FINANCIAL MANAGEMENT ‘A well-balanced and user-friendly introduction to a complex discipline.’ P.A.Belk, Loughborough Business School ‘Useful examples, topical illustrations and clear discussion make this an excellent student text—the author has adopted a practical approach which helps the reader appreciate the importance of financial management in the business world.’ Tony Head, Sheffield Hallam University ‘An excellent introduction to the complexities of financial management The book will be particularly useful for business students and others who are coming new to the subject.’ Clive Bishop, Manchester Metropolitan University Financial Management is intended for use by non-specialist students taking a finance module in a range of general business and management courses Finance is a notoriously difficult core subject for business undergraduates So far the area has been dominated by large and complex introductory texts—often from the USA—which many lecturers find too detailed and unwieldy This carefully developed and researched text fills this gap by providing a short, modular, UK-focused introduction to the subject of financial management Quality controlled by an academic review panel, the content and approach have been rigorously developed to answer the needs of non-finance students Financial Management offers the following additional features: • a coherent and unifying model of financial management • learning objectives, clear worked examples, in-chapter exercises with solutions, key learning points, real-world vignettes, structured review questions with selected answers, case studies, glossary, summary of key formulae • user-friendly and flexible structure, most chapters can be studied as discrete modular units • contemporary coverage including corporate governance, ethics, Economic Value Added (EVA), Market Value Added (MVA), stakeholder theory and the treasury function • Contents: Part 1: The Scope and Environment of Financial Management, Introduction and Overview, Key Issues in Modern Financial Management, The Financial Environment, Capital Markets, Case Study 1; Part 2: The Core Concepts in Financial Management, The Time Value of Money, Risk and Return— Portfolio Theory, Risk and Return—The Capital Asset Pricing Model (CAPM), The Central Concept of Value, Case Study 2; Part 3: Financial Analysis and Performance Evaluation, Financial Analysis and Performance Evaluation, Case Study 3; Part 4: Strategic Financial Decision-Making—The Investment Decision, 10 Investment Appraisal—Introduction, 11 Investment Appraisal—Risk Analysis, 12 The Cost of Capital, Case Study 4; Part 5: Strategic Financial Decision-Making— The Financing Decision, 13 Capital Structure and Gearing, 14 Dividend Policy, Case Study 5; Part 6: Financial Planning and Control, 15 Strategic Financial Planning and Control, Case Study 6; Part 7: Short-Term Financial Management, 16 Short-Term Financial Planning and Control, 17 Short-term Decision-Making (1) 1, 18 Short-Term Decision-Making (2) 2, 19 Sources of Short- and Medium-Term Financing, Case Study 7, Comprehensive Case Study Jim McMenamin is a Lecturer in Financial Management at the University of Ulster FINANCIAL MANAGEMENT: AN INTRODUCTION—TUTOR’S GUIDE The tutor’s guide is available to academics who adopt Financial Management: An introduction for course use It includes the answers to end of chapter review questions, suggested solutions to case studies together with indicative marketing schemes, transparency masters of key charts, tables and diagrams, a multiple choice question bank and specimen test papers For more information please email: info.business@routledge.com Financial Management: An introduction Tutor’s Guide ISBN: 0-415-212-219 FINANCIAL MANAGEMENT An introduction JIM MCMENAMIN LONDON AND NEW YORK First published 1999 by Routledge 11 New Fetter Lane, London EC4P 4EE This edition published in the Taylor & Francis e-Library, 2005 “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk” Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 © 1999 Jim McMenamin The right of Jim McMenamin to be identified as the Author of this