The document discusses various measures of leverage, including:
1. Operating leverage, which measures how EBIT responds to changes in sales, calculated as the percentage change in EBIT divided by the percentage change in sales.
2. Financial leverage, which measures how earnings per share responds to changes in EBIT, calculated as the percentage change in EPS divided by the percentage change in EBIT.
3. Combined leverage, which measures how earnings per share responds to changes in sales by combining operating and financial leverage, calculated as the product of operating and financial leverage.
2. Tujuan Pembelajaran
Mampu Menjelaskan dan memahami tentang :
1. Menghitung “cost of equity capital”
2. Menghitung “cost of debt”
3. Menghitung “overall cost of capital”
4. Kelemahan “overall cost of capital” dan bagaimana mengelolanya
5. Dampak “financial leverage” terhadap arus kas dan “cost of
equity”
6. Dampak beban pajak dan kebangkrutan terhadap pemilihan
struktur modal
7. Menghitung DFL, and DCL
8. Perusahaan yang risiko usahanya tinggi disarankan memilih
struktur keuangan yang DFL nya rendah
3.
4.
5. Operating Leverage
• Degree of Operating Leverage
• With FIXED operating costs, there will be
operating leverage
• DOL measures the sensitivity of EBIT to changes in sales. DOL
of a company is different at different levels of sales.
• High DOL implies that a relatively small change in
sales will result in large change in the operating
income (EBIT)
6. Operating Leverage
• Degree of Operating Leverage
– Operating Leverage is responsiveness of a firm’s
EBIT to fluctuations in Sales
7. Operating Leverage
• Degree of Operating Leverage
– Operating Leverage is responsiveness of a firm’s
EBIT to fluctuations in Sales
– Degree of Operating Leverage (DOL)
• Measurement of Operating Leverage
• For a unique level of sales, DOL changes as sales
change.
8. Operating Leverage
• Degree of Operating Leverage
– Operating Leverage is responsiveness of a firm’s
EBIT to fluctuations in Sales
– Degree of Operating Leverage (DOL)
• Measurement of Operating Leverage
• For a unique level of sales, DOL changes as sales
change.
DOLS = % Change in EBIT
% Change in Sales
Unique Level of Sales
10. Operating Leverage
• Measurement of DOL
– Calculation using per unit information:
DOLS =
Q(P – V)
Q(P – V) – F
Q = 3,750 units
Price = $800 per unit
Variable costs = $400 per unit
Fixed Costs = $1,000,000 per year.
Example:
11. Operating Leverage
• Measurement of DOL
– Calculation using per unit information:
DOLS = Q(P – V)
Q(P – V) – F
Q = 3,750 units
Price = $800 per unit
Variable costs = $400 per unit
Fixed Costs = $1,000,000 per year.
Example:
DOL3,750 units =
3,750(800 – 400)
3,750(800 – 400) – 1,000,000
12. Operating Leverage
• Measurement of DOL
– Calculation using per unit information:
DOLS = Q(P – V)
Q(P – V) – F
Q = 3,750 units
Price = $800 per unit
Variable costs = $400 per unit
Fixed Costs = $1,000,000 per year.
Example:
DOL3,750 units =
3,750(800 – 400)
3,750(800 – 400) – 1,000,000
= 3 times
13. Operating Leverage
• Measurement of DOL
– Calculation using per unit information:
DOLS =
Q(P – V)
Q(P – V) – F
Q = 3,750 units
Price = $800 per unit
Variable costs = $400 per unit
Fixed Costs = $1,000,000 per year.
Example:
DOL3,750 units =
3,750(800 – 400)
3,750(800 – 400) – 1,000,000
= 3 times Interpretation: If sales change 1%, then EBIT
will change 3% in the same direction.
15. Operating Leverage
• Measurement of DOL
– Calculation using Income Statement Information
DOLS =
S – VC
S – VC – F
Q = 3,750 units
Price = $800 per unit
Variable costs = $400 per unit
Fixed Costs = $1,000,000 per year.
Example:
16. Operating Leverage
• Measurement of DOL
– Calculation using Income Statement Information
DOLS =
S – VC
S – VC – F
Q = 3,750 units
Price = $800 per unit
Variable costs = $400 per unit
Fixed Costs = $1,000,000 per year.
Example:
Sales
$3,000,000
x
17. Operating Leverage
• Measurement of DOL
– Calculation using Income Statement Information
DOLS =
S – VC
S – VC – F
Q = 3,750 units
Price = $800 per unit
Variable costs = $400 per unit
Fixed Costs = $1,000,000 per year.
Example:
Variable Costs
$1,500,000
x
18. Operating Leverage
• Measurement of DOL
– Calculation using Income Statement Information
DOLS =
S – VC
S – VC – F
Q = 3,750 units
Price = $800 per unit
Variable costs = $400 per unit
Fixed Costs = $1,000,000 per year.
Example:
DOL3,750 units =
3,000,000 – 1,500,00
3,000,000 – 1,500,000 – 1,000,000
19. Operating Leverage
• Measurement of DOL
– Calculation using Income Statement Information
DOLS =
S – VC
S – VC – F
Q = 3,750 units
Price = $800 per unit
Variable costs = $400 per unit
Fixed Costs = $1,000,000 per year.
