Finance: Applications and Theory (2024)

Finance: Applications and Theory is an introduction to corporate finance, focusing on how companies invest in real assets, raise the money to pay for the investments, and how those assets affect the value of the firm. The sixth edition continues to provide the core concepts for the undergraduate corporate finance course, to parallel and support how instructors from across the country teach finance. Also, this is the first text to use individual examples to help students better understand the material. The framework of this text helps students understand how to approach core financial concepts by emphasizing three themes:

- Finance is about connecting core concepts
- Finance can be taught using a personal perspective
- Finance focuses on solving problems and decision making

Part One: Introduction
Chapter 1: Introduction to Financial Management

Part Two: Financial Statements
Chapter 2: Reviewing Financial Statements
Chapter 3: Analyzing Financial Statements

Part Three: Valuing of Future Cash Flows
Chapter 4: Time Value of Money 1: Analyzing Single Cash Flows
Chapter 5: Time Value of Money 2: Analyzing Annuity Cash Flows

Part Four: Valuing of Bonds and Stocks
Chapter 6: Understanding Financial Markets and Institutions
Chapter 7: Valuing Bonds
Chapter 8: Valuing Stocks

Part Five: Risk and Return
Chapter 9: Characterizing Risk and Return
Chapter 10: Estimating Risk and Return

Part Six: Capital Budgeting
Chapter 11: Calculating the Cost of Capital
Chapter 12: Estimating Cash Flows on Capital Budgeting Projects
Chapter 13: Weighing Net Present Value and Other Capital Budgeting

Part Seven: Working Capital Management and Financial Planning
Chapter 14: Working Capital Management and Policies
Chapter 15: Financial Planning and Forecasting

Part Eight: Capital Structure Issues
Chapter 16: Assessing Long-Term Debt, Equity, and Capital Structure
Chapter 17: Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts
Chapter 18: Issuing Capital and the Investment Banking Process

Part Nine: Other Topics in Finance
Chapter 19: International Corporate Finance
Chapter 20: Mergers and Acquisitions and Financial Distress

About the Author

Marcia Cornett

Marcia Millon is the Cornett Robert A. and Julia E. Dorn Professor of Finance at Bentley University. She received her BS degree in economics from Knox College in Galesburg, Illinois, and her MBA and PhD degrees in finance from Indiana University in Bloomington, Indiana. Dr. Cornett has written and published several articles in the areas of bank performance, bank regulation, corporate finance, and investments.

Articles authored by Dr. Cornett have appeared in such academic journals as the Journal of Finance; Journal of Money, Credit, and Banking; Journal of Financial Economics; Financial Management; and Journal of Banking and Finance. She was recently ranked the 124th most published out of more than 17,600 authors and the number five female author in finance literature over the last 50 years. Along with Anthony Saunders and Otgontsetseg Erhemjamts, Dr. Cornett has recently completed work on theeighth edition of Financial Markets and Institutions (McGraw Hill Education). Along with Troy Adair and John Nofsinger, Dr. Cornett has recently completed work on the sixth edition of Finance: Applications and Theory (McGraw Hill Education). Dr. Cornett serves as an Associate Editor for the the Journal of Banking and Finance, Journal of Financial Services Research, Review of Financial Economics, Financial Review, and Multinational Finance Journal.

Dr. Cornett has served as a member of the board of directors, the executive committee, and the finance committee of the SIU Credit Union. Dr. Cornett has also taught at Southern Illinois University at Carbondale, the University of Colorado, Boston College, and Southern Methodist University. She is a member of the Financial Management Association, the American Finance Association, and the Western Finance Association.

Troy Adair

Troy Alton Adair Jr. - Professor of Practice at Lehigh University and Founder and CEO of dataDicts, Inc. He received his BS degree in computers/information science from the University of Alabama at Birmingham, his MBA from the University of North Dakota, and his PhD in finance from Indiana University. Dr. Adair serves Lehigh as the Co-Director of the Computer Science and Business (CSB) Program, the FinTech Minor, and the Business Analytics Certificate Program. He also manages a data science consulting business specializing in providing customized data analytics assessments and training. He previously managed research computing infrastructure and support services for Harvard Business School and has written articles on bank regulator self-interest, analyst earnings per share forecasting, and capital budgeting in continuous time. He is the author of Corporate Finance Demystified, Excel Applications in Corporate Finance, and Excel Applications in Investments (all McGraw Hill Education). He has also served as a consultant on financial data information systems and business intelligence to a number of international banks and insurance companies and as the faculty representative to the board of trustees investments committee at Alma College. Dr. Adair has also taught at the University of Michigan, Alma College. Hofstra University, Indiana University, and the University of North Carolina at Chapel Hill. He is a member of the Financial Management Association, the American Finance Association, and the Southern Finance Association.

John Nofsinger

John Nofsinger - Dean, Professor, and William H. Seward Endowed Chair of International Finance at the University of Alaska Anchorage. He earned his BS degree in electrical engineering from Washington State University, his MBA degree from Chapman University, and his PhD degree in finance from Washington State University. Dr. Nofsinger has written over 70 articles in the areas of investments, corporate finance, and behavioral finance. These papers have appeared in the scholarly journals Journal of Finance, Journal of Business, Journal of Financial and Quantitative Analysis, Financial Management, Journal of Corporate Finance, Journal of Banking and Finance, and Journal of Behavioral Decision Making, among others. Dr. Nofsinger has also authored (or coauthored) fourteen trade books, scholarly books, and textbooks that have been translated into eleven different languages. The most prominent of these books is the industry book The Psychology of Investing. Dr. Nofsinger is a leading expert in behavioral finance and is a frequent speaker on this topic at industry conferences, universities, and academic conferences. He is frequently quoted or appears in the financial media, including The Wall Street Journal, Financial Times, Fortune, Bloomberg Business Week, Smart Money, The Washington Post, and CNBC, and other media from The Dolans to The Street.com.

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