strategic financial management

Robert Alan Hill
Strategic Financial Management
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R.A. Hill
Strategic Financial Management
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Strategic Financial Management
1
st
edition
© 2008 R.A. Hill &
bookboon.com
ISBN 978-87-7681-425-0
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Strategic Financial Management
4
Contents
Contents
About the Author 9
Part One: An Introduction 10
1 Finance – An Overview 11
1.1 Financial Objectives and Shareholder Wealth 11
1.2 Wealth Creation and Value Added 13
1.3 e Investment and Finance Decision 14
1.4 Decision Structures and Corporate Governance 17

1.5 e Developing Finance Function 18
1.6 e Principles of Investment 22
1.7 Perfect Markets and the Separation eorem 24
1.8 Summary and Conclusions 28
1.9 Selected References 29
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Strategic Financial Management
5
Contents
Part Two: e Investment Decision 30
2 Capital Budgeting Under Conditions Of Certainty 31
2.1 e Role of Capital Budgeting 32
2.2 Liquidity, Protability and Present Value 33
2.3 e Internal Rate of Return (IRR) 39

2.4 e Inadequacies of IRR and the Case for NPV 40
2.5 Summary and Conclusions 42
3 Capital Budgeting and the Case for NPV 43
3.1 Ranking and Acceptance Under IRR and NPV 44
3.2 e Incremental IRR 46
3.3 Capital Rationing, Project Divisibility and NPV 46
3.4 Relevant Cash Flows and Working Capital 47
3.5 Capital Budgeting and Taxation 49
3.6 NPV and Purchasing Power Risk 50
3.7 Summary and Conclusions 53
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