1.
Optimizing the Corporate Finance Function
Introduction
The External Business Environment and Corporate Financial Strategy
The Strategic Logic of High Growth
2. Shareholder Value Maximization
Introduction
Corporate Valuation
Valuation Models: Public Company
Valuation Models: Closely held Company
Corporate Performance Measurement: Economic Value Added (EVA)
3. Financial Policy
Introduction
Capital Structure
Operating Leverage
Dividend Policy
Pricing Strategy
Tax Planning
Optimal Capital Budgeting with real Options
Mergers and Acquisitions
Asset-Liability Management: Optimizing the Balance Sheet
4. Risk Management
Introduction
Identifying and Estimating Risk Exposure
Off-Balance Sheet (OBS) Risks
Operational Risk Management
Enterprise Wide Risk Management (EWRM)
Risk Hedging Strategies
5. Financial Reporting, Planning and Control
Introduction
Financial Reporting: GAAP Convergence
Business and Financial Planning
Treasury Management
Financial Control and Audit
Optimize amid Changing Operating Conditions
6. Corporate Performance Management: The Balancing act?
Introduction
The Execution Problem
The Balanced Scorecard
Real-time Financial Systems: Corporate Performance Management (CPM)
Integrated Financial Management
Appendix: Applied Financial Optimization Modelling
Value Maximisation: Analytical Techniques
Company Size, Asset Utilization and Financial Leverage
Brief Synopsis of each Chapter:
Chapter 1: Introduction: Optimizing the Corporate Finance Function - an integrated frameworkEach business is unique in terms of product, market, size, industry, management, culture, and financial strength. Companies need to tailor any generic model to its own unique needs and circumstances. Corporate financial management includes shareholder value maximization, risk management, financial planning, and performance assessment. Often these functions are viewed independently. For example, risk management is often performed by the treasury department on an ad hoc basis, and without an integrated planning and optimisation framework. The corporate finance function supports shareholder wealth creation by supporting corporate growth objectives with a disciplined financial foundation that is dynamically optimised with superior insights. The Modified Balanced Scorecard provides such a framework, which integrates economic value creation, enterprise-wide-risk management, and financial planning in an applied model. We discuss quantitative methods for optimisation of the corporate finance function, and assess qualitative aspects of real-world corporate finance that supports optimal decision-making, from a senior management perspective.
Chapter 2: Shareholder Value Maximization
Shareholder value is maximized when a company maximizes its growth opportunities by making superior financing and investing decisions, while optimally managing the operational risks of the business. In this chapter, we discuss the major shareholder valuation methods, and analytical techniques for value maximization. This includes minimization of earnings and cash flow volatility. We focus on the economic valuation aspects or EVA-type valuation techniques instead of accounting-based valuations, and cover both publicly listed as well as privately held companies.
Chapter 3: Financial Policy
Corporations usually have some guidelines they use for financial management, such as dividend payout amounts or payout ratios, debt-to-equity ratios, accounts receivable-to-revenue ratios and
