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Intermediate Financial Management

By Eugene F. Brigham, Phillip R. Daves

15th Edition © 2027
Discipline:Finance
Course:Corporate Finance
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The only text written specifically for today's intermediate or advanced corporate finance course, Brigham/Daves' "Intermediate Financial Management," 15th Edition, blends conceptual theories with practical financial skills. The authors offer a clear, comprehensive presentation that reinforces coverage from earlier corporate finance courses before delving into new content that guides students through today's recent developments. Corporate valuation is used as a unifying theme to emphasize the theoretic groundwork for value maximization and highlight the practical details of financial and business decision-making. Business examples, applied financial analytics cases and integrated and extensive Excel® spreadsheet models illustrate how financial theory in practice leads to solid financial decisions. MindTap digital resources provide support for you and interactive tools for your students.

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About this product

The only text written specifically for today's intermediate or advanced corporate finance course, Brigham/Daves' "Intermediate Financial Management," 15th Edition, blends conceptual theories with practical financial skills. The authors offer a clear, comprehensive presentation that reinforces coverage from earlier corporate finance courses before delving into new content that guides students through today's recent developments. Corporate valuation is used as a unifying theme to emphasize the theoretic groundwork for value maximization and highlight the practical details of financial and business decision-making. Business examples, applied financial analytics cases and integrated and extensive Excel® spreadsheet models illustrate how financial theory in practice leads to solid financial decisions. MindTap digital resources provide support for you and interactive tools for your students.

TRUSTED ACCURACY: The author team's meticulous attention to detail and time-tested content ensures this edition and supplements offer time-saving resources that you can trust.

EXCEL TOOL KITS: Excel Tool Kits in each chapter provide helpful demonstrations and best practices, guiding students in developing strong Excel skills.

STRUCTURED LEARNING: Learning outcomes, beginning-of-chapter questions and self-test questions help frame the goals of each chapter in a concise way.

PROVEN LEARNING FEATURES HIGHLIGHT PRACTICAL APPLICATIONS. Students see how today's financial theories and trends are applied through this edition's wealth of engaging learning features. These features work with this edition's memorable real-world examples, practical problem sets and integrated mini-cases, all of which incorporate the latest financial management information.

Table of contents

Chapters

Cover Page
Title Page
Copyright Page
Dedication
Preface
Acknowledgments
Part 1. Fundamental Concepts of Corporate Finance
Part 2. Corporate Valuation
Part 3. Project Valuation
Part 4. Strategic Financing Decisions
Part 5. Tactical Financing Decisions
Part 6. Working Capital Management
Part 7. Special Topics
Appendix A. Values of the Areas under the Standard Normal Distribution Function
Appendix C. Selected Equations
Show more

