Cengage Learning

Higher Education

Introduction to Corporate Finance: What Companies Do, Abridged Edition, 3rd Edition

  • includes with Economic CourseMate with eBook Printed Access Card and Thomson ONE Business School Edition 6-month Printed Access Card
  • John Graham Duke University
  • Scott B. Smart Indiana University, Bloomington
  • ISBN-10: 1111532613  |  ISBN-13: 9781111532611
  • 640 Pages
  • Previous Editions: 2009
  • © 2012 | Published
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INTRODUCTION TO CORPORATE FINANCE: WHAT COMPANIES DO, ABRIDGED, 3RD EDITION is a text that uses timely real-world relevance, innovative learning tools, and versatile resources to meet the needs of finance majors while remaining accessible to non-majors. It delivers the ideal solution for instructors challenged with keeping students of varying degrees of ability and interest motivated and invested in the material. The text incorporates examples to emphasize the roles of financial managers and CFOs, and to show how financial management actually works in real companies. Chapters flow smoothly to review materials and an interactive website. In addition, the SmartFinance online features are used to identify key resources that are highlighted in the text.

Features and Benefits

  • Cutting-Edge Technology: Completely integrated, SmartFinance is not another isolated computer exercise. It helps students gain a stronger understanding of financial topics every step of the way as they progress through the text. Helping to illustrate concepts, theories, and ethical issues in real business, these high-tech tools include: Excel animations of problems (SmartExcel), animated review tutorials (SmartConcepts), problem-solving animations (SmartSolutions), and video clips (SmartPractices, SmartEthics, SmartIdeas) of well-known U.S. and global academics and business executives.
  • Real-Life Examples: Students can easily relate to the timely, interesting and relevant "Finance in Your Life" examples that focus on finance scenarios that can affect students' lives.
  • Student-Friendly: The text immediately finds common ground with readers. Using Marginal Benefit vs. Marginal Cost as an underlying framework, the text draws connections to readers' background in economics, giving students immediate familiarity with the book's conceptual organization. It also draws from students' basic knowledge of statistics and accounting--illustrating the close relationship among business disciplines.
  • Real-Life Application: Real corporate scenarios capture readers' attention at the start of each chapter, and then extend throughout with a myriad of examples and practical applications. Illustrations highlight companies that are frequent newsmakers and spotlight the dilemmas they face in today's marketplace.
  • Global Perspective: Giving students insight into the global marketplace in which they will (or already) work, the text compares financial methods and measures in other countries to practices in the United States--illustrating how they relate.
  • ThomsonONE - Business School Edition: Readers receive integrated access to real company data for financial analysis and research. Thomson ONE enables students to apply the most reliable information to financials, earnings estimates, market data and source documents. At the end of appropriate chapters, the authors include exercises requiring students to draw from the same financial data sources that finance professionals use every day--including Thomson Financial, Worldscope, SEC Disclosure, Datastream, and more-- which makes it easy for students to see how what they are learning connects to real life.
  • Web chapters: Chapters for further study are included on the text Web Site.
  • Aplia for Finance: Adopters of Aplia Finance can access the text directly on the Aplia website. This version includes a digital copy of the text and access to SmartFinance tools, combined with the trusted Aplia Finance homework solution that ensures students are well-prepared for class.

Table of Contents

1. The Scope of Corporate Finance.
2. Financial Statement and Cash Flow Analysis.
3. The Time Value of Money.
4. Valuing Bonds.
5. Valuing Stocks.
6. The Trade-Off between Risk and Return.
7. Risk, Return, and the Capital Asset Pricing Model.
8. Capital Budgeting Process and Decision Criteria.
9. Cash Flow and Capital Budgeting.
10. Risk and Capital Budgeting.
11. Raising Long-Term Financing.
12. Capital Structure.
13. Long-Term Debt and Leasing.
14. Payout Policy.
15. Financial Planning.
16. Cash Conversion, Inventory, and Receivables Management.
17. Cash, Payables, and Liquidity Management.
18. International Financial Management.
19. Options.
20. Entrepreneurial Finance and Venture Capital.
21. Mergers, Acquisitions, and Corporate Control.
22. Bankruptcy and Financial Distress.
23. Risk Management.

What's New

  • Every chapter includes new material illustrating how financial management works in real companies.
  • NEW! Students learn how CFOs spend their time, what analysis CFOs rely on to back up their most important decisions, and how financial practices vary across countries.
  • NEW! Financial crisis material is included where appropriate, reflecting the causes and consequences of the recent financial crisis.
  • NEW! Chapter12 includes a new approach that reflects emerging research and shows students how to trade off the marginal costs and benefits of debt to arrive at an optimal capital structure.
  • NEW! Chapter 14 emphasizes current trends in dividend and share repurchase policy, accessibly linking to recent research.
  • NEW! Chapter 21, Mergers, Acquisitions and Corporate Control, explains why firms engage in mergers and acquisitions, and the resulting consequences.
  • NEW! Chapter 22, Bankruptcy and Financial Distress, offers a complete discussion of corporate bankruptcy to equip students to think through the various legal issues and incentives that occur when a company becomes distressed.
  • NEW! Job Interview Questions appear in the margins of the text at exactly the spot where the textbook provides the answers. Students can see for themselves which topics surface again and again in actual job interviews.
  • NEW! What to Ask questions appear in the margins where the textbook provides answers. These are suggestions for what students should ask when interviewing for a job in finance.
  • NEW! What Companies Do chapter openers and in-text features help students see that managers and investors make decisions using the tools presented in the book, showing how finance theory applies to today's business challenges.
  • NEW! What Companies Do Globally features in each chapter compare corporate finance practices around the world, and the effects of the recent global financial crisis.
  • NEW! What CFOs Do features in many chapters illustrate how senior executives rely on financial theory to make key decisions.
  • NEW! The number of end-of-chapter problems that come with live solutions has been increased. Students can see (on video or through flash animation) demonstrations of important solution techniques and linkage to the theory presented in the book.
  • NEW! Smart Practices Videos have been added that demonstrate cutting-edge thinking and practices by scholars and business leaders today.
  • NEW! Smart Solutions include NEW videos of the author team solving end-of-chapter problems. This walks students step-by-step through solving finance problems.