Work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988 All rights reserved No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data McMenamin, Jim, 1951– Financial management: an introduction/Jim McMenamin p cm Includes index Corporations—Finance I Title HG4026.M39 1999 658.1–dc21 98–26719 CIP ISBN 0-203-03116-4 Master e-book ISBN ISBN 0-203-20635-5 (Adobe e-Reader Format) ISBN 0-415-18161-5 (hbk) ISBN 0-415-18162-3 (pbk) To my family CONTENTS List of figures List of tables Preface Acknowledgements x xiii xv xxv Part One THE SCOPE AND ENVIRONMENT OF FINANCIAL MANAGEMENT Overview Introduction Key Issues in Modern Financial Management The Financial Environment Capital Markets 42 79 121 Part Two THE CORE CONCEPTS IN FINANCIAL MANAGEMENT The Time Value of Money Risk and Return—Portfolio theory Risk and Return—The Capital Asset Pricing Model (CAPM) The Central Concept of Value 170 172 206 236 270 Part Three FINANCIAL ANALYSIS AND PERFORMANCE EVALUATION Financial Analysis and Performance Evaluation 331 333 Part Four STRATEGIC FINANCIAL DECISION-MAKING: The Investment Decision 10 Investment Appraisal—Introduction 11 Investment Appraisal—Risk analysis 12 The Cost of Capital 388 390 446 472 Part Five STRATEGIC FINANCIAL DECISION-MAKING: The Financing Decision 13 Capital Structure and Gearing 14 Dividend Policy 502 504 540 Part Six FINANCIAL PLANNING AND CONTROL 577 15 Strategic Financial Planning and Control 578 Part Seven SHORT-TERM FINANCIAL MANAGEMENT 16 Short-Term Financial Planning and Control 17 Short-Term Financial Decision-making (1) 18 Short-Term Financial Decision-making (2) 19 Sources of Short- and Medium-Term Financing 602 604 645 688 726 Appendices A Financial Tables B Solutions to Exercise Questions C Suggested Answers to Selected Review Questions Glossary of Key Financial Terms Selected Equations and Formulae Index 774 786 816 869 879 885 Index 916 implementation 354, 355; materials requirement 604–5; medium-term 521; narrow in scope 13, 522; short-term 522; strategic 350; top-down 521; see also planning and control planning and control 115, 19–20, 578–99, 607, 642, 853–4; competitive or business unit strategy 519; corporate strategy 518–19; low-level 522; mid-level 12, 521; moderately aggregated 521; strategic 520–1; tactical 518, 520, 521–2, 767; see also operational; short-term Poland 91 Polaroid Corporation 316 political intervention 439 political risk 80, 434 Polly Peck 61 Porsche International Finance 88 Porterbrook Leasing 88 portfolio theory 206, 220–30, 267; correlation 201–3; covariance 203–5; diversification 205–7; modern 185; return 199–200; risk 200, 205; weightings 205–6 positive correlation 212, 223 positive signal 526, 552 post implemenation audit 396 Post Office pension fund 96 Powerscreen plc 667 precautionary motive 706 predictive tools 368 preference shares 101, 291–2, 354, 482–4, 498 845; convertible 92; irredeemable 259, 431; redeemable 259, 431; valuation 259–60, 287, 748 prepayment financing 756 present value 173, 176, 183–91, 199, 201, 273; 413–4, 517, 821–3; annuities 175, 180, 369; Index 917 of expected future cash flow 242; frequent discounting 168; and future value 168–9; interest factor 166–7, 169, 179, 249, 251, 286, 427, 702–9; interest factor for an annuity 180, 251, 404, 405, 429, 430; perpetuities 176, 177; see also net present value price earnings (PE) ratio 149, 303–7, 309, 323 341 –2 price-sensitive information 126 Prince’s Scottish Youth Business Trust 156 –7 Prince’s Youth Business Trust 156 –7 principal-agent relationship 43 private information 146 probability: assessments, accurate 410; distribution 193, 194–5, 409, 559; estimates 407–8, 558; of failure 328–9; preassigned 408; theory 400, 754; weightings 193, 400, 754 process of financial management 110–24; analysis 15; balance sheet as model of firm 22–3; control 19; decision-making 13–16; financial information 14; financing decisions 20–1; investment decisions 20; objective-setting 16–18; operational functions 13; planning 18–19; strategic functions 11–12; tactical functions 12 Procter & Gamble 110 profit/profitability 17, 334, 338, 357, 400, 403, 555, 693, 798, 