Part 1. Fundamental Concepts of Corporate Finance

Chapter 1. An Overview of Financial Management and the Financial Environment
Preview this section ↗
1-1. What Is Success? ↗
1-2. The Big Picture of Finance ↗
1-3. The Corporate Life Cycle ↗
1-3a. Starting Up as a Proprietorship ↗
1-3b. More Than One Owner: A Partnership ↗
1-3c. Many Owners: A Corporation ↗
1-3d. Growing a Corporation: Going Public ↗
1-3e. Managing a Corporation’s Value ↗
1-4. Governing a Corporation ↗
1-4a. The Primary Objective of a Corporation: Maximizing Stockholder Wealth ↗
1-4b. Intrinsic Stock Value Maximization and Social Welfare ↗
1-4c. Ethics and Intrinsic Stock Value Maximization ↗
1-5. An Overview of Financial Markets ↗
1-5a. The Net Providers and Users of Capital ↗
1-5b. Getting Cash From Providers to Users: The Capital Allocation Process ↗
1-6. Types of Claims on Future Cash Flows: Financial Instruments, Financial Assets, and Financial Securities ↗
1-6a. Claims on Future Cash Flows: Debt and Equity ↗
1-6b. Types of Claims on Future Cash Flows: Derivatives and Hybrids ↗
1-6c. Type of Claim on Future Cash Flows: Securitized Financial Assets ↗
1-7. Claims on Future Cash Flows: The Required Rate of Return ↗
1-7a. Economic Conditions and Policies That Affect Interest Rates ↗
1-7b. Fundamental Factors That Affect the Required Rate of Return ↗
1-8. The Functions of Financial Institutions ↗
1-8a. Investment Banks and Brokerage Activities ↗
1-8b. Deposit-Taking Financial Intermediaries ↗
1-8c. Investment Funds ↗
1-8d. Life Insurance Companies and Pension Funds ↗
1-8e. Regulation of Financial Institutions ↗
1-9. Financial Markets ↗
1-9a. Types of Financial Markets ↗
1-9b. Why Secondary Markets Are Important ↗
1-10. U.S. Stock Markets ↗
1-10a. Where Stocks are Listed ↗
1-10b. Types of Brokerage Accounts and Types of Trading Orders ↗
1-10c. Types of Trading Venues: Open Outcry Auctions, Dealer Markets, and Computer Networks ↗
1-11. Trading in Modern Stock Markets ↗
1-11a. Reg NMS: Stock Transactions, Quotes, and the “Market Price” ↗
1-11b. Broker-Dealer Networks ↗
1-11c. Trading in a Standard Broker-Dealer Network ↗
1-11d. Trading in an Electronic Communications Network (ECN) or an Alternative Trading System (ATS) ↗
1-11e. Summary of Trading Activity ↗
1-11f. Algorithmic Trading and High-Frequency Trading (HFT) ↗
1-11g. Stock Market Returns ↗
1-12. The Big Picture ↗
e-Resources ↗
Summary ↗
Questions ↗
Mini Case ↗
Extension 1A. An Overview of Derivatives ↗
Chapter 2. Risk and Return: Part I
2-1. Defining Investment Returns and Risk
2-1a. Returns on Investments
2-1b. Stand-Alone Risk Versus Portfolio Risk
2-2. Measuring Risk for Discrete Probability Distributions
2-2a. Probability Distributions for Discrete Outcomes
2-2b. Expected Rate of Return for Discrete Probability Distributions
2-2c. Measuring Stand-Alone Risk: The Standard Deviation of a Discrete Distribution
2-3. Risk in a Continuous Distribution
2-4. Using Historical Data to Estimate Risk
2-4a. Calculating the Historical Average and Standard Deviation
2-4b. Using Past Data to Estimate Average Return and Standard Deviation
2-5. Risk in a Portfolio Context
2-5a. Creating a Portfolio
2-5b. Correlation and Risk for a Two-Stock Portfolio
2-5c. Diversification and Multi-Stock Portfolios
2-6. The Relevant Risk of a Stock: The Capital Asset Pricing Model (CAPM)
2-6a. Contribution to Market Risk: Beta
2-6b. Estimating Beta
2-6c. Interpreting the Estimated Beta
2-7. The Relationship Between Risk and Return in the Capital Asset Pricing Model
2-7a. The Security Market Line (SML)
2-7b. The Impact on Required Return Due to Changes in the Risk-Free Rate, Risk Aversion, and Beta
2-7c. Portfolio Returns and Portfolio Performance Evaluation
2-7d. Required Returns, Expected Returns, and Market Equilibrium
2-8. The Efficient Markets Hypothesis
2-8a. Rationale of the Efficient Markets Hypothesis
