Fundamentals of Corporate Finance

Subject Index

A

Accounting earnings, free cash flows (FCFs) versus, 336

Accounting principles

arm's-length transactions assumption, 52

cost principle, 52

GAAP, 52

going concern assumption, 53

international GAAP, 53

matching principle, 53

realization principle, 52–53

Accounting rate of return (ARR), 301

Accounts payable

FCF forecast, 352

as short term financing, 415

working capital account, 398–399

Accounts receivable

aging, 407–408

average collection period, 94

days’ sales outstanding, 94

management of, 406–408

monitoring and collecting on, 408

terms of sale for, 406–407

turnover calculation, 93–94

without recourse, 416

working capital account, 398

Accounts receivable financing, 416–417

Acid-test ratio, 90–91

Add WC. See Incremental additions to working capital

Additional paid-in capital, 58

Adjustable-rate mortgages (ARMs), 251

Affinity credit cards, 181–182

Agency conflicts, 15–19

agency relationships and, 15, 20

aligning interests of management and stockholders, 16–18

defined, 15

manager-stockholder, 16

with ownership and control, 15

regulatory reforms and, 18–19

Agency costs, 477–480

agent and, 477

corporate governance regulations designed to reduce, 19

defined, 16, 477

ethical conflicts and, 20

principal and, 477

stockholder-lender, 478–480

stockholder-manager, 479

Agency relationships, 15, 20

Aging accounts receivable, 407–408

Aging schedule, 407, 408

American (direct) quote, 563

Americas, spot rate, 564

Amortization, 64, 156

Amortization schedules

defined, 157

illustrated ...