835; accounting 360; after interest but before tax 304; after interest and tax 304, 319; assessment 301–7; before interest and tax 304, 318; distributable 484; earning potential 303; incremental 624; index 374, 726; indicator 328; -liquidity matrix 308; -on-sales component 321; Index operating 30; performance 544; planning 36, 524, 547, 559–62, 767; ratios 298, 303–4; residual 304; versus cash flow 28–9 project evaluation and review technique (PERT) 462 project financing 490, 493 –5 project management systems and techniques 462 project risk classification 495 prospectus 128 Prudential 56 public relations 43 public sector 436–8, 817 purchase payments schedule 613 –5 purchasing 666, 762 pure play approach 495 put option 109 Quaker Oats 316 qualitative objectives 15, 18 quality 15, 361, 374; adjusted life-year (QUALY) 392 quantifiable objectives 18 quantitative objectives 15 RAND Corporation 462 random numbers 457 random walk 145 Rank Organisation 246 Rappaport, A 312 rate of return 183, 206, 459; accounting 360–2, 725, 753; expected 194–5, 223, 371; fixed 316; minimum 424, 742; multiple 374–5; see also internal; required ratios 17, 333, 335–64, 833; acid test (quick) 310–11, 584; Bio-Tech Enterprises Ltd: financial analysis 300–22; current 310, 584; limitations 322–4; price earnings 135, 270–4, 305–6; pyramid 320–2; sales activity 332; 918 Index 919 sector-specific 332–3; selection 299; target 616; turnover 597 raw materials 434, 666 receipts 612, 613 Recognised Investment Exchanges 116 Recognised Professional Bodies 117 record date 542 recourse 703; factoring 676 redemption 104 reducing balance method 200, 424 references, trade 693 Regan, A 60 Registrar of Companies 693, 756 regulation 118 regulatory hurdles 434 Regulatory News Service 160 –1 reinvestment rate assumption 420, 421 remuneration committees 659 reorder point 673–5, 684 reputational capital 21, 70 required rate of return 210–1, 249, 266, 282, 408, 484, 493, 824, 827, 842 research and development 362, 393, 462 reserve borrowing capacity 527 reserves 628 resource utilisation 8, 371, 586 restrictive covenants 738 retail banking service 93 Retail Price Index (RPI) 147 retail service providers 160 retained earnings 488 return 2, 154–5, 206–11, 231–2, 607, 619; actual 31, 186, 187; annualised 188; calculation 742–3; on equity (ROE) 304; level of 544; point 641; portfolio theory 199–200; realised 187; timing of 25, 361; see also expected; return on investment (ROI); rate of return; risk and return return on investment (ROI) 12, 16, 18, 19, 24, 47, 54, 55, 469; Index 920 financial analysis and performance evaluation 301–3, 304, 312, 317, 319–21, 324–5, 331; investment appraisal 360, 362 Reuters Group plc 246, 300, 542, 544, 557, 558, 563, 648 revenue: expenditure 351; items 356; passenger kilometres 333 reverse dilution 560 Rhodes, R 155 rights: issues 122–3, 146, 147; pre-emptive 122; subscription price 123–4; value 123–4 Rio Tinto 559 risk 3, 11, 13, 15, 16, 26, 27, 36, 46, 47, 728, 824, 839, 847, 864; -adjusted discount rate (RADR) 411–12, 414, 417, 419–20, 441, 442; -adjusted required rate of return 212; adjustment 401; alternative investments, comparison of 195–6; analysis 237–8, 412–13, 557–9, 574; assessment 308, 618; asset pricing 196–7; attitudes 190, 194, 471–2, 587; -averse 32, 190, 227–8, 742, 744; bearers, residual 92; business 43, 44, 215, 424, 453, 460, 652, 761, 776; capital markets 122, 139; capital structure and gearing 453, 460–1; cash budget 556; cash flows, variability of 402–12; central concept of value 244; classes 419–20, 457, 760; coefficient of variation 197–8; company-unique 213; corporate 191, 213, 400; cost of capital 424–5; credit 43; currency 43; of default 222; equal 33; equity 760; evaluation 401; exchange rate 388; existing level 439; expected 222; factoring and discounting 679; financial analysis and performance evaluation 316, 318; Index 921 financial planning and control 523; and financial return evaluation 525; -free debt 457, 760; -free profit 234; -free rate 222, 229, 237, 415, 416, 744, 745; high 318; identical 195; identification 45; -indifference 190, 742; investment