2-8b. Forms of the Efficient Markets Hypothesis
2-8c. Tests of Market Efficiency: The Empirical Evidence
2-8d. Market Bubbles and the Efficient Market Hypothesis
2-9. The Fama–French Three-Factor Model
2-10. Behavioral Finance
2-10a. Can Behavioral Finance Explain Market Bubbles?
2-10b. Other Ways That Behavioral Finance Affects Decisions
2-11. The CAPM and Market Efficiency: Implications for Corporate Managers and Investors
2-12. Retail Investors, Meme Stocks, and Cryptocurrencies
2-12a. Retail Investors and Stock Trading Fees
2-12b. Meme Stocks
2-12c. Cryptocurrencies
2-12d. Non-Fungible Tokens
Summary
Questions
Problems
Spreadsheet Problem
Financial Analytics Cases
Mini Case
Extension 2A. Continuous Probability Distributions
Chapter 3. Risk and Return: Part II
3-1. Efficient Portfolios
3-1a. The Two-Asset Case
3-1b. The N-Asset Case
3-2. Choosing the Optimal Portfolio
3-2a. The Efficient Frontier
3-2b. Risk–Return Indifference Curves
3-2c. The Optimal Portfolio for an Investor
3-3. The Basic Assumptions of the Capital Asset Pricing Model
3-4. The Capital Market Line and the Security Market Line
3-5. Calculating Beta Coefficients
3-5a. Using the Market Model to Estimate Beta Coefficients
3-5b. The Market Model Versus the CAPM
3-5c. Calculating the Beta Coefficient for a Portfolio: The Vanguard Mid-Cap Value Index Fund Investor Shares
3-5d. Performance Measures
3-5e. Additional Insights Into Risk and Return
3-5f. Modifying the Historical Beta
3-5g. Choice of Estimation Period, Holding Period, and Market Index
3-6. Empirical Tests of the CAPM
3-6a. Tests of the Stability of Beta Coefficients
3-6b. Tests of the CAPM Based on the Slope of the SML
3-6c. Current Status of the CAPM
3-7. Arbitrage Pricing Theory
Summary
Questions
Problems
Spreadsheet Problem
Financial Analytics Cases
Mini Case
Chapter 4. Bond Valuation
4-1. Who Issues Bonds?
4-2. Key Characteristics of Bonds
4-2a. Par Value
4-2b. Coupon Interest Rate
4-2c. Maturity Date
4-2d. Provisions to Call or Redeem Bonds
4-2e. Sinking Funds
4-2f. Other Provisions and Features
4-2g. Bond Markets
4-3. Bond Valuation
4-3a. Time Lines for a Bond’s Cash Flows
4-3b. Calculating a Bond’s Value
4-3c. Interest Rate Changes and Bond Prices
4-4. Changes in Bond Values Over Time
4-4a. New Bond Issues Versus Seasoned Bonds
4-4b. How Bond Values Change From Issue Date to Maturity Date
4-4c. Bond Prices: Clean and Dirty
4-5. Bonds With Semiannual Coupons
4-6. Bond Yields
4-6a. Yield to Maturity
4-6b. Yield to Call
4-6c. The Cost of Debt and Intrinsic Value
4-7. The Pre-Tax Cost of Debt: Determinants of Market Interest Rates
4-8. The Risk-Free Interest Rate: Nominal (rRF) and Real (r*)
4-9. The Inflation Premium (IP)
4-10. The Maturity Risk Premium (MRP)
4-10a. Interest Rate Risk
4-10b. Reinvestment Rate Risk
4-10c. Comparing Interest Rate Risk and Reinvestment Rate Risk: The Maturity Risk Premium
4-11. The Default Risk Premium (DRP)
4-11a. Bond Contract Provisions That Influence Default Risk
4-11b. Bond Ratings
4-11c. Bond Rating Criteria, Upgrades, and Downgrades
4-11d. Bond Ratings and the Default Risk Premium
4-12. The Liquidity Premium (LP)
4-13. The Term Structure of Interest Rates
4-14. Financing With Junk Bonds
4-15. Bankruptcy and Reorganization
Summary
Questions
Problems
Spreadsheet Problem
Financial Analytics Cases
Mini Case
Extension 4A. Zero Coupon Bonds, Original Issue Discount Bonds, and Original Issue Premium Bonds
Extension 4B. Bond Valuation Between Coupon Payment Dates
Extension 4C. Treasury Inflation-Protected Securities (TIPS)
Extension 4D. Bond Risk and Duration
Extension 4E. The Pure Expectations Theory and Estimation of Forward Rates
Chapter 5. Financial Options
5-1. Overview of Financial Options
5-2. The Single-Period Binomial Option Pricing Approach
5-2a. Payoffs in a Single-Period Binomial Model
5-2b. The Hedge Portfolio Approach
