Capital Structure Decisions In Financial Management 6 November

CAPITAL STRUCTURE DECISIONS IN FINANCIAL MANAGEMENT AFTERSCHO☺OL – DEVELOPING CHANGE MAKERS CENTRE FOR SOCIAL ENTREPRENEURSHIP PGPSE PROGRAMME – World’s Most Comprehensive programmes in social entrepreneurship & spiritual entrepreneurship OPEN FOR ALL FREE FOR ALL

CAPITAL STRUCTURE DECISIONS IN FINANCIAL MANAGEMENT Dr. T.K. Jain. AFTERSCHO☺OL Centre for social entrepreneurship Bikaner M: 9414430763 [email_address] www.afterschool.tk , www.afterschoool.tk

Question on NI approach ,[object Object],[object Object],[object Object],[object Object]

Solution ,[object Object],[object Object],[object Object],[object Object]

Solution … ,[object Object],[object Object],[object Object],[object Object],[object Object]

Ramesh Ltd’s. operating income is $ 5,00,000. The firms cost of debt is 10% firm employs $ 15,00,000 of debt. The overall cost of capital of the firm is 15%. What is total value of the firm. & Cost of equity as per NOI approach. ,[object Object]

Solution ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

There are two firms – Goti International & Ramesh Global. Goti International is leveraged company having debt of $ 100,000 @ 7%. Cost of equity of both the companies is 11.5% and 10% respectively.analyse using MM approach. EBIT = $20000 ,[object Object]

Analysis ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Arbitrage process ,[object Object],[object Object],[object Object],[object Object]

Vinod Bhugari Continental has EBIT of $ 100000. Company has 10% debentures of $ 5 Lakhs and equity capitalisation rate is 15%. What is the value of the firm as per traditional approach ? ,[object Object],[object Object],[object Object],[object Object]

Sarika Consultants & Pankaj Baid Consultants are two firms. Having NOI of $ 15 lakhs each.Pankaj Baid consultants have taken ECB of $7 lakhs @11%. Tax rate = 33% Equity of Sarika consultants $ 13 lakhs and that of Pankaj Consultants is $6 lakhs

Solution ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

In the previous question, what will happen if cost of equity is given as 20% in both the cases? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

In the previous question, what will happen, if market capitalises operting income as a whole @ 20%? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Operating leverage… ,[object Object],[object Object]

Financial leverage… ,[object Object],[object Object],[object Object]

Alternate formulaes ,[object Object],[object Object],[object Object],[object Object]

What is capital structure? ,[object Object]

How do you design capital structure? ,[object Object],[object Object],[object Object],[object Object],[object Object]

What are the risks associated with capital structure decisions? ,[object Object],[object Object],[object Object]

Degree of financial leverage? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

EBIT - EPS analysis ,[object Object]

Formula ,[object Object],[object Object],[object Object],[object Object]

What do you understand from trading on equity? ,[object Object]

What is coverage ratio or DSCR? ,[object Object],[object Object],[object Object],[object Object]

Theory of optimal capital structure? ,[object Object],[object Object]

Solve the following ,[object Object],[object Object],[object Object]

Solution ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Analysis ,[object Object],[object Object],[object Object]

Solution ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Theories of capital structures . . ,[object Object],[object Object],[object Object],[object Object],[object Object]

Assumptions in capital structure theories ….. ,[object Object],[object Object],[object Object],[object Object],[object Object]

NI approach (net income approach) ,[object Object],[object Object],[object Object],[object Object]

NOI approach (Net operating income approach) ,[object Object]

Traditional approach ,[object Object]

ABOUT AFTERSCHO☺OL ,[object Object]

Why such a programme? ,[object Object],[object Object],[object Object],[object Object]

Who are our supporters? ,[object Object],[object Object]

About AFTERSCHO☺OL PGPSE – the best programme for developing great entrepreneurs ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Workshops from AFTERSCHO☺OL ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Flexible Specialisations: ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Salient features: ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Components ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Pedagogy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Basic values at AFTERSCHO☺OL ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

www.afterschoool.tk social entrepreneurship for better society

Capital Structure Decisions In Financial Management 6 November

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Capital Structure Decisions In Financial Management 6 November