課程財務(wù)管理基礎(chǔ)英文ch(3)課件

1、16-1 Pearson Education Limited 2004 Fundamentals of Financial Management, 12/e Created by: Gregory A. Kuhlemeyer, Ph.D. Carroll College, Waukesha, WI 16-2 uDefine operating and financial leverage and identify causes of both. uCalculate a firms operating break-even (quantity) point and break-even (sa

2、les) point . uDefine, calculate, and interpret a firms degree of operating, financial, and total leverage. uUnderstand EBIT-EPS break-even, or indifference, analysis, and construct and interpret an EBIT-EPS chart. uDefine, discuss, and quantify “total firm risk” and its two components, “business ris

3、k” and “financial risk.” uUnderstand what is involved in determining the appropriate amount of financial leverage for a firm. 16-3 uOperating Leverage uFinancial Leverage uTotal Leverage uCash-Flow Ability to Service Debt uOther Methods of Analysis uCombination of Methods 16-4 uOne potential “effect

4、” caused by the presence of operating leverage is that a change in the volume of sales results in a “more than proportional” change in operating profit (or loss). 16-5 Sales$10$11 $19.5 Operating Costs Fixed 7 2 14 Variable 2 7 3 Operating Profit FC/total costs .78 .22 .82 FC/sales .70 .18 .72 16-6

5、uNow, subject each firm to a for next year. uWhich firm do you think will be more to the change in sales (i.e., show the largest percentage change in operating profit, EBIT)? ; ; . 16-7 Sales$15 $16.5 $29.25 Operating Costs Fixed 7 2 14 Variable 310.5 4.5 Operating Profit * * (EBITt - EBIT t-1) / EB

6、IT t-1 16-8 - for it, a 50% increase in sales leads to a . uOur example reveals that it is a mistake to assume that the firm with the largest absolute or relative amount of fixed costs automatically shows the most dramatic effects of operating leverage. uLater, we will come up with an easy way to sp

7、ot the firm that is most sensitive to the presence of operating leverage. 16-9 uWhen studying operating leverage, “profits” refers to operating profits before taxes (i.e., EBIT) and excludes debt interest and dividend payments. - A technique for studying the relationship among fixed costs, variable

8、costs, sales volume, and . Also called cost/volume/profit (C/V/P) analysis. 16-10 0 1,000 2,000 3,000 5,000 6,000 7,000 250 100 50 16-11 How to find the quantity break-even point: EBIT = ( ) - ( ) - EBIT = ( - ) - 16-12 Breakeven occurs when EBIT = 0 ( - ) - = EBIT ( - ) - = 0 ( - ) = = / ( - ) a.k.

9、a. Unit Contribution Margin 16-13 How to find the sales break-even point: = + () = + ( )( ) or = / 1 - ( / S) * Refer to text for derivation of the formula 16-14 Basket Wonders (BW) wants to determine both the when: are uBaskets are sold for uVariable costs are 16-15 Breakeven occurs when: = / ( - )

10、 = / ( - ) = = ( )( ) + = ( )() + = 16-16 0 1,000 2,000 3,000 5,000 6,000 7,000 250 100 50 16-17 at Q units of output (or sales) - The percentage change in a firms operating profit (EBIT) resulting from a 1 percent change in output (sales). = Percentage change in operating profit (EBIT) Percentage c

11、hange in output (or sales) 16-18 = ( - ) ( - ) - = - 16-19 = - - - = EBIT + EBIT 16-20 Lisa Miller wants to determine the at . As we did earlier, we will assume that: are uBaskets are sold for uVariable costs are 16-21 = - = = - = 16-22 = - = 16-23 16-24 uDOL is a quantitative measure of the “sensit

12、ivity” of a firms operating profit to a change in the firms sales. uThe closer that a firm operates to its break-even point, the higher is the absolute value of its DOL. uWhen comparing firms, the firm with the highest DOL is the firm that will be most “sensitive” to a change in sales. 16-25 uDOL is

13、 only of business risk and becomes “active” . uDOL the variability of operating profits and, hence, business risk. 16-26 = = 16-27 = = 16-28 = = 16-29 . 16-30 uFinancial leverage is acquired by choice. uUsed as a means of increasing the return to common shareholders. 16-31 Calculate for a given leve