appraisal 354, 390, 399–400, 401–12, 419; leasing 669–70; low 589; management 41, 43–5, 407; market 72, 225, 229, 745; measurement 44–5, 190–1, 216, 218; minimisation 100; nondiversifiable 191; partitioning 213, 743; political 72, 388; -pooling 83; portfolio theory 200, 205; premium 189, 197, 222–3, 411, 459, 464, 742; probability distributions 193–5; propensity 190, 742; protection (hedging) 99, 592; recognition 401; reduction 83, 89, 413; relative 186; screening device 360; -seeking 742; short-and medium-term finance 544, 547, 555, 562, 652; -spreading 83; stand-alone 400, 401, 411; standard deviation 191–3; -taking 32, 190, 742; and time 198; time value of money 156–7; transformation 83; of two-asset portfolio 202–4; unsystematic (specific) 191, 213–14, 743–4; weighted average cost of capital 440–1; see also business risk; risk and return; systematic risk and return 33–4, 205–34, 236–68, 270, 273, 650, 659–60, 708, 817, 825, 855; Capital Asset Pricing Model (CAPM) 212–13, 214–31; corporate asssets investment 231; financial analysis and performance evaluation 299; Index investment risk types 212, 213–14; portfolio theory 198–207; relationship 185–6; required rate of return 189–90; trade-off 4, 26, 31, 32, 185, 579, 711 Ritter, J.R 149 Rock Solid Music 856 –7 Roll, R 257 Ross, S.A 258, 263, 526 Royal Society of Arts (RSA) 59 running costs and benefits 397 Rural Development Commission 157 Russia 91 safety stock 674–5, 706 Sainsbury’s 60 sales: activity ratios 332; forecast 544–7; per employee 332; per square metre of floor space 332; price 409; receipts schedule 552; stability 472; volume 409 Salomon Brothers 62 Sarnat, M 257, 449 satisficing 53 Savoy Group 302 Scandinavia 757 scenario analysis 454–6, 467–9, 587, 621–3; see also best, middle and worst case Schroders 57 scrip issue 137 seasonal variations 150, 350 seat turnover 361 sector-specific performance ratios 361 securities 101, 107–8, 121; hybrid 92, 259; long-term 91, 110, 738; marketable 96, 555, 580, 632, 767; short-term 91 Securities and Futures Authority (SFA) 118 securities houses 95, 101, 820 Securities and Investment Board (SIB) 116, 117 securities markets 121–41; Alternative Investment Market 115–17; capital issues 110–11; 922 Index 923 fixed interest or bond market 118; gilt-edged market 117–18; grey market 118; listing securities 118–25; London Stock Exchange 111–14; market liquidity 111; market supervision 145; order-driven trading 145; Regulatory News Service 145–6; surveillance 145; trading in the stock market 144–6 securitisation 141, 744 security 334, 728, 864; issues, timing of 135; market line (SML) 224–31, 232, 233, 234, 237, 252, 744; prices variation 128–9 self-liquidating (hedging) principle 661 Self Regulating Organisations (SROs) 116, 117 self-regulation 114, 115, 117 sensitivity analysis 450–4, 466–7, 470, 623, 839, 840 –2 service organisations 372 –5 ‘72 rule’ 178 shadow prices 438 shareholder 54–5, 56–7, 833; apathy 53; expectations 497; value 65, 276–9, 542, 578–9; wealth maximisation 3, 23, 735 shares 101; aggressive 216; average 216; cumulative 92; defensive 216; irredeemable 92; non-cumulative 92; non-equity 92, 259, 453; options 50, 59; ordinary 92; ownership 53; per equity 273; prices 34, 499, 763; redeemable 92; repurchase 497–501, 510, 763; risk classification 216; valuation 261, 284–5, 292; see also preference shares; shareholder Sharpe, W 237 Index 924 Shell UK Limited 110, 157, 241 Shield Diagnostics 297 short-term financial decision-making 645–86, 688–725; cash 628–40; credit management 617–28; current assets, optimal investment in 594; debtors, management of 615–17; economic order quantity model incorporating quantity discounts 608–10; Miller-Orr management model 641–4; operating cycle 584–5; shareholder value 578–9; stocks, management of 595–607; working capital 578; working capital components 579–81; working capital derivation 579; working capital management 578–9, 581–93; working capital policies 585–93; working capital ratios 584 short- and medium-term finance 13, 619–20, 707, 726–73, 855; availability 653; borrowing capacity 652; cost 650–1; debtor-based finance 