Applied Corporate Finance: A User's Manual (Wiley Frontiers in Finance) [Paperback]

Aswath Damodaran (Author)

Book Description

ISBN-10: 0471330426 | ISBN-13: 978-0471330424 | Publication Date: March 1, 1999 | Edition: 1

Convert Theory into Solutions: A Corporate Finance Reality Check This hands-on guide to corporate finance focuses on converting the theory and models in corporate finance into tools that can be used to analyze, under stand and help any business. Applied Corporate Finance provides a user's perspective to corporate finance, by posing the three major questions that every business has to answer, and then providing the tools and the analytical techniques needed to answer them. The three questions are-
* Where do we invest our resources? (The Investment Decision) The first part of the book looks at how to assess risk and develop a risk profile for a firm, convert this risk profile into a hurdle rate, and develops the basic rules that need to be followed in estimating the returns on any investment.
* How should we fund these investments? (The Financing Decision) Firms generally can use debt, equity or some combination of the two to fund projects. This part of the book examines the relationship between this choice and the hurdle rate to be used in analyzing projects, and presents ways in which the financing decision can be used to maximize firm value. It also sets up a framework for picking the right kind of security for any firm.
* How much cash can and should we return to the owners? (The Dividend Decision) The third part of the book establishes a process that can be used to decide how much cash should be taken out of the business, and in what form - dividends or stock buybacks. The final chapter in the book ties in the value of the firm to these three decisions, and provides insight into how firms can enhance value.
In summary, this is a book about coming up with real solutions to real problems, using real-time data on real companies.

Editorial Reviews

From the Publisher

This hands-on guide provides readers the tools they need to turn corporate financial theory into practical financial analysis. It contains proven-effective analysis models and tools and shows readers exactly how to apply what they have learned to any company they choose! --This text refers to an out of print or unavailable edition of this title.

From the Back Cover

Convert Theory into Solutions: A Corporate Finance Reality Check This hands-on guide to corporate finance focuses on converting the theory and models in corporate finance into tools that can be used to analyze, under stand and help any business. Applied Corporate Finance provides a user’s perspective to corporate finance, by posing the three major questions that every business has to answer, and then providing the tools and the analytical techniques needed to answer them. The three questions are-

1. Where do we invest our resources? (The Investment Decision) The first part of the book looks at how to assess risk and develop a risk profile for a firm, convert this risk profile into a hurdle rate, and develops the basic rules that need to be followed in estimating the returns on any investment.
2. How should we fund these investments? (The Financing Decision) Firms generally can use debt, equity or some combination of the two to fund projects. This part of the book examines the relationship between this choice and the hurdle rate to be used in analyzing projects, and presents ways in which the financing decision can be used to maximize firm value. It also sets up a framework for picking the right kind of security for any firm.
3. How much cash can and should we return to the owners? (The Dividend Decision) The third part of the book establishes a process that can be used to decide how much cash should be taken out of the business, and in what form — dividends or stock buybacks. The final chapter in the book ties in the value of the firm to these three decisions, and provides insight into how firms can enhance value.

In summary, this is a book about coming up with real solutions to real problems, using real-time data on real companies.

See all Editorial Reviews

Product Details

• Paperback: 592 pages
• Publisher: Wiley; 1 edition (March 1, 1999)
• Language: English
• ISBN-10: 0471330426
• ISBN-13: 978-0471330424
• Product Dimensions: 9.6 x 7.8 x 1.1 inches
• Shipping Weight: 2.5 pounds
• Average Customer Review: 4.4 out of 5 stars  See all reviews (14 customer reviews)
• Amazon Best Sellers Rank: #2,468,205 in Books (See Top 100 in Books)

More About the Author

Aswath Damodaran is a professor of finance and David Margolis teaching fellow at the Stern School of Business at New York University. He teaches the corporate finance and equity valuation courses in the MBA program. He received his MBA and PhD from the University of California at Los Angeles. His research interests lie in valuation, portfolio management, and applied corporate finance. He has been published in the Journal of Financial and Quantitative Analysis, the Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies. He has written three books on equity valuation (Damodaran on Valuation, Investment Valuation, and The Dark Side of Valuation) and two on corporate finance (Corporate Finance: Theory and Practice, Applied Corporate Finance: A User's Manual). He has coedited a book on investment management with Peter Bernstein (Investment Management) and has written a book on investment philosophies (Investment Philosophies). His newest book on portfolio management is titled Investment Fables and was published in 2004. He was a visiting lecturer at the University of California, Berkeley, from 1984 to 1986, where he received the Earl Cheit Outstanding Teaching Award in 1985. He has been at NYU since 1986 and received the Stern School of Business Excellence in Teaching Award (awarded by the graduating class) in 1988, 1991, 1992, 1999, 2001, and 2007, and was the youngest winner of the University-wide Distinguished Teaching Award (in 1990). He was profiled in Business Week as one of the top 12 business school professors in the United States in 1994.

Customer Reviews

Most Helpful Customer Reviews

19 of 20 people found the following review helpful:

5.0 out of 5 stars THE BEST BOOK ON THE TOPIC, August 20, 1999

By 

Marcelo (Rio de Janeiro, Brazil) - See all my reviews

This review is from: Applied Corporate Finance: A User's Manual (Wiley Frontiers in Finance) (Paperback)

This is not just the best book on corporate finance, but ranks as one of the best technical books I ever read. Extremely well organized with examples not just close to real life but REAL LIFE itself.

The knowledge about brazilian economy is astonishingly accurate.

Forgot to mention the web site that helps the reader. Very useful and updated. A perfect combination.

I Recommend without restrictions.

11 of 11 people found the following review helpful:

5.0 out of 5 stars An indispensable guide, October 20, 2002

By 

Aravind S (Singapore) - See all my reviews

This review is from: Applied Corporate Finance: A User's Manual (Paperback)

This book is one of my best investments I have ever made. It is perfectly suited for 1st year MBA students with no prior exposure to finance. The first principles chart appearing at the beginning of each chapter always drags the students to the basics of why we are doing things. Prof Damodaran seems to be an excellent teacher and makes corporate finance a fun subject. The support web site has wealth of information and most importantly solutions to problems(I have never understood why many books hardly bother to give answers to problems)are given. Don't do a corporate finance course without this book.

14 of 18 people found the following review helpful:

2.0 out of 5 stars Too elementary for any real users except new students, December 9, 1998

By A Customer

This review is from: Applied Corporate Finance: A User's Manual (Paperback)

The book covers a number of concepts in a broad swath; while the new finance student will get a decent overview with some applications, seasoned users will get the standard fare dished out in elementary finance texts. Not recommended for anyone with working knowledge of finance.