bond Valuation7 pages
    1. Why It Matters
    2. 10.1Characteristics of Bonds
    3. 10.2Bond Valuation
    4. 10.3Using the Yield Curve
    5. 10.4Risks of Interest Rates and Default
    6. 10.5Using Spreadsheets to Solve Bond Problems
    7. Practice
  12. 11Stocks and Stock Valuation7 pages
    1. Why It Matters
    2. 11.1Multiple Approaches to Stock Valuation
    3. 11.2Dividend Discount Models (DDMs)
    4. 11.3Discounted Cash Flow (DCF) Model
    5. 11.4Preferred Stock
    6. 11.5Efficient Markets
    7. Practice
  13. 12Historical Performance of US Markets6 pages
    1. Why It Matters
    2. 12.1Overview of US Financial Markets
    3. 12.2Historical Picture of Inflation
    4. 12.3Historical Picture of Returns to Bonds
    5. 12.4Historical Picture of Returns to Stocks
    6. Practice
  14. 13Statistical Analysis in Finance9 pages
    1. Why It Matters
    2. 13.1Measures of Center
    3. 13.2Measures of Spread
    4. 13.3Measures of Position
    5. 13.4Statistical Distributions
    6. 13.5Probability Distributions
    7. 13.6Data Visualization and Graphical Displays
    8. 13.7The R Statistical Analysis Tool
    9. Practice
  15. 14Regression Analysis in Finance8 pages
    1. Why It Matters
    2. 14.1Correlation Analysis
    3. 14.2Linear Regression Analysis
    4. 14.3Best-Fit Linear Model
    5. 14.4Regression Applications in Finance
    6. 14.5Predictions and Prediction Intervals
    7. 14.6Use of R Statistical Analysis Tool for Regression Analysis
    8. Practice
  16. 15How to Think about Investing7 pages
    1. Why It Matters
    2. 15.1Risk and Return to an Individual Asset
    3. 15.2Risk and Return to Multiple Assets
    4. 15.3The Capital Asset Pricing Model (CAPM)
    5. 15.4Applications in Performance Measurement
    6. 15.5Using Excel to Make Investment Decisions
    7. Practice
  17. 16How Companies Think about Investing8 pages
    1. Why It Matters
    2. 16.1Payback Period Method
    3. 16.2Net Present Value (NPV) Method
    4. 16.3Internal Rate of Return (IRR) Method
    5. 16.4Alternative Methods
    6. 16.5Choosing between Projects
    7. 16.6Using Excel to Make Company Investment Decisions
    8. Practice
  18. 17How Firms Raise Capital8 pages
    1. Why It Matters
    2. 17.1The Concept of Capital Structure
    3. 17.2The Costs of Debt and Equity Capital
    4. 17.3Calculating the Weighted Average Cost of Capital
    5. 17.4Capital Structure Choices
    6. 17.5Optimal Capital Structure
    7. 17.6Alternative Sources of Funds
    8. Practice
  19. 18Financial Forecasting8 pages
    1. Why It Matters
    2. 18.1The Importance of Forecasting
    3. 18.2Forecasting Sales
    4. 18.3Pro Forma Financials
    5. 18.4Generating the Complete Forecast
    6. 18.5Forecasting Cash Flow and Assessing the Value of Growth
    7. 18.6Using Excel to Create the Long-Term Forecast
    8. Practice
  20. 19The Importance of Trade Credit and Working Capital in Planning8 pages
    1. Why It Matters
    2. 19.1What Is Working Capital?
    3. 19.2What Is Trade Credit?
    4. 19.3Cash Management
    5. 19.4Receivables Management
    6. 19.5Inventory Management
    7. 19.6Using Excel to Create the Short-Term Plan
    8. Practice
  21. 20Risk Management and the Financial Manager6 pages
    1. Why It Matters
    2. 20.1The Importance of Risk Management
    3. 20.2Commodity Price Risk
    4. 20.3Exchange Rates and Risk
    5. 20.4Interest Rate Risk
    6. Practice