This book attempts to deal with financing and investment decision making, with particular focus on the private sector of the UK economy. Its approach is to set out the theories that surround each area of financial decision making and relate these to what appears to happen in practice. Where theory and practice diverge, the book tries to reconcile and explain the differences. It also attempts to assess the practical usefulness of some of the theories that do not seem to be applied widely in practice.

The book attempts to make the subject as accessible as possible to readers coming to business finance for the first time. Unnecessarily technical language has been avoided as much as possible, and the issues are described in a narrative form as well as in more formal statements. The more technical terms are highlighted in blue when they are first mentioned and these are included in the glossary at the end of the book. Detailed proofs of theoretical propositions have generally been placed in appendices to the relevant chapters. Readers should not take this to mean that these proofs are particularly difficult to follow. The objective was to make the book as readable as possible, and it was felt that, sometimes, formal proofs can disturb the flow if they are included in the main body of the text.

The book is directed at those who are studying business finance as part of an under-graduate course, for example, a degree in business studies. It is also directed at post-graduate, post-experience students who are either following a university course or seeking a professional qualification. It should also prove useful to those studying for the professional examinations of the accounting bodies. It is also hoped that those who are interested in business finance for its own sake will find the book readable and helpful.