All supplements have been updated in coordination with the main title. Select the main title's "About" tab, then select "What's New" for updates specific to title's edition.

For more information about these supplements, or to obtain them, contact your Learning Consultant.

Instructor Supplements

Aplia™, 1 term Instant Access  (ISBN-10: 1133141463 | ISBN-13: 9781133141464)

Engage, prepare and educate students with this ideal online learning solution. You'll find a digital copy of the text, access to SmartFinance tools, and a trusted homework solution. Aplia™ for Finance is an online, auto-graded homework system that improves learning by increasing student effort and engagement--without requiring more work from you. Students stay on top of coursework with regular homework assignments, and automatic grading that provides immediate feedback. All assignments correspond with the text and reflect the most current financial information and laws.

CourseMate Instant Access  (ISBN-10: 084006781X | ISBN-13: 9780840067814)

Cengage Learning's Finance CourseMate brings course concepts to life with interactive learning, study, and exam preparation tools that support the printed text. Watch student comprehension soar as your class works with the printed book and the textbook-specific website. Finance CourseMate includes an interactive eBook, interactive teaching and learning tools, including quizzes, flashcards, videos, and more. Engagement Tracker is a first-of-its-kind tool that monitors student engagement. Keep your students engaged and access instructor resources in CourseMate at http://login.cengage.com.

ExamView®  (ISBN-10: 1111529639 | ISBN-13: 9781111529635)

Check your students’ understanding of concepts with this easy-to-use test creation software. ExamView® electronic Test Bank makes test preparation, scoring, and grading easy with all of the multiple-choice, true/false, matching, essay questions, and problems from the Test Bank. Add or edit questions, instructions, answers, and select questions randomly or by number. You can also create and administer quizzes online A fully-customizable algorithmic option allows you to create unlimited variations of each test or specific problems, which is particularly useful for large class enrollments.

Instructor’s Resource CD-ROM  (ISBN-10: 1111529914 | ISBN-13: 9781111529918)

Everything is a convenient click away on this IRCD, which includes the Instructor’s Manual, Solutions Manual, Test Bank in Word, ExamView™, Excel® Models, and PowerPoint® Lecture Slides. Tools are also available on the password-protected companion website. The revised Instructor’s Solutions Manual includes chapter overviews, lecture guides, enrichment exercises, answers to text questions, and solutions for end-of-chapter problems. Excel® Models provide templates for students to solve problems. PowerPoint slides feature graphs and tables to enhance lectures.

CengageNOW with eBook Instant Access Code  (ISBN-10: 1133493858 | ISBN-13: 9781133493853)

Designed by instructors for instructors, CengageNOW for Finance is the most reliable, flexible, and easy-to-use online suite of services and resources. CNOW for Finance supports your course goals and saves you significant preparation and grading time with such features an algorithmic homework management system, testing and an intuitive grade book. With CNOW for Finance, students can continually try problems and work them until they understand the concept. Take a tour at www.cengagenow.com.

Student Supplements

Aplia™, 1 term Instant Access  (ISBN-10: 1133141463 | ISBN-13: 9781133141464)

Succeed in this course with Aplia™ for Finance's interactive learning system--featuring a full digitial copy of the text, access to SmartFinance tools practice problems as well as interactive tutorials and more. With Aplia™ you get the help you need to stay on top of your coursework. This innovative, online learning solution makes it convenient to read your e-text and master principles of finance. Interactive tools and automatically graded homework with immediate feedback further your understanding. It's easy to apply what you learn in the text directly to homework.

CourseMate Instant Access  (ISBN-10: 084006781X | ISBN-13: 9780840067814)

The more you study, the better the results! Make the most of your study time by accessing everything you need to succeed in one place online. Read your text, take notes, review flashcards, watch videos, and take practice quizzes--online with CourseMate. Finance CourseMate includes an interactive eBook with highlighting, bookmarking, search, and note-taking capabilities. You'll also find an interactive glossary, quizzes, flashcards, videos, and more! For more information, visit www.cengagebrain.com.

CengageNOW with eBook Instant Access Code  (ISBN-10: 1133493858 | ISBN-13: 9781133493853)

CNOW is an easy-to-use online resource that helps you study in less time to get the grade you want.

Meet the Author

Author Bio

John Graham

John Graham is the D. Richard Mead Professor of Finance at Duke University where he also serves as the Director of the CFO Global Business Outlook survey. He is coeditor of the Journal of Finance. Professor Graham is also a Research Associate with the National Bureau of Economic Research, Vice President of the Western Finance Association, and been recognised for outstanding teaching and faculty contributions at Duke and the University of Utah.

Scott B. Smart

John Graham is the D. Richard Mead Professor of Finance at Duke University where he also serves as the Director of the CFO Global Business Outlook survey. He is coeditor of the Journal of Finance. Professor Graham is also a Research Associate with the National Bureau of Economic Research, Vice President of the Western Finance Association, and been recognised for outstanding teaching and faculty contributions at Duke and the University of Utah.