Chapter 14 - Capital Structure Management in Practice 现代财务相关管理英文版课件.pptVIP

* * 14 Capital Structure Management in Practice ?2006 Thomson/South-Western Introduction This chapter focuses on tools of analysis that can assist managers in making capital structure decisions that will lead to a maximization of shareholder wealth. It develops techniques, derived from accounting data, for measuring operating and financial leverage. Operating and Financial Leverage From fixed operating or fixed capital costs Operating costs Costs of sales General administrative costs Capital costs Interest charges Preferred dividends Income taxes Operating and Financial Leverage Operating Leverage Results from fixed operating costs such that a change in sales revenue is magnified into a relatively large change in EBIT Financial Leverage Results from fixed capital costs such that a change in EBIT is magnified into a relatively large change in EPSSee leverage model Behavior of Variable Costs Leverage Model DOL DFL % Sales % EBIT % EPS DOL Measured as a percent change in EBIT resulting from a given percent change in sales Original values Sales – VC – FC = EBIT DOL at X = Sales – Variable Costs EBIT DFL Measured as the percent change in EPS resulting from a given percent change in EBIT P/S dividends before taxes DFL at X = How does a banker looks at financial leverage? /uwcc/info/yic/22fin.html EBIT EBIT – I – Dp/(1 – T) DCL Measured as a percent change in EPS resulting from a given percent change in sales See DCL model DCL at X = DOL ? DFL DCL at X = Sales – Variable Costs EBIT – I – Dp/(1 – T) DCL Model DOL DFL % Δ Sales % Δ EBIT % Δ EPS DCL DOL DFL Trade Off A firm can trade off operating and financial leverage to control DCL. A firm with a high DOL may choose a capital structure with a low DFL to avoid a high DCL. How Can You Find the Probability of EPS? Loss level of EBIT is the amount of EBIT needed to cover interest charged and preferred dividends The Z value can be looked up in