Corporate Value Creation: An Operations Framework for Nonfinancial Managers

Contents

Preface

Acknowledgments

Foreword

Chapter 1: Basic Concepts

Introduction

Financial Statements

The Income Statement

The Balance Sheet

The Cash Flow Statement

Required Revenue for a Given Level of Net Income

Case Study: Advanced Solar Systems Corporation

Chapter 2: The Envelope Equations

Introduction

ROCE and NiROCE

Net Investments

Investment Rate

Incorporating the IR and NiROCE into the Expression for Net Income

Incorporating IR into the Expression for Cash Flow after Investing Activities

NI and CFaIA—A Sequential Year-by-Year Analysis

NI and CFaIA—The General Model

Estimating Growth Rates of Cash Flow after Investing Activities and Net Income

Growth Rate of CFaIAg with Constant IR and NiROCE

Growth Rate of Net Income (NIg)

Net Income Growth Rate (NIg) with Constant IR and NiROCE

Envelope Equations Methodology for Estimating Net Income, Cash Flow after Investing Activities, and Growth Rates

Required Revenue Revisited

Growing the Net Income

Case Study: American Technology Corporation

Chapter 3: The Weighted Average Cost of Capital

Why Is a Company's Weighted Average Cost of Capital Important?

Weighted Average Cost of Capital Defined

Operating and Capital Leases

Weighting of the Components of Capital Structure

Market Value of Debt and Equity

Impact of Taxes on the Weighted Average Cost of Capital

Estimating the Cost of Debt and Equity and the Capital Asset Pricing Model

General Equations for Estimating the WACC for a Company with One Class of Debt and Equity

Levered and Unlevered ...