Financial Management: Theory and Practice – Eugene F. Brigham and Michael C. Ehrhardt
Introduction
Financial management is a crucial aspect of any organization, whether it is a small business or a large corporation. It is essentially the process of managing the financial resources of an organization in order to achieve its goals and objectives. In order to be successful in this area, one must have an understanding of the theories and principles that govern financial management, and this is where Eugene F. Brigham and Michael C. Ehrhardt’s book on Financial Management comes in.
The Authors
Eugene F. Brigham is a well-known financial management expert, author, and consultant. He has written several books on the subject, and his work is highly regarded in the academic and business communities. He received his B.S. and M.B.A from the University of California, Los Angeles, and his Ph.D. from the University of California, Berkeley. He has been a professor at various universities, including the University of Florida and the University of Wisconsin, and has also served as a consultant to many corporations.
Michael C. Ehrhardt is a noted academic and author, with expertise in financial management and corporate finance. He received his B.S. from the University of Tennessee and his M.S. and Ph.D. from the Ohio State University. He has been a professor at the University of Tennessee and the University of Colorado, and has extensive consulting experience with various corporations.
Theory and Practice
Brigham and Ehrhardt’s book provides a comprehensive overview of financial management, covering both the theory and practice of the subject. It is designed to serve as both a textbook for students and a reference guide for professionals. The book is divided into five parts, each focusing on a specific aspect of financial management: financial analysis and planning, working capital management, capital budgeting, long-term financing, and business combinations and restructurings.
Financial Analysis and Planning
Part one of the book delves into the basics of financial management, with a focus on financial analysis and planning. It covers key topics such as financial statements, ratio analysis, and forecasting. The authors provide readers with a solid understanding of financial statements and how to interpret them, as well as various techniques for forecasting and planning.
Working Capital Management
Part two explores the management of current assets and liabilities, also known as working capital. It covers topics such as inventory management, cash management, and credit policies. The authors provide readers with strategies for efficient working capital management, as well as techniques for managing cash flow and credit risk.
Capital Budgeting
In part three, Brigham and Ehrhardt focus on capital budgeting, which involves making long-term investment decisions. This section covers topics such as net present value, internal rate of return, and capital budgeting decision criteria. The authors provide readers with a thorough understanding of the various methods of evaluating investment opportunities and the importance of making sound capital budgeting decisions.
Long-Term Financing
Part four of the book focuses on long-term financing, which involves raising capital for an organization. It covers a range of topics such as issuing stock, bond valuation, and cost of capital. The authors provide readers with a comprehensive understanding of the different sources of financing and how to evaluate their costs and risks.
Business Combinations and Restructurings
The final part of the book explores the more advanced topics of business combinations and restructurings. It covers mergers and acquisitions, divestitures, and corporate restructuring strategies. The authors provide readers with a comprehensive understanding of the factors that influence business combinations and the process of restructuring an organization.
Conclusion
In conclusion, Eugene F. Brigham and Michael C. Ehrhardt’s book on Financial Management provides a comprehensive and in-depth analysis of the theories and practices of financial management. It is an essential resource for students and professionals alike, and serves as a valuable guide for navigating the complex world of finance. With its clear and concise writing style and practical examples, this book is a must-read for anyone looking to understand and apply the principles of financial management in a real-world setting.