tory burch outlet Value creation in financial leve

43nike9485qt

Value creation in the role of financial leverage

Coefficients to represent, financial leverage (DFL) is the percentage change in earnings per share and percentage change in profit before interest and tax rates. Leverage can be expressed as: DFL = (AEPS / EPS) / (AEBIT / EBIT) = EBIT / (EBIT-I) where: DFL, said the financial leverage; AEPS that changes the amount of earnings per share; EPS, said earnings per share; 5EBIT that the change in EBIT; EBIT EBIT said; I said interest paid. Can see that in the case of constant returns, the greater the proportion of corporate debt, debt interest more, the higher the financial leverage ratio. 2. Cash flow and financial leverage, the value of the role of corporate assets clearly, no tax liabilities of a company's profit (140,000) than there are B's profit after tax liabilities (84,000), but a company's cash flow (140,000) are small in Company B's cash flow (164 000 = 84000 +80000). B's cash flow gap between 24,000 yuan from the role of interest tax deductible, that is 80000 �� 30% = 24000, known as interest tax shields (interest tax shelter), it is precisely because the role of interest tax deduction allows Company B to obtain additional cash flow, discounted or received by an asset. Of which: interest on the present value of tax shelters �� tax rate = Interest / Interest = (interest rate debt capital ��) �� rate / interest rate = debt capital �� tax rate = D �� t = 80000 �� 30% = 24000 can be seen, the use of financial leverage than non-use of financial leverage the present value and get more cash flow, business assets worth more. 3. Liabilities, corporate income tax credits of interest as in the above analysis, Company B because of the debt, interest bearing 80,000, from 24,000 yuan to pay less. Under the current system provides that the interest should be counted as liabilities, financial costs, and tax deductible, so the tax saving effect can be produced to enable enterprises to less income tax, thereby increasing the equity capital gains. 4. Of course,[link widoczny dla zalogowanych], whether the negative effects of financial leverage will certainly have a positive balance of financial leverage effect? Above example, the corporate EBIT was 200000/2000000 = 10%, while debt interest rate of 8%,[link widoczny dla zalogowanych], EBIT rate is greater than debt interest rates. If Company B is 15% debt interest rate (more than 10%), other data remain unchanged, the calculated results (omitted). According to the relevant data have been known to master: Company B because of liability and makes EPS of 3.5 shares, 7.0 shares of only a half of the company's financial leverage to play the negative role. When EBIT is less than debt interest rates, the liabilities of financial leverage is negative. Third, the conclusion of the above cases,[link widoczny dla zalogowanych], we can see that financial leverage is a double-edged sword, its positive role in corporate value creation is obvious,[link widoczny dla zalogowanych], can bring additional revenue to the enterprise; but the negative side must also be careful treatment, improper use may result if the firm additional losses, which is an important factor in the financial risk posed. Financial leverage and did not increase the wealth of society as a whole, is an established wealth distribution between the investors and creditors; financial risk did not increase the risk of the whole society, is operating the transfer of risk to investors. Financial leverage and capital structure of financial risk is an important factor in decision-making, capital structure decisions need to leverage to the risks associated with a reasonable trade-off between. Access to financial leverage any Zhigu, ignoring financial risks without the proper use of financial leverage is the practice of corporate financial decision making major mistakes, will ultimately harm the interests of investors. Therefore, to a rational approach to financial leverage in the use of corporate value creation.
More articles related to topics：

buy ghd hair Feeling of a small image of the plann

[link widoczny dla zalogowanych]

[link widoczny dla zalogowanych]