公司理财英文版课件Chap016.ppt

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1、Chapter16FinancialLeverageandCapitalStructurePolicyMcGraw-Hill/IrwinCopyright©2010byTheMcGraw-HillCompanies,Inc.Allrightsreserved.1KeyConceptsandSkillsUnderstandtheeffectoffinancialleverageoncashflowsandthecostofequityUnderstandtheimpactoftaxesandbankruptcyoncapitalstructurecho

2、iceUnderstandthebasiccomponentsofthebankruptcyprocess16-22ChapterOutlineTheCapitalStructureQuestionTheEffectofFinancialLeverageCapitalStructureandtheCostofEquityCapitalM&MPropositionsIandIIwithCorporateTaxesBankruptcyCostsOptimalCapitalStructureThePieAgainThePecking-OrderTheory

3、ObservedCapitalStructuresAQuickLookattheBankruptcyProcess16-33CapitalRestructuringWearegoingtolookathowchangesincapitalstructureaffectthevalueofthefirm,allelseequalCapitalrestructuringinvolveschangingtheamountofleverageafirmhaswithoutchangingthefirm’sassetsThefirmcanincreaselev

4、eragebyissuingdebtandrepurchasingoutstandingsharesThefirmcandecreaseleveragebyissuingnewsharesandretiringoutstandingdebt16-44ChoosingaCapitalStructureWhatistheprimarygoaloffinancialmanagers?MaximizestockholderwealthWewanttochoosethecapitalstructurethatwillmaximizestockholderwea

5、lthWecanmaximizestockholderwealthbymaximizingthevalueofthefirmorminimizingtheWACC16-55TheEffectofLeverageHowdoesleverageaffecttheEPSandROEofafirm?Whenweincreasetheamountofdebtfinancing,weincreasethefixedinterestexpenseIfwehaveareallygoodyear,thenwepayourfixedcostandwehavemorele

6、ftoverforourstockholdersIfwehaveareallybadyear,westillhavetopayourfixedcostsandwehavelessleftoverforourstockholdersLeverageamplifiesthevariationinbothEPSandROE16-66Example:FinancialLeverage,EPSandROE–PartIWewillignoretheeffectoftaxesatthisstageWhathappenstoEPSandROEwhenweissued

7、ebtandbuybacksharesofstock?16-77Example:FinancialLeverage,EPSandROE–PartIIVariabilityinROECurrent:ROErangesfrom6%to20%Proposed:ROErangesfrom2%to30%VariabilityinEPSCurrent:EPSrangesfrom$0.60to$2.00Proposed:EPSrangesfrom$0.20to$3.00ThevariabilityinbothROEandEPSincreaseswhenfinanc

8、ialleverageisincreased16-88Break-EvenEBITFindEBITwhere