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Foundations of Finance, 4/e

Arthur J. Keown, Virginia Polytechnic and State University J. William Petty & John D. Martin, both of Baylor University David F. Scott, University of Central Florida

Unique in its approach, this text provides students with an intuitive, conceptual understanding of the financial decision-making process—rather than just introducing them to soon-forgotten formulas and calculations of finance. And, by focusing on concept interrelationships, it explores the “big picture” and actual practice—i.e., financial decision making rooted in current financial theory and in the current state of world economic conditions. Throughout, Foundations of Finance eliminates non-essential material and keeps mathematics to a minimum— presenting material at a level accessible to non-finance majors—but with a strong theoretical foundation necessary for more specialized students.

FEATURES/BENEFITS  NEW—Excel spreadsheets—Integrated in problems at the end of the appropriate chapters. o Gives students a contemporary tool for time value of money calculations, dealing with valuation of financial assets, and evaluating capital budgeting projects.  NEW—Ch. 10, Cash Flows and Other Topics in Capital Budgeting was heavily revised using a more intuitive approach. In addition, a new section on Options in Capital Budgeting was added. o Makes it both easier for the student to understand and easier for the professor to teach.  NEW—Thoroughly revised Chapter 2 on Financial Markets and Interest Rates—Reflect the impact of the economic downturn and Fed Monetary Policy on risk and return, cost of capital, corporate financing. The chapter also discusses the significant differences between nominal and real interest rates.  NEW—Part-opening interviews with business professionals—e.g., a consultant who offers counsel as to how a manager of any area within a firm should think about finance; a business valuation expert who talks about the importance of an operating manager understanding what determines firm value, etc. o Gives students in-the-trenches insights into the application of theory to practice in the real world. Provides perspective for anyone who is planning a career in business, and at the same time makes learning more interesting.  NEW—Current coverage—Weaves “Enron Lessons” boxes throughout appropriate chapters, includes a box on the impact of September 11th on Corporate Finance, and discusses the impact of the 2002 Economic Stimulus Package. o Gives students a sense of the dynamic nature of corporate finance.  A unique intuitive approach based on 10 principles of finance—Presents 10 intuitive, easy-to-understand axioms representing the fundamental principles that drive the practice of corporate finance (in Ch. 1). Then repeatedly revisits these axioms throughout the text in “Back to the Foundations” inserts, thus continually tying concepts together and allowing students to take time out to reflect upon the meaning of the material just presented. o Helps students stay focused on the logic that drives finance, instead of merely memorizing formulas and procedures (which may not neatly fit all the situations they'll encounter in the real world). Long after they've forgotten some of the formulas they learned by cramming, they'll remember the axioms.  International coverage—Includes an entire chapter on International Business Finance (Ch. 17) as well as chapter-end sections that discuss the international aspects of the material just presented. o Provides students with a valuable overview of the importance and functioning of international business finance— e.g., exchange rates—which are important topics regardless of what students' majors are.  Extensive coverage of ethics—Ethics is covered as a core axiom and Ethics in Financial Management boxes appear throughout. o Shows students that ethical behavior is doing the right thing, and that ethical dilemmas are everywhere in finance.  A refresher on accounting—Ch. 3, Understanding Financial Statements and Cash Flows. o Shows students that it is the language of business, and that a basic understanding of it is essential to a usable understanding of finance.  Financial Management in Practice boxes. o Demonstrates the implementation of theory through the use of practice. CHAPTER PEDAGOGY  Chapter-opening vignettes—Features a real-world, current story related to chapter material. o Stimulates students' interest in the chapter topics to be discussed, and promotes classroom discussion of companies' financial decisions.  Chapter-beginning learning objectives. o Alerts students to key concepts, and keeps them aware of these study goals with references in the margins throughout the chapter.  Pause and Reflect inserts—In-text inserts that appear throughout the text. o Focuses students' attention on “the big picture.”  Concept Checks—Key ideas just presented are highlighted. o Gives students a chance to check their understanding of material in most major sections before moving on to the next.  Four-part approach to mastering vocabulary—Highlights key terms in text margins, defines them in italics within the text and in the end-of-book glossary, and lists key terms, with page numbers, at the end of each chapter. o Helps students develop the professional vocabulary they will need to communicate effectively on the job.  Comprehensive chapter-end problems. o Strengthens students' understanding of the material by giving them a chance to apply chapter concepts in a realistic setting.  Internet applications—“Takin' It to the Net.” o Directs students to key references, additional information, and related Web sites dealing with the topics covered in each chapter.

CONTENTS I. THE SCOPE AND ENVIRONMENT OF 9. Capital-Budgeting Techniques and Practice. FINANCIAL MANAGEMENT. 10. Cash Flows and Other Topics in Capital 1. An Introduction to the Foundations of Financial Budgeting. Management —The Ties That Bind. 11. Cost of Capital. 2. The Financial Markets and Interest Rates. IV. CAPITAL STRUCTURE AND DIVIDEND 3. Understanding Financial Statements and Cash POLICY. Flows. 12. Determining the Financing Mix. 4. Evaluating a Firm's Financial Performance. 13. Dividend Policy and Internal Financing. II. VALUATION OF FINANCIAL ASSETS. V. WORKING CAPITAL MANAGEMENT AND 5. The Time Value of Money. INTERNATIONAL BUSINESS FINANCE. 6. The Meaning and Measurement of Risk and 14. Financial Forecasting, Planning, and Budgeting. Return. 15. Introduction to Working-Capital Management. 7. Valuation and Characteristics of Bonds. 16. Liquid Asset Management. 8. Valuation and Characteristics of Stock. 17. International Business Finance. III. INVESTMENT IN LONG-TERM ASSETS.

SUPPLEMENTS  Study Guide (0-13-046537-2)  Instructor's CD (0-13-046534-8)  ActiveBook Foundations of Finance (0-13-  EVA Tutor (0-13-046535-6) 046539-9)  Companion Website - Keown  Instructors Manual (0-13-046529-1) o www.prenhall.com/keown  Test Item File (0-13-046520-8)  CourseCompasss with e-Book  Test Manager (0-13-046531-3) o cms.prenhall.com/coursecompass/  PowerPoints (0-13-046532-1)