公司理财第14章ppt课件.ppt

CapitalStructure BasicConcepts Chapter14 KeyConceptsandSkills Understandtheeffectoffinancialleverage i e capitalstructure onfirmearningsUnderstandhomemadeleverageUnderstandcapitalstructuretheorieswithandwithouttaxesBeabletocomputethevalueoftheunleveredandleveredfirm ChapterOutline 14 1TheCapitalStructureQuestionandThePieTheory14 2MaximizingFirmValueversusMaximizingStockholderInterests14 3FinancialLeverageandFirmValue AnExample14 4ModiglianiandMiller PropositionII NoTaxes 14 5Taxes 14 1CapitalStructureandthePie Thevalueofafirmisdefinedtobethesumofthevalueofthefirm sdebtandthefirm sequity V B S Ifthegoalofthefirm smanagementistomakethefirmasvaluableaspossible thenthefirmshouldpickthedebt equityratiothatmakesthepieasbigaspossible ValueoftheFirm S B S B StockholderInterests Therearetwoimportantquestions Whyshouldthestockholderscareaboutmaximizingfirmvalue Perhapstheyshouldbeinterestedinstrategiesthatmaximizeshareholdervalue Whatistheratioofdebt to equitythatmaximizestheshareholder svalue Asitturnsout changesincapitalstructurebenefitthestockholdersifandonlyifthevalueofthefirmincreases 14 3FinancialLeverage EPS andROE CurrentAssets 20 000Debt 0Equity 20 000Debt Equityratio0 00Interestraten aSharesoutstanding400Shareprice 50 Proposed 20 000 8 000 12 0002 38 240 50 Consideranall equityfirmthatisconsideringgoingintodebt Maybesomeoftheoriginalshareholderswanttocashout EPSandROEUnderCurrentStructure RecessionExpectedExpansionEBIT 1 000 2 000 3 000Interest000Netincome 1 000 2 000 3 000EPS 2 50 5 00 7 50ROA5 10 15 ROE5 10 15 CurrentSharesOutstanding 400shares EPSandROEUnderProposedStructure RecessionExpectedExpansionEBIT 1 000 2 000 3 000Interest640640640Netincome 360 1 360 2 360EPS 1 50 5 67 9 83ROA1 8 6 8 11 8 ROE3 0 11 3 19 7 ProposedSharesOutstanding 240shares FinancialLeverageandEPS 2 00 0 00 2 00 4 00 6 00 8 00 10 00 12 00 1 000 2 000 3 000 EPS Debt NoDebt Break evenpoint EBITindollars notaxes Advantagetodebt Disadvantagetodebt AssumptionsoftheM MModel HomogeneousExpectationsHomogeneousBusinessRiskClassesPerpetualCashFlowsPerfectCapitalMarkets PerfectcompetitionFirmsandinvestorscanborrow lendatthesamerateEqualaccesstoallrelevantinformationNotransactioncostsNotaxes HomemadeLeverage AnExample RecessionExpectedExpansionEPSofUnleveredFirm 2 50 5 00 7 50Earningsfor40shares 100 200 300Lessintereston 800 8 64 64 64NetProfits 36 136 236ROE NetProfits 1 200 3 0 11 3 19 7 Wearebuying40sharesofa 50stock using 800inmargin WegetthesameROEasifweboughtintoaleveredfirm Ourpersonaldebt equityratiois Homemade Un Leverage AnExample RecessionExpectedExpansionEPSofLeveredFirm 1 50 5 67 9 83Earningsfor24shares 36 136 236Plusintereston 800 8 64 64 64NetProfits 100 200 300ROE NetProfits 2 000 5 10 15 Buying24sharesofanotherwiseidenticalleveredfirmalongwithsomeofthefirm sdebtgetsustotheROEoftheunleveredfirm ThisisthefundamentalinsightofM M MMPropositionI NoTaxes Wecancreatealeveredorunleveredpositionbyadjustingthetradinginourownaccount Thishomemadeleveragesuggeststhatcapitalstructureisirrelevantindeterminingthevalueofthefirm VL VU 14 4MMPropositionII NoTaxes PropositionIILeverageincreasestheriskandreturntostockholdersRs R0 B SL R0 RB RBistheinterestrate costofdebt Rsisthereturnon levered equity costofequity R0isthereturnonunleveredequity costofcapital BisthevalueofdebtSListhevalueofleveredequity MMPropositionII NoTaxes Thederivationisstraightforward MMPropositionII NoTaxes Debt to equityRatio Costofcapital R R0 RB RB 14 5MMPropositionsI II WithTaxes PropositionI withCorporateTaxes FirmvalueincreaseswithleverageVL VU TCBPropositionII withCorporateTaxes SomeoftheincreaseinequityriskandreturnisoffsetbytheinteresttaxshieldRS R0 B S 1 TC R0 RB RBistheinterestrate costofdebt RSisthereturnonequity costofequity R0isthereturnonunleveredequity costofcapital BisthevalueofdebtSisthevalueofleveredequity MMPropositionI WithTaxes ThepresentvalueofthisstreamofcashflowsisVL ThepresentvalueofthefirsttermisVUThepresentvalueofthesecondtermisTCB MMPropositionII WithTaxes StartwithM MPropositionIwithtaxes Since Thecashflowsfromeachsideofthebalancesheetmustequal DividebothsidesbyS Whichquicklyreducesto TheEffectofFinancialLeverage Debt to equityratio B S Costofcapital R R0 RB TotalCashFlowtoInvestors RecessionExpectedExpansionEBIT 1 000 2 000 3 000Interest000EBT 1 000 2 000 3 000Taxes Tc 35 350 700 1 050TotalCashFlowtoS H 650 1 300 1 950 RecessionExpectedExpansionEBIT 1 000 2 000 3 000Interest 800 8 640640640EBT 360 1 360 2 360Taxes Tc 35 126 476 826TotalCashFlow 234 640 884 640 1 534 640 tobothS H B H 874 1 524 2 174EBIT 1 Tc TCRBB 650 224 1 300 224 1 950 224 874 1 524 2 174 AllEquity Levered TotalCashFlowtoInvestors Theleveredfirmpayslessintaxesthandoestheall equityfirm Thus thesumofthedebtplustheequityoftheleveredfirmisgreaterthantheequityoftheunleveredfirm Thisishowcuttingthepiedifferentlycanmakethepie larger thegovernmenttakesasmallersliceofthepie S G S G B All equityfirmLeveredfirm Summary NoTaxes Inaworldofnotaxes thevalueofthefirmisunaffectedbycapitalstructure ThisisM MPropositionI VL VUPropositionIholdsbecauseshareholderscanachieveanypatternofpayoutstheydesirewithhomemadeleverage Inaworldofnotaxes M MPropositionIIstatesthatleverageincreasestheriskandreturntostockholders Summary Taxes Inaworldoftaxes butnobankruptcycosts thevalueofthefirmincreaseswithleverage ThisisM MPropositionI VL VU TCBPropositionIholdsbecauseshareholderscanachieveanypatternofpayoutstheydesirewit