Example:
DOL3,750 units =
3,000,000 – 1,500,00
3,000,000 – 1,500,000 – 1,000,000
= 3 times
20. Operating Leverage
• Measurement of DOL
– Calculation using Income Statement Information
DOLS =
S – VC
S – VC – F
Q = 3,750 units
Price = $800 per unit
Variable costs = $400 per unit
Fixed Costs = $1,000,000 per year.
Example:
DOL3,750 units =
3,000,000 – 1,500,00
3,000,000 – 1,500,000 – 1,000,000
= 3 times Same Answer as before
21. Operating Leverage
• Degree of Operating Leverage
– Degree of Operating Leverage is highest when the
firm is closest to break-even point--DOL falls as
sales rise
Quantity DOL
2,500 (QB) Undefined
3,250 4.33
3,750 3
5,000 2
22. Operating Leverage
• Degree of Operating Leverage
– Degree of Operating Leverage is highest when the
firm is closest to break-even point--DOL falls as
sales rise
Quantity DOL
2,500 (QB) Undefined
3,250 4.33
3,750 3
5,000 2
The higher the sales level above break-even, the less EBIT (in
%) changes as sales change
23. Operating Leverage
• Degree of Operating Leverage
– Degree of Operating Leverage is highest when the
firm is closest to break-even point--DOL falls as
sales rise
Quantity DOL
2,500 (QB) Undefined
3,250 4.33
3,750 3
5,000 2
The higher the sales level above break-even, the less EBIT(in
%) changes as sales change
If Fixed Costs = $0, Degree of Operating Leverage = 1
24. Financial Leverage
• Degree of Financial Leverage
– Finance a portion of the firm’s assets with
securities that have fixed financial costs
• Debt
• Preferred Stock
25. Financial Leverage
• Degree of Financial Leverage
– Finance a portion of the firm’s assets with
securities that have fixed financial costs
• Debt
• Preferred Stock
– Financial Leverage measures changes in earnings
per share (NI) as EBIT changes.
26. Financial Leverage
• Degree of Financial Leverage
– Finance a portion of the firm’s assets with securities that have fixed
financial costs
• Debt
• Preferred Stock
– Financial Leverage measures changes in earnings per share as EBIT
changes.
– Degree of Financial Leverage (DFL) at one level of EBIT:
DFLEBIT =
% Change in EPS
% Change in EBIT
Unique Level of EBIT
31. Financial Leverage
DFLEBIT =
EBIT
EBIT – I
EBIT = $500,000
Interest Charges = $200,000
Example:
DFLEBIT=500,000 =
500,000
500,000 – 200,000
= 1.67 times
• Measurement of DFL
32. Financial Leverage
DFLEBIT =
EBIT
EBIT – I
EBIT = $500,000
Interest Charges = $200,000
Example:
DFLEBIT=500,000 =
500,000
500,000 – 200,000
= 1.67 times
• Measurement of DFL
Interpretation: For 1% change in EBIT (from an existing level of
$500,000) Earnings Per Share will change 1.67%
33. DFL
S - VC - F
• DFL = ---------------------
S - VC - F - I
34. Combined Leverage
• Degree of Combined Leverage
– Measures changes in Earnings Per Share given changes
in Sales
35. Combined Leverage
• Degree of Combined Leverage
– Measures changes in Earnings Per Share given changes
in Sales
– Combines both Operating and Financial Leverage
36. Combined Leverage
• Degree of Combined Leverage
– Measures changes in Earnings Per Share given changes in
Sales
– Combines both Operating and Financial Leverage
– Computed for a specific level of sales
37. Combined Leverage
DCLS =
% Change in EPS
% Change in Sales
• Degree of Combined Leverage
– Measures changes in Earnings Per Share given changes in
Sales
– Combines both Operating and Financial Leverage
– Computed for a specific level of sales
Unique Level of Sales
44. Combined Leverage
DCLS =
• Measurement of DCL--Alternative Computation
Q(P – V)
Q(P – V) – F – I
Q = 3,750 units
Price = $800 per unit
Variable costs = $400 per unit
Fixed Costs = $1,000,000 per year
Interest = $200,000 per year
Example:
45. Combined Leverage
DCLS =
• Measurement of DCL--Alternative Computation
Q(P – V)
Q(P – V) – F – I
Q = 3,750 units
Price = $800 per unit
Variable costs = $400 per unit
Fixed Costs = $1,000,000 per year
Interest = $200,000 per year
Example:
DCLS =
3,750(800 – 400)
3,750(800 – 400) – 1,000,000 – 200,000
46. Combined Leverage
DCLS =
• Measurement of DCL--Alternative Computation
Q(P – V)
Q(P – V) – F – I
Q = 3,750 units
Price = $800 per unit
Variable costs = $400 per unit
Fixed Costs = $1,000,000 per year
Interest = $200,000 per year
Example:
DCLS =
3,750(800 – 400)
3,750(800 – 400) – 1,000,000 – 200,000
= 5 times
47. Combined Leverage
DCLS =
• Measurement of DCL--Alternative Computation
Interpretation: When sales change 1%, Earnings Per Share will
change 5.0%
Q(P – V)
Q(P – V) – F – I
Q = 3,750 units
Price = $800 per unit
Variable costs = $400 per unit
Fixed Costs = $1,000,000 per year
Interest = $200,000 per year
Example:
DCLS =
3,750(800 – 400)
3,750(800 – 400) – 1,000,000 – 200,000
= 5 times
48. S - VC - F
DCLS = ---------------------
S - VC - F - I
Combined Leverage
Measurement of DCL--Alternative Computation-
Using income statement.