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Capital Structure Decisions (Financial Management) (PowerPoint PPT Slide Deck)
PowerPoint (PPT) 57 Slides
BENEFITS OF DOCUMENT
- Provides of MM and Miller models
- Provides of Financial distress and agency costs
- Provides of Cost of equity and WACC
DESCRIPTION
Capital Structure Decisions (Financial Management)
Lecture Outline
1. MM and Miller models
2. Hamada's equation
3. Financial distress and agency costs
4. Trade-off models
5. Asymmetric information theory
6. What assumptions underlie the MM and Miller models?
7. Graph value versus leverage.
8. Graph the MM relationships between capital costs and leverage as measured by D/V.
9. MM relationship between capital costs and leverage when corporate taxes are considered.
10. MM relationship between value and debt when corporate taxes are considered.
11. How does this gain compare to the gain in the MM model with corporate taxes?
12. When Miller brought in personal taxes, the value enhancement of debt was lowered. Why?
13. What does capital structure theory prescribe for corporate managers?
14. Do firms follow the recommendations of capital structure theory?
16. How is all of this analysis different if firms U and L are growing?
17. Levered cost of equity
18. Relevant information for valuation
19. Cost of equity and WACC
20. What if L's debt is risky?
21. Equity as an option
22. Black-Scholes Solution
23. Bait and Switch
Capital structure decision is concerned with the sources of long term funds such as debt and equity capital. Capital structure is defined as the mix of various long term sources of funds broadly classified as debt and equity. Hence capital structure is also referred to as ‘Debt Equity Mix' of a company.
This PPT provides a comprehensive analysis of capital structure decisions, focusing on the intricate relationships between debt and equity financing. It delves into key theories, including the Modigliani-Miller propositions, and explores the implications of corporate taxes on capital costs and valuation. The practical applications of these concepts are illustrated through real-world examples, enabling executives to grasp the nuances of financial management. By understanding these frameworks, decision-makers can better navigate the complexities of capital structure and make informed choices that align with their firm's strategic objectives.
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Source: Best Practices in M&A, Acquisition Strategy, Valuation, M&A (Mergers & Acquisitions) PowerPoint Slides: Capital Structure Decisions (Financial Management) PowerPoint (PPT) Presentation Slide Deck, UJ Consulting
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