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Introduction
In case you couldn’t already tell, this book is about corporate finance. If you were looking for poodle grooming, you picked up the wrong book. Go try again.
Corporate finance is the study of how groups of people work together as a single organization to provide something of value to society. If a corporation is using up more value than it’s producing, it will lose money and fail. In corporate finance, you measure value using money, and the final goal of a corporation is to make money.
Ensuring that a corporation is financially successful is far more complicated than simply ensuring that a corporation is profitable, though. Throughout this book, I discuss a wide range of topics in corporate finance. This is an introductory book, after all, so think of it as a sampler or a greatest-hits album — it’s everything you need in order to understand what corporate finance is and how to begin functioning on a basic level in the world of finance.
About This Book
This book is a little different from other corporate finance books. First of all, it’s better. More useful than that, though, is that this book is written and organized so that people with absolutely no understanding of corporate finance can use it as a reference guide. It’s also a wonderfully interesting read.
Everything in this book is written as if you’re a complete newbie. The little details are pointed out, and when stuff gets too complicated, I just summarize the topic. I also explain — or at least clarify — everything, in normal everyday language, without trying to sound very technical. This book is all about making the subject of corporate finance accessible to everyone, while also trying to keep it from being too dry. Corporate finance books can be really boring, which is sad because they don’t need to be.
To enhance your reading experience, I use the following conventions:
New terms are in italics, with an easy-to-understand definition provided nearby.
Bold is used to highlight key words and phrases in bulleted and numbered lists.
In math equations, variables are italicized to set them apart from letters.
To make the content more accessible, I divided it into six parts:
Part 1, What’s Unique about Corporate Finance: This part talks a lot about what money is, what corporate finance is and the role it plays, and the people and organizations that utilize corporate financial information.
Part 2, Making a Statement: Reading financial statements is a lot easier than learning a language, but odds are this process is going to be just as new to you, so I take several chapters to break it down easily.
Part 3, Valuations on the Price Tags of Business: Before you buy or invest in something, how do you figure out what it’s worth? You start by reading the chapters in this part!
Part 4, A Wonderland of Risk Management: The chapters in this part deal heavily in risk and cover some of the