14、l of at a given financing structure. ( - I) (1 - t) - Pref. Div. # of Common Shares = 16-32 uAll C.S. sold at $20/share (50,000 shares) uAll debt with a coupon rate of 10% uAll P.S. with a dividend rate of 9% 16-33 * Interest 0 0 EBT $500,000 $150,000 Taxes (30% x EBT) 150,000 45,000 EAT $350,000 $1

15、05,000 Preferred Dividends 0 0 # of Shares 100,000 100,000 * A second analysis using $150,000 EBIT rather than the expected EBIT. 16-34 16-35 * Interest 100,000 100,000 EBT $400,000 $ 50,000 Taxes (30% x EBT) 120,000 15,000 EAT $280,000 $ 35,000 Preferred Dividends 0 0 # of Shares 50,000 50,000 * A

16、second analysis using $150,000 EBIT rather than the expected EBIT. 16-36 Indifference point between and financing 16-37 * Interest 0 0 EBT $500,000 $150,000 Taxes (30% x EBT) 150,000 45,000 EAT $350,000 $105,000 Preferred Dividends 90,000 90,000 # of Shares 50,000 50,000 * A second analysis using $1

17、50,000 EBIT rather than the expected EBIT. 16-38 Indifference point between and financing 16-39 . Only a small probability that EPS will be less if the debt alternative is chosen. 16-40 . A much larger probability that EPS will be less if the debt alternative is chosen. 16-41 at EBIT of X dollars -

18、The percentage change in a firms earnings per share (EPS) resulting from a 1 percent change in operating profit. = Percentage change in earnings per share (EPS) Percentage change in operating profit (EBIT) 16-42 EBIT of $X = - - / (1 - ) 16-43 * = - - / (1 - ) * The calculation is based on the expec

19、ted EBIT = 16-44 * = - - / (1 - ) * The calculation is based on the expected EBIT =/ $400,000 = 16-45 * = - - / (1 - ) * The calculation is based on the expected EBIT =/ $400,000 = 16-46 financing will lead to the greatest variability in earnings per share based on the DFL. uThis is due to the tax d

20、eductibility of interest on debt financing. Which financing method will have the 16-47 uDebt increases the probability of cash insolvency over an all-equity-financed firm. For example, our example firm must have EBIT of at least $100,000 to cover the interest payment. uDebt also increased the variab

21、ility in EPS as the DFL increased from 1.00 to 1.25. 16-48 is a measure of relative is a measure of relative uThe difference, , is a measure of relative = + 16-49 at Q units (or S dollars) of output (or sales) - The percentage change in a firms earnings per share (EPS) resulting from a 1 percent cha

22、nge in output (sales). = Percentage change in earnings per share (EPS) Percentage change in output (or sales) 16-50 S dollars of sales = () x ( ) = + FC - - / (1 - ) Q units () () - FC - - / (1 - ) = 16-51 Lisa Miller wants to determine the at As we did earlier, we will assume that: are uBaskets are

23、 sold for uVariable costs are 16-52 S dollars of sales = + $100,000 - - / (1 - ) = () x () = () x ( * ) = = *Note: No financial leverage. 16-53 S dollars of sales = + $100,000 - - / (1 - ) = () x () = () x ( * ) = = *Note: Calculated on Slide 16-44. 16-54 Compare the expected EPS to the DTL for the

24、common stock equity financing approach to the debt financing approach. 16-55 uFirms must first analyze their uThe and the expected future cash flows, : debt principal and interest payments, lease payments, and preferred stock dividends. 16-56 Indicates a firms ability to cover interest charges. Inco

25、me Statement Ratios Coverage Ratios A ratio value equal to 1 indicates that earnings are just sufficient to cover interest charges. 16-57 + Indicates a firms ability to cover interest expenses and principal payments. Income Statement Ratios Coverage Ratios Allows us to examine the ability of the fir

26、m to meet all of its debt payments. Failure to make principal payments is also default. 16-58 Make an examination of the for Basket Wonders when Compare the equity and the debt financing alternatives. : remain at are made yearly for 10 years 16-59 Compare the interest coverage and debt burden ratios for equity and debt financing. 16-60 Firm B has a much smaller probability of failing to meet its obligations than Firm A.