Essentials of Corporate Finance - WileyPLUS (2023)

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Essentials of Corporate Finance

By Robert Parrino, David S. Kidwell, Thomas Bates

Researchers and educators agree that it takes more than academic knowledge to be prepared for college—intrapersonal competencies like conscientiousness have been proven to be strong determinants of success. WileyPLUS with ORION for Essentials of Corporate Finance helps you identify students’ proficiency early in the semester and intervene as needed.

Essentials of Corporate Finance offers a finely tuned balance of intuitive conceptual understanding, problem solving, analysis, and decision making. Packed with every resource found in Fundamentals of Corporate Finance, this briefer version offers a focused approach to the fundamentals of value creation.

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Simulations help students sharpen analytical skills

Learning by Doing applications contain quantitative problems with step-by-step solutions to help students better understand how to apply their intuition and analytical skills to solve problems. The interactive tutorials are based on the Learning by Doing applications and are assignable in WileyPLUS.

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ROBERT PARRINO is a member of the faculty at the University of Texas since 1992. He teaches courses in regular degree and executive education programs as well as in customized executive education courses for industrial, financial, and professional firms. He has also taught at the University of Chicago, University of Rochester, and IMADEC University in Vienna. Parrino has received numerous awards for teaching excellence at the University of Texas from students, faculty, and the Texas Exes (alumni association). Parrino has been involved in advancing financial education outside of the classroom in a variety of ways. As a Chartered Financial Analyst (CFA) charter holder, he has been very active with the CFA Institute as a member of the candidate curriculum committee and as a regular speaker at the annual Financial Analysts Seminar. He has spoken at over 20 Financial Analyst Society meetings, and he served as a member of the planning committee for the CFA Institute’s Annual Meeting. Parrino is also the founding director of the Hicks, Muse, Tate & Furst Center for Private Equity Finance at the University of Texas. The center sponsors conferences and other educational activities in areas related to private equity finance. Parrino was vice president for financial education of the Financial Management Association (FMA) from 2008 to 2010 and an academic director of the FMA from 2011 to 2013. In 2017, he was elected to be VP-Program for the 2019 FMA annual meeting. He also co-founded the Financial Research Association and is associate editor of the Journal of Corporate Finance.

Parrino’s research focus includes corporate governance, financial policies, restructuring, mergers and acquisitions, and private equity markets. He has published his research in several journals, including the Journal of Finance, Journal of Financial Economics, Journal of Financial and Quantitative Analysis, Journal of Law and Economics, Journal of Portfolio Management, and Financial Management. Parrino has won numerous awards for his research, including the 2013–2014 Career Award for Outstanding Research Contributions at the McCombs School of Business.

Parrino has experience in the application of corporate finance concepts in a variety of business situations. Since entering the academic profession, he has been retained as an advisor on valuation issues concerning businesses with enterprise values ranging to more than $1 billion and has consulted in areas such as corporate financing, compensation, and corporate governance. Parrino was previously president of Sprigg Lane Financial, Inc., a financial consulting firm with offices in Charlottesville, Virginia, and New York City. While at Sprigg Lane, he was on the executive, banking, and portfolio committees of the holding company that owns Sprigg Lane. Before joining Sprigg Lane, Parrino was on the Corporate Business Planning and Development staff at Marriott Corporation. At Marriott, he conducted fundamental business analyses and preliminary financial valuations of new business development opportunities and potential acquisitions. Parrino holds a B.S. in chemical engineering from Lehigh University, an MBA degree from The College of William and Mary, and M.S. and Ph.D. degrees in applied economics and finance, respectively, from the University of Rochester.

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DAVID S. KIDWELL has over 30 years of experience in financial education as a teacher, researcher, and administrator. He has served as dean of the Carlson School at the University of Minnesota and of the School of Business Administration at the University of Connecticut. He was also on the faculty at the Krannert Graduate School of Management, Purdue University, where he was twice voted the outstanding undergraduate teacher of the year. An expert on the U.S. financial system, Kidwell is the author of more than 80 articles dealing with the U.S. financial system and capital markets.