675; duration 650; flexibility 652–3; hire purchase 673–5; interest rates, term structure of 651–2; leasing 666–73; medium-term loans 666; non-spontaneous sources 658–66; risk 652; spontaneous sources 654–8; terms and conditions 653; see also short-term financial planning and control short-term financial planning and control 604–43; cash budget interpretation 554; cash budget preparation 551–3; cash budget risk and uncertainty 557; cash flow statements 564–8; cash planning—cash budget 547–9; computerised 568–9; forecast financial statements, evaluation of 568; integrated plan 544; investing and financing 555–6; plan 543–4; profit planning 559–64; risk analysis techniques 557–9; sales forecast 544–7; Index 925 shareholder value 542 short-termism 152 signalling models 526, 552–, 565 simulation 457–9, 624, 840 Singapore 87 size effect 86, 150, 155, 273, 790 small firms 156, 431, 740; financing 138–42, 146 small and medium-sized enterprises (SMEs) 53, 153, 354, 736, 817 Smithkline Beecham 246 Sock Shop 740 software packages 20 solvency see liquidity South Africa 91 specialised institutions 97 –9 specialised knowledge and skills 44, 50, 593 speculative bubble 151 speculative motive 706 spin off effects (synergistic effects) 398, 427 sponsors 124 spontaneous financing 658, 757 spread 720 Stagecoach plc 720 stakeholder 58, 819; theory 40, 46, 53–5, 737 Standard & Poor’s 276 standard deviation 212–4–217, 219, 225, 825 Standard and Poor’s 559 258 standardised risk measure 241, 243 Stant Corporation 706 statement of compliance 64, 659 statement of full consideration 670 Statements of Standard Accounting Practice (SSAPs) 360, 745, 752, 833 statutory framework 116 Stern Stewart 314, 316 stock management systems 667–75, 684–5; ABC system 598; economic order quantity (EQO) model 598–604; just-in-time (JIT) system 605–7; materials requirement planning (MRP) 604; outsourcing 606–7; stock evaluations 596–7; stock turnover ratios 597; supply chain management 606; types 596 stock market crash of 1987 (Black Monday) 90, 150 –1 stock market crash of 1997 151 stock turnover 349–50, 682, 859 Index 926 stock valuation methods 348 stockholding costs 666 stockouts 348, 664, 665 stocks 646, 859 Stonehill, A.I 434 strategic: business considerations 606; business unit (SBU) 519; control 11, 419; fit 350; functions 11–12; motives 388; objectives 419; options 16, 419; planning 11, 419, 518, 520–1, 767; purposes 631; review 419; statement 12 strategy, corporate 579 striking price 134 subjective approach 448, 495 substitute prices 438 Sumitomo copper trading scandal 61 supplier goodwill 609 suppliers see net suppliers supply chain management 678 surveillance, stock market 160 Swiss franc 86 Swiss Life 95 SWOT analysis 15 syndicate 104 synergistic effects 435 systematic risk 237–40, 273, 434, 447, 475, 486, 491, 492, 516, 825–6, 843 tactical functions 11, 12 Taffler, R 367 Takagaki, T 100 takeovers 118, 559, 849 tax 32, 620, 626, 708, 752, 855; balancing charges and allowances 381; capital allowances 380; capital structure and gearing 477, 479–81; corporate 461–2, 468, 760; cost of capital 425–6; deducibility of debt interest 430; discounted cash flow 362; dividend policy 496, 500, 501, 504; management 41, 46; Index 927 shield 317, 426; see also Advance Corporation Tax; Inland Revenue technical analysts 144 Télédiffusion de France 289 tender offer 557 Tesco plc 104, 393, 505, 542, 563 theoretical ex-rights price (TERP) 135 –6 third-party effects, in investment appraisal 435 Thomas, C.D 56 Thomson Travel Group 562 time to maturity 283–4, 827 time value of money 26, 34–6, 172–204, 205, 270, 273, 401, 403, 817; annuities 172–5; cash flows, timing of 156–7; future value 159–65; inflation 157; investment decisions 158–9; opportunity cost 157–8; perpetuities 175–7; present value 165–72 time-series analysis 362 timeframe 577 timelines of information 175, 368 timing 172, 273, 401, 450; of cash inflows 360; effects 135–6, 380; of returns 186, 364 Tokyo 151 Tomkins plc 706 Tomorrow’s Company 59 total quality management (TQM) 431, 676 Tottenham Hotspur Football Club 140, 300 Toyota 432, 677; Motor Credit