PPT-Chapter 16 Financial Leverage and Capital Structure Policy

What is meant by capital restructuring What is the primary goal of financial managers Can leverage help in achieving such goals Capital Restructuring Capital Restructuring We are going to look at how changes in capital structure affect the value of the firm . Capital Structure. Presenter’s name. Presenter’s title. dd. Month . yyyy. 1. Introduction. The capital structure decision affects financial risk and, hence, the value of the company.. The capital structure theory helps us understand the factors most important in the relationship between capital structure and the value of the company.. Financing a Firm with Equity. You are considering an investment opportunity. . For an initial investment of $800 this year, the project will generate cash flows of either $1400 or $900 next year, depending on whether the economy is strong or weak, respectively. Both scenarios are equally likely.. Corporate Finance 35. Capital structure: An introduction to the debate. Different types of gearing. The effect of gearing. Differentiate business and financial risk. The underlying assumptions, rationale and conclusions of Modigliani and Miller’s models in a world without tax. 21. 21. .1. . Explain how business and financial risk affect a firm’s ROE and EPS and identify the financial break-even points.. 21. .2. . Identify the factors that influence capital structure.. 21. Financial Leverage and Capital Structure Policy. What is meant by capital restructuring. What is the primary goal of financial managers?. Can leverage help in achieving such goals?. Capital Restructuring. I will move the entire earth. -Archimedes. Presented by:. Ashutosh Mishra. Leverage. The amount of debt used to finance a firm's assets. . A firm with significantly more debt than equity is considered to be highly . Presented by Dr. Monika Aggarwal. . Post Graduate Govt. College, CHD. 1. Objectives of the Study. Understand the theories of the . relationship. . between capital structure and the value of the firm. Corporate Finance 36. Capital structure: further considerations. Capital structure in a world with tax. Financial distress. Agency costs. Borrowing capacity. Managerial preferences. Pecking order. Financial slack. Capital Structure in a Perfect Market Chapter 14 outline Equity and or debt financing Return on levered equity Modigliani-Miller theorems: MM1: firm value not affected MM2: expected returns are affected Free to share, print, make copies and changes. Get yours at . www.boundless.com. Available on the Boundless Teaching Platform. Using Boundless Presentations. The Appendix. The appendix is for you to use to add depth and breadth to your lectures. You can simply drag and drop slides from the appendix into the main presentation to make for a richer lecture experience.. Theories of capital structure . . Value of firm(V) = EBIT/. K. o. Two school of thoughts. :. Financing decision affects the valuation. Net Income Approach(NI). Financing decision does not affect the valuation. Marcus Miller, Lei Zhang and Han . Hao. Li. University of Warwick. 1. Independent Commission on Banking (ICB):. background and mandate. ‘The global financial crisis that began in 2007 has exposed fundamental weaknesses in banking systems and... . Capital Markets, Debt Finance and the EU Capital Markets Union: A Law and Finance Critique. Dr Vincenzo . Bavoso. Lecturer in Commercial Law, University of Manchester. 1. Capital markets vs bank finance. Slides . based on the book by Jäger/Springler: . Ökonomie der Internationalen Entwicklung. Eine kritische Einführung in die Volkswirtschaftslehre. Chapter . 6. :. Money and Financial Markets. 6.1.1 Neoclassical economics: General Approach.