Kidwell has published his research in the leading journals, including the Journal of Finance, Journal of Financial Economics, Journal of Financial and Quantitative Analysis, Financial Management, and Journal of Money, Credit, and Banking. Kidwell holds an undergraduate degree in mechanical engineering from California State University at San Diego, an MBA with a concentration in finance from California State University at San Francisco, and a Ph.D. in finance from the University of Oregon.

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THOMAS W. BATES is the chair of the Department of Finance and Dean’s Council of 100 Distinguished Scholars at the W. P. Carey School of Business, Arizona State University. He has also taught courses in finance at the University of Delaware, the Ivey School of Business at the University of Western Ontario, and the University of Arizona where he received the Scrivner teaching award. During his career as an educator, Bates has taught corporate finance to students in undergraduate, MBA, executive MBA, and Ph.D. programs, as well as in custom corporate educational courses.

Bates is a regular contributor to academic finance literature in such journals as the Journal of Finance, Journal of Financial Economics, Journal of Financial and Quantitative Analysis, and Financial Management. His research addresses a variety of issues in corporate finance, including the contracting environment in mergers and acquisitions, corporate liquidity decisions and cash holdings, and the governance of corporations. In practice, Bates has worked with companies and legal firms as an advisor on issues related to the valuation of companies and corporate governance. Bates received a B.A. in economics from Guilford College and his doctorate in finance from the University of Pittsburgh.

(Video) Financial Accounting Wiley Plus Introduction


1 The Financial Manager and the Firm 1


2 The Financial System and the Level of Interest Rates 26

3 Financial Statements, Cash Flows, and Taxes 50

4 Analyzing Financial Statements 83


5 The Time Value of Money, Discounted Cash Flows, and Valuation 126

6 Risk and Return 183

7 Bond Valuation and the Structure of Interest Rates 221

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8 Stock Valuation 253


9 The Fundamentals of Capital Budgeting 284

10 Cash Flows and Capital Budgeting 328

11 The Cost of Capital 363


12 Working Capital Management 395

13 How Firms Raise Capital 426

14 Capital Structure Policy 458

15 Dividends, Stock Repurchases, and Payout Policy 495


16 Financial Planning and Managing Growth 519


17 International Financial Management 554

(Video) HES E1600 - Class from Sept 1, 2021


Is corporate finance difficult? ›

While finance requires some mathematics training and some knowledge and skills in accounting and economics, it's not necessarily more difficult than any other field of study, particularly for people with an aptitude for math.

Is corporate finance easy? ›

Corporate finance jobs aren't easy to get, but they're more plentiful and less competitive than investment banking jobs. Corporate finance still offers an excellent career in business analytics and corporate culture to those who value their weekends, holidays, and evenings.

Why do you want to work in corporate finance? ›

It is a career in which you can actively contribute to the commercial success of a business, ensuring it is securing the right finance options at the right time. Working in corporate finance also enables you to move between working in practice and directly within companies.

What is the basic feature of corporate finance? ›

Corporate finance is concerned with how businesses fund their operations in order to maximize profits and minimize costs. It deals with the day-to-day operations of a business' cash flows as well as with long-term financing goals (e.g., issuing bonds).

Does corporate finance pay well? ›

Corporate Finance Analyst Salaries

The rules of thumb are: Entry Level (Analyst): The “average” base salary is ~$70K USD at most large companies. But you might earn less than this in Controllership (more like $50K), and more than this at large tech companies (see below).

Is finance harder than accounting? ›

Generally speaking, people consider accounting majors to be more difficult to study and pass than finance majors. And there are a few different reasons for this. The content of accounting majors is, on average, much more technical than for finance majors, and this can make it more difficult.

Can you self teach corporate finance? ›

There are multiple ways you can learn about finance, including online courses, in-person classes, reading financial publications, self-teaching from finance books, and joining a network of financial professionals.

What are the three main areas of corporate finance? ›

What Are The Three Main Areas Of Corporate Finance? Corporate finance is split into three sub-sections: capital budgeting, capital structure, and working capital management.

