Fundamentals of Corporate Finance, Second Edition

Subject Index

A

Abandoning projects, 657

Accelerated depreciation, 55, 61

Accounting controls, internal, 17

Accounting DOL (degree of accounting operating leverage), 389–391

Accounting earnings, cash flows vs., 349

Accounting firm scandals, 16, 122–123

Accounting operating profit (EBIT) break-evenpoint, 393–395

Accounting principles (standards), 50–51

FASB statements, 50

GAAP, 50–51

international, 51–52, 676

Accounting (operating) profits, 98, 390n.4. See also Earnings before interest and taxes (EBIT); EBIT plus depreciation and amortization (EBITDA)

and fixed/variable costs, 381–382

incremental net operating profits after tax, 345–348, 352

Accounting rate of return (ARR), 318

Accounting statement of cash flows, 342, 344

Accounts payable, 444–445

as current liability, 53

in financial planning models, 619

forecasting, 365

as short-term financing, 461

Accounts receivable, 444

aging, 453–454

as current assets, 53

forecasting, 364–365

management of, 452–454

realization principle for, 51

terms of sale for, 452–454

Accounts receivable financing, 462–463

Accounts receivable turnover, 91–92

Accrued taxes, as current liability, 53

Accumulated depreciation account, 54–55

Acid-test ratio, 88

Additional paid-in capital account, 56

Add WC, see Incremental additions to working capital

Adjustable-rate mortgages (ARMs), 268

Adjusted book value, 582

Adjusted book value valuation approach, 582–584

After-tax cost of debt, 418, 419, 509n.5

Agency conflicts, 13–18, 14

and agency relationships, 14