Corporation 673; Production System 386 Toys ‘Я’ Us 296 trade bills 741 Trade Indemnity 701 trade-offs: financial ratios 324; model of capital structure 469–70; risk-return 213 trade references 693 trading in the stock market 159–65, 339 traditional model of capital structure 508 –9 train operating companies 509 Training and Enterprise Councils (TECs) 156 Index 928 transactions motive cash management 705 transfer pricing 364 transformation process 587 Travelers Group 587 treasury bills 62, 82, 85, 101, 107–8, 112, 245, 620, 648, 855 treasury department 44 treasury function 43, 73 –4 treasury management 46–9, 74, 90 trend analysis 362 turnover 339, 668, 703 two-asset portfolio 224 –7 uncertainty 15, 449, 621, 839 under-investment (under-capitalisation) 839 undertrading 370 underwriting 134 Uniform System of Accounts 372 Unilever 52, 564 unit trusts 97 United Biscuits 655, 656, 689, 705 United States 50, 56, 61, 70, 248, 678, 702–5, 706, 711; capital markets 132, 136, 138; central concept of value 258, 280, 282, 385, 386, 388; Chicago Board Options Exchange 99; dividend policy 499, 503; dollar 78, 79; Dow Jones Industrial Average 82; financial environment 76, 90; National Association of Securities Dealers Automated Quotation (NASDAQ) 117 Unity Trust Bank 157 universal role of financial management – Unlisted Securities Market 127, 128 unseasoned issues 83 unsystematic risk 237 utilty function 464 valuation technique 421 value 36, 270–330, 817; added ratios 322–3; added tax (VAT) 669; application of models 275–6; bonds valuation 246–59; book chain 606; creation 3; definition 243–4; drivers 277; economic value added (EVA) 280–1; equity valuation 260–77; Index 929 executive pay—linking performance to value 281; expected 187, 191, 399, 545, 754; financial decision-making and shareholder value 276–7; of firm 73–4; fundamental asset valuation model 244–5; intrinsic (economic) 243; limitations of models 274–5; liquidation 244, 266, 269–70; market 243; market value added 279–80, 281; market value of firm 246; maximisation 25; mean 191, 399, 754; for money (VFM) 24, 335; preference shares 259–60; relative 136; shareholder value analysis 277–9; today’s 165; see also future value; present value; time value Varity Corporation 560 –2 venture capital 119; companies 88–9, 107, 115, 141; trusts 89, 141 viability, financial 690, 861 Vietnam 434 Virgin Airlines 61 volume and mix of financing 586 volume transformation of funds 92 volumes 273 Volvo 583 Vora, A 286, 480 Wagner, W.H 239 Walker, J 431 warrants 106 Waterford Glass 667 Waterstones 740 weekend effect 150 Weetabix Limited 130 Wehrung, D.A 449 weighted average cost of capital (WACC) 314, 473, 488–96, 498–9, 843; calculation 439; capital structure and gearing 454–5, 456, 458, 460; project financing 438, 441–2; risk 440–1; target capital structure 439–40 Index Weinstock, Lord 157, 594 ‘what if’ effect 623; see also sensitivity analysis wholesale banks 93 wholesale markets 82 Wilson, R.M.S 588 Wolseley 246 Woolwich 95 work-in-progress 666 working capital 2, 346, 427, 645, 765–72, 834, 858; components 579–81; derivation 579; management 542, 578–9, 581–3, 680–1; net 309, 579; ratios 584; see also working capital policies working capital policies 653–63, 724; aggressive 590–1; conservative 588–90; maturity matching principle 592; moderate/balanced 591 writing-down allowance 424 –5 yield 373; approximation 255; curve 651; to maturity 254–6, 426, 748 Zeneca 144 zero correlation 223 zero coupon bonds 288 Z scores 367, 368, 370, 693, 694, 834 930 ... The financial management process: financial planning and control Dimensions of planning and control The management control process The financial management process: short-term financial management. .. Six FINANCIAL PLANNING AND CONTROL 577 15 Strategic Financial Planning and Control 578 Part Seven SHORT-TERM FINANCIAL MANAGEMENT 16 Short-Term Financial Planning and Control 17 Short-Term Financial. .. SCOPE AND ENVIRONMENT OF FINANCIAL MANAGEMENT Part 1, which consists of an Overview of financial management and Chapters through 4, addresses the broad scope of financial management and presents an