What skills do you need in corporate finance? ›

10 finance skills to include in your CV
  • A formal accounting qualification.
  • Interpersonal skills.
  • Ability to communicate.
  • Financial reporting.
  • Analytical ability.
  • Problem-solving skills.
  • Knowledge of digital tools.
  • Management experience.
9 Aug 2021

What is your expectation corporate finance? ›

The ultimate purpose of corporate finance is to maximize the value of a business through planning and implementation of resources, while balancing risk and profitability.

What are the basic questions of corporate finance? ›

Corporate finance interview questions includes different kind of questions asked at the time of interview such as How do you interpret the financial statements of the company and what does it tell about ?, What should be the major area of focus of the company as per latest financial statements?, Explain the sources of ...

What is corporate finance in simple words? ›

Corporate finance refers to activities and transactions related to raising capital to create, develop and acquire a business. It is directly related to company decisions that have a financial or monetary impact. It can be considered as a liaison between the capital market and the organisation.

What are the advantages of corporate finance? ›

Corporate financing aims to increase the shareholder values that help managers to be able to balance capital funding between investments in projects that increase the long term profitability and sustainability of a company.

Why is corporate finance important to all managers? ›

Corporate finance is important to all managers because it allows a manager to be able to predict the funds the company will need for their upcoming projects and think about ways to organize and acquire those funds.

What is the highest paid job in finance? ›

1. Chief Executives. Chief executives, such as chief executive officers (CEOs) and chief financial officers (CFOs), are responsible for overseeing all activities within a company, so their high salary also comes with a lot of responsibility. CFOs in particular manage the finances of a company.

What is the highest position in finance? ›

The CFO is the executive with primary responsibility for overseeing all the financial operations of a business. CFO duties include tracking assets and liabilities; managing cash flow, debt, and the company's capital structure; and perhaps most importantly, financial planning for the company's future growth.

Is corporate finance a good career path? ›

Is Corporate Finance a Good Career? Corporate finance can be a great career choice for anyone with strong quantitative analysis skills who is also seeking a career with stability. Many professions experience boom/bust cycles.

Who gets paid more finance or accounting? ›

Based on NACE data, those who had a bachelor's degree in finance tend to have slightly higher starting median incomes than those with accounting degrees.

Which has more math accounting or finance? ›

Finance requires more math

While many people might assume that both a finance degree and an accounting degree would require strong math skills, in reality it's the finance degree that demands the more mathematical mind.

Is it better to major in finance or accounting? ›

An accounting degree allows for many more options. Finance majors have courses more focused on financial services and consultancy. Finance is a great choice for those students who want to manage current and future financials of a company or organization.

How can I pass my finance exam? ›

Take notes during class to prepare for the exam. Analyzing financial information is a process that gets more complicated with each lesson. Make sure you understand each class meeting. Get a tutor, ask questions or meet with your finance instructor to clarify ideas that you don't understand.

Is finance hard to study? ›

Getting your finance degree isn't easy—it takes time, dedication and hard work. But getting your degree is only the first step. Here are three things you need to know about differentiating yourself from the competition: The best way to learn is by doing.

How long does it take to learn finance? ›

You should expect to spend a minimum of two years of full-time study on your finance education, but for the best career opportunities, you might need to invest four to five years or more in your education.

Is corporate finance a stressful job? ›

Corporate finance (and finance careers in general) can be quite stressful. Additional certifications are often required, which incur time and cost. Entry-level positions can sometimes be boring and quite laborious.

Can you go from corporate finance to investment banking? ›

Some students graduate, accept a role that's related to IB, such as a Big 4 valuation job, corporate banking, or corporate finance, and then move into IB from there. The probability of making this move depends heavily on market conditions and the nature of your full-time job.

Can a financial analyst become a CFO? ›

In the corporate world, senior analysts can become treasury managers supervising working groups within their departments. A standout performer may rise through the ranks to become a chief financial officer (CFO) or chief investment officer (CIO) responsible for all of the company's financial activities.

What are the 5 principles of finance? ›

The five principles are consistency, timeliness, justification, documentation, and certification.
  • Consistency. Transactions must be handled in a consistent manner. ...
  • Timeliness. ...
  • Justification. ...
  • Documentation. ...
  • Certification.