5-2c. Hedge Portfolios and Replicating Portfolios
5-3. The Single-Period Binomial Option Pricing Formula
5-3a. The Binomial Option Pricing Formula
5-3b. Primitive Securities and the Binomial Option Pricing Formula
5-4. The Multi-Period Binomial Option Pricing Model
5-5. The Black–Scholes Option Pricing Model (OPM)
5-5a. OPM Assumptions and Results
5-5b. Application of the Black–Scholes Option Pricing Model to a Call Option
5-5c. The Five Factors That Affect Call Option Prices
5-6. The Valuation of Put Options
5-6a. Put-Call Parity
5-6b. The Five Factors That Affect Put Option Prices
5-7. Applications of Option Pricing in Corporate Finance
5-7a. Real Options
5-7b. Risk Management
5-7c. Capital Structure Decisions
5-7d. Compensation Plans
Summary
Questions
Problems
Spreadsheet Problem
Financial Analytics Cases
Mini Case
Chapter 6. Accounting for Financial Management
6-1. Financial Statements and Reports
6-2. The Balance Sheet
6-2a. Assets
6-2b. Liabilities and Equity
6-3. The Income Statement
6-4. Statement of Cash Flows
6-4a. Operating Activities
6-4b. Investing Activities
6-4c. Financing Activities
6-4d. Putting the Pieces Together
6-5. Statement of Stockholders’ Equity
6-6. Net Cash Flow
6-7. Free Cash Flow: The Cash Flow Available for Distribution to Investors
6-7a. Net Operating Profit After Taxes (NOPAT)
6-7b. Net Operating Working Capital
6-7c. Total Net Operating Capital
6-7d. Net Investment in Operating Capital
6-7e. Calculating Free Cash Flow
6-7f. The Uses of FCF
6-7g. FCF and Corporate Value
6-8. Performance Evaluation
6-8a. The Return on Invested Capital
6-8b. Market Value Added (MVA)
6-8c. Economic Value Added (EVA)
6-8d. Intrinsic Value, MVA, and EVA
6-9. Corporate Income Taxes
6-9a. Corporate Taxes: The Flat Corporate Tax Rate
6-9b. Corporate Taxes: Treatment of Investment Income Earned by a Corporation
6-9c. Corporate Taxes: Special Rules for Certain Expenses
Limits on Interest Expense Deductions
6-9d. Corporate Taxes: Miscellaneous Features
Improper Accumulation to Avoid Payment of Dividends
Consolidated Corporate Tax Returns
6-10. Personal Taxes
6-10a. Personal Taxes on Municipal Bonds and Corporate Bonds
6-10b. Personal Taxes on Capital Gains (or Losses) and Dividend Income
Summary
Questions
Problems
Spreadsheet Problem
Financial Analytics Cases
Mini Case
Extension 6A. The Federal Income Tax System for Individuals
Chapter 7. Analysis of Financial Statements
7-1. Financial Analysis
7-1a. Gather Data
7-1b. Examine the Statement of Cash Flows
7-1c. Calculate and Examine the Return on Invested Capital and Free Cash Flow
7-1d. Begin Ratio Analysis
7-2. Profitability Ratios
7-2a. Net Profit Margin
7-2b. Basic Earning Power (BEP) Ratio
7-2c. Return on Total Assets
7-2d. Return on Common Equity
7-3. Asset Management Ratios
7-3a. Evaluating Total Assets: The Total Assets Turnover Ratio
7-3b. Evaluating Fixed Assets: The Fixed Assets Turnover Ratio
7-3c. Evaluating Receivables: The Days Sales Outstanding
7-3d. Evaluating Inventories: The Inventory Turnover Ratio
7-4. Liquidity Ratios
7-4a. The Current Ratio
7-4b. The Quick Ratio
7-5. Debt Management Ratios
7-5a. How the Firm Is Financed: Leverage Ratios
7-5b. Ability to Pay Interest: Times-Interest-Earned Ratio
7-5c. Ability to Service Debt: EBITDA Coverage Ratio
7-6. Market Value Ratios
7-6a. Price/Earnings Ratio
7-6b. Price/Free Cash Flow (P/FCF) Ratio
7-6c. Market/Book Ratio
7-7. Other Methods to Evaluate a Company’s Performance
7-7a. Common Size Analysis
7-7b. Percentage Change Analysis
7-7c. Trend Analysis
7-8. Tying the Ratios Together: The DuPont Equation
7-9. Comparative Ratios and Benchmarking
7-10. Uses and Limitations of Ratio Analysis
7-11. Looking Beyond the Numbers
Summary
Questions
Problems
Spreadsheet Problem
Financial Analytics Cases
Mini Case

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