财务管理与英文课件 .ppt

Financial structure design How should a firm divide its total fund sources between short- and long-term (permanent) components? What mix of long-term financing sources should make up the firm’s capital structure? Why is capital structure important? Leverage Higher financial leverage means potentially higher returns to shareholders, but higher risk due to higher interest payments Cost of capital Each source of finance has a different cost. Capital structure affects the cost of capital Optimal capital structure The structure that minimises the firm’s cost of capital and maximises firm value Assumptions forcapital-structure theory Company income is not taxed Capital structures consist only of shares and debt Investors have identical expectations regarding EBITs Securities are traded in perfect or efficient financial markets Dividends remain constant over time Firms retain no earnings What is the optimal capital structure? Three differing views: Extreme position 1: Independence hypothesis NOI approach to valuation Extreme position 2: Dependence hypothesis NI approach to valuation Moderate approach Terminology and symbols Financial leverage Capital costs 100% debt 0% debt Ke Kd Ke = cost of equity Kd = cost of debt Ko = cost of capital If we have an all-equity financed firm, what is the cost of capital? Ko = Independence hypothesis The firm’s composite or weighted cost of capital, Ko, and ordinary share price, P0, are both independent of the degree to which the company chooses to use financial leverage Independence hypothesis Suppose we begin adding debt financing, what should happen to the cost of capital? Financial leverage Capital costs 100% debt 0% debt Ke Kd Ko = Kd Independence hypothesis Ke Increasing leverage causes the cost of equity to rise Financial leverage Capital costs 100% debt 0% debt Ke Kd Kd Independence hypothesis and the cost of capital Ke Leverage has no effect on the cost of capital and no effect on the value of the firm Financial leverage