What are the 4 basic areas of finance? ›

There are four main areas of finance: banks, institutions, public accounting, and corporate. Courses within the finance major provide a solid background in many subjects including: Financial markets and intermediaries.

Which two decisions are the basis of corporate finance? ›

The financing decision comes from two sources from where the funds can be raised – first is from the company's own money, such as the share capital, retained earnings. Second is from borrowing funds from the outside the corporate in the form debenture, loan, bond, etc.

Is MBA in finance difficult? ›

A: MBA in Finance is as rigorous as any other MBA programme. However, since there is extra use of Maths and Statistics, some students may find it tougher than other specialisations.

Is there a lot of math in finance? ›

Some of the main math-related skills that the financial industry requires are: mental arithmetic (“fast math”), algebra, trigonometry, and statistics and probability. A basic understanding of these skills should be good enough and can qualify you for most finance jobs.

How hard is finance compared to engineering? ›

Finance is far less rigorous than Engineering. With Engineering there is an incredible number of rules and complex math underpinning Engineering. Finance can also be hard, with the level of difficulty depending on the college.

Are finance jobs stressful? ›

Like every field, there are also drawbacks to a career in finance. They can include high stress, big responsibility, long working hours, continuing education requirements, and, in some cases, a lack of job security—the finance industry is generally quite cyclical.

Which MBA has highest salary? ›

According to the BLS, some of the highest-paying management occupations related to MBA concentrations include computer and information systems management, financial management, marketing management, and human resources management.

Which is the toughest subject in MBA? ›

Finance. Next up on our list of hardest majors in MBA programs is the finance focus. Typically, students who concentrate on finance will enjoy a wide spectrum of career options. Finance MBAs go on to become financial managers, financial examiners, financial analysts, and personal financial advisors.

Which is the toughest stream in MBA? ›

Here, in broad strokes, are some of the most difficult classes involved in an MBA program:
  • Accounting & Economics. ...
  • Management Communications. ...
  • Capstone Courses & Practical Projects.

What is the highest paid job in finance? ›

1. Chief Executives. Chief executives, such as chief executive officers (CEOs) and chief financial officers (CFOs), are responsible for overseeing all activities within a company, so their high salary also comes with a lot of responsibility. CFOs in particular manage the finances of a company.

What pays more finance or accounting? ›

Based on NACE data, those who had a bachelor's degree in finance tend to have slightly higher starting median incomes than those with accounting degrees.

Which has more math accounting or finance? ›

Finance requires more math

While many people might assume that both a finance degree and an accounting degree would require strong math skills, in reality it's the finance degree that demands the more mathematical mind.

Why do so many engineers go into finance? ›

Most engineers point to one of the following reasons to explain their desire to work in finance: They want to make more money; they've hit a “ceiling” in their current role. They want better advancement opportunities. They want more interesting, client-facing work.

Is physics harder than finance? ›

Math in economics/accounting/finance is much easier than math in physics. As for financial concepts and ideas, try reading some of their textbooks and see whether you can understand them and whether you enjoy reading them.

Why do finance majors make so much money? ›

In this environment financial institutions have offered a number of highly priced services that companies and investors find worth the cost. This is a very competitive market and clients pay for what they perceive to be higher returns, less risk and reduced capital costs.

What is the hardest job in finance? ›

The positions that some financial recruiters have identified as the hardest and most competitive jobs to fill include controllers (including hedge fund controllers), tax managers, fund and senior-level accountants, and valuation analysts.

What is the easiest finance job? ›

Entry Level Finance Jobs for New Grads
  • Accountant. Many finance jobs build on accounting skills and knowledge, but that doesn't mean that there's no need for general accountants. ...
  • Tax Associate. ...
  • Financial Analyst. ...
  • Credit Analyst. ...
  • Data Analyst. ...
  • Budget Analyst. ...
  • Economist. ...
  • Insurance Claims Adjuster.

What career is the happiest? ›

The 10 Happiest and Most Satisfying Jobs
  • Dental Hygienist.
  • Physical Therapist.
  • Radiation Therapist.
  • Optometrist.
  • Human Resources Manager.


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