PREFACE: THIS BOOK contains a collection of some of the "technical notes" on tools and techniques of analysis as well as other insti- tutional background information being used in the first year of the M.B.A. program at the Harvard Graduate School of Business Administration as supplements to case books and materials. These technical notes have been written to provide the student with the basic skills and knowledge required to analyze case situations for class discussion in preparation for a business ca- reer. Together with selected readings these materials help to build up the student's proficiency in analysis by introducing him to accepted techniques and a basic structure of institutional in- formation. The materials in this book were selected by the editor from a broader collection to form a set of the more important tech- niques of financial analysis commonly used, and thereby to pro- vide a source for study and reference apart from the wider subject of financial management. Inasmuch as the acquisition of most technical skills requires some practice, the book contains a variety of problems and exercises to accompany the descriptions of the analytical techniques in the various chapters. All of the materials, except Chapter 6 which was written for this book, have been used for at least two years in the finance curriculum of the Harvard Business School. As editor I should like to express my appreciation to Professors Pearson Hunt, Charles M. Williams, and Robert F. Vandell of the Harvard Business School, and Professor James E. Walter (now at the Wharton School of Commerce and Finance) for their permission to include some of their materials in this book. As author of several chapters I have benefited from the suggestions of my colleagues, especially Professors Frank L. Tucker and Robert F. Vandell of the Harvard Business School, and Pro- fessor Alan B. Coleman (now at Stanford University), who as a teaching group and individually contributed their ideas to the materials for which I am responsible. My thanks also go to my secretary, Miss Ann Morrison, who patiently and efficiently typed many of the manuscripts of the materials in this book. I should like to express my appreciation to the President and Fellows of Harvard College who have granted me permission to use these materials which bear their copyright, and to the ad- ministrators of the Harvard Business School for having provided me with the opportunity to develop the materials which I wrote. ERICH A. HELFERT Boston, Massachusetts. (ÖNSÖZ)