Capitalisation
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The document discusses capitalization and capital structure. It addresses two issues: the magnitude of capital employed and the proportion of different forms of capital. It describes two approaches to determining optimal capitalization - cost theory and earnings theory. Earnings theory is generally preferable as it is aligned with a firm's earning capacity and estimates can be made reliably for ongoing concerns based on historical profits. Over-capitalization can harm a firm's performance, while under-capitalization has some advantages. Various measures are discussed to reorganize a firm's capital structure, such as changing share par value or issuing bonus shares.
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Capital Structure & Dividend Policy
The document discusses capital structure and dividend policy. It begins by defining capital structure as how a corporation finances its assets through equity, debt, or hybrid securities. It then discusses Modigliani-Miller's theorem which states that in a perfect market, a firm's capital structure does not affect its value. However, in the real world with taxes, bankruptcy costs, and asymmetric information, capital structure does matter. The document outlines various theories for capital structure including trade-off theory and pecking order theory. It also discusses dividend policy and different theories for how dividends may or may not affect firm value such as Gordon's model and Modigliani-Miller's irrelevance theory.
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The document discusses capital structure, which refers to the mix of long-term financing sources like debt and equity. It notes that capital structure should maximize returns to shareholders without adding undue risk. It then covers various factors that affect capital structure decisions, including return, risk, flexibility, debt capacity, and control considerations. Specific factors discussed include trading on equity, retaining control, enterprise nature, legal regulations, financing purpose and period, investor requirements, company size, and government policy.
Capital structure
The document discusses capital structure, which refers to the composition and proportions of various capital sources like loans, reserves, shares, and bonds that make up a company's total capital (capitalization). It also discusses the impacts of leverage and different capital structure alternatives on earnings per share. Over-capitalization occurs when a company's earnings are insufficient to provide a fair return on its investments, while under-capitalization means a company's capital is less than what is required.
Capital Structure
The document defines capital structure as the permanent long-term financing of a company, including long-term debt, common stock, preferred stock, and retained earnings. It discusses the concept of optimal capital structure, which minimizes a firm's cost of capital. The document also outlines various approaches to establishing capital structure, including EBIT-EPS analysis and cash flow analysis. It evaluates capital structure based on factors like flexibility, risk, return, and control.
Capital Structure
The capital structure of a company refers to the composition of its long-term financing, including loans, reserves, shares, and bonds. A company's capital structure is influenced by both internal factors like financial leverage, risk tolerance, and growth plans as well as external factors like industry norms, availability of funds, and tax policies. An optimal capital structure maximizes the value of the company by balancing the use of debt financing which increases earnings per share but also increases financial risk. The point of indifference is the earnings level at which earnings per share remains the same regardless of the debt-to-equity mix. Leverage refers to using fixed-cost funds to increase returns to owners, either through financial leverage of long-term debt or operating
Capital Structure
The document defines capital structure as the composition of a company's long-term financing, including loans, reserves, shares, and bonds. It discusses factors that influence a company's capital structure such as financial leverage, risk, growth, and cost of capital. It also discusses the concept of an optimal capital structure that maximizes firm value. The document then covers related topics like the point of indifference, types of leverage including financial and operating leverage, and how they impact a company's earnings.
Capital structure
The document discusses various aspects of capital structure including definitions, key terms, theories, and principles. It defines capital structure as the mix of debt and equity used by a company to finance its overall operations and long-term needs. Several theories of capital structure are described, including the net income approach, net operating income approach, and Modigliani & Miller approach. Factors that determine an optimal capital structure are discussed, including costs, risks, flexibility, and control. Formulas for calculating financial break-even point, point of indifference, and capital gearing ratio are provided. Examples are given to illustrate how to apply the concepts.
Capital structure.
The document discusses capital structure, which refers to the proportion of debt, preferred stock, and common equity used to finance a company's assets. Capital structure includes long-term debt and stockholder equity. Capitalization refers to the total amount of securities issued, while capital structure refers to the types and proportions of securities. Financial structure includes all financial resources, both short- and long-term. An optimal capital structure maximizes share price and minimizes cost of capital. Factors that determine a company's capital structure include financial leverage, growth and stability of sales, cost of capital, cash flow ability, nature and size of the firm, control, flexibility, requirements of investors, and capital market conditions.
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The document discusses capital structure and dividend policy. It begins by defining capital structure as how a corporation finances its assets through equity, debt, or hybrid securities. It then discusses Modigliani-Miller's theorem which states that in a perfect market, a firm's capital structure does not affect its value. However, in the real world with taxes, bankruptcy costs, and asymmetric information, capital structure does matter. The document outlines various theories for capital structure including trade-off theory and pecking order theory. It also discusses dividend policy and different theories for how dividends may or may not affect firm value such as Gordon's model and Modigliani-Miller's irrelevance theory.
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The document discusses capital structure, which refers to the mix of long-term financing sources like debt and equity. It notes that capital structure should maximize returns to shareholders without adding undue risk. It then covers various factors that affect capital structure decisions, including return, risk, flexibility, debt capacity, and control considerations. Specific factors discussed include trading on equity, retaining control, enterprise nature, legal regulations, financing purpose and period, investor requirements, company size, and government policy.
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The document discusses capital structure, which refers to the composition and proportions of various capital sources like loans, reserves, shares, and bonds that make up a company's total capital (capitalization). It also discusses the impacts of leverage and different capital structure alternatives on earnings per share. Over-capitalization occurs when a company's earnings are insufficient to provide a fair return on its investments, while under-capitalization means a company's capital is less than what is required.
Capital Structure
The document defines capital structure as the permanent long-term financing of a company, including long-term debt, common stock, preferred stock, and retained earnings. It discusses the concept of optimal capital structure, which minimizes a firm's cost of capital. The document also outlines various approaches to establishing capital structure, including EBIT-EPS analysis and cash flow analysis. It evaluates capital structure based on factors like flexibility, risk, return, and control.
Capital Structure
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The document defines capital structure as the composition of a company's long-term financing, including loans, reserves, shares, and bonds. It discusses factors that influence a company's capital structure such as financial leverage, risk, growth, and cost of capital. It also discusses the concept of an optimal capital structure that maximizes firm value. The document then covers related topics like the point of indifference, types of leverage including financial and operating leverage, and how they impact a company's earnings.
Capital structure
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Capital structure.
The document discusses capital structure, which refers to the proportion of debt, preferred stock, and common equity used to finance a company's assets. Capital structure includes long-term debt and stockholder equity. Capitalization refers to the total amount of securities issued, while capital structure refers to the types and proportions of securities. Financial structure includes all financial resources, both short- and long-term. An optimal capital structure maximizes share price and minimizes cost of capital. Factors that determine a company's capital structure include financial leverage, growth and stability of sales, cost of capital, cash flow ability, nature and size of the firm, control, flexibility, requirements of investors, and capital market conditions.
optimal capital structure
This document discusses optimal capital structure and includes the following key points:
1. An optimal capital structure maximizes a company's market value while minimizing the cost of capital by striking a balance between risk and return. It occurs when the market price per share is at its maximum and cost of capital is at its minimum.
2. Several illustrations are provided to demonstrate how changes in the debt-equity mix impact total market value and overall cost of capital. Adding more debt initially increases value but can eventually increase costs if debt levels rise too high.
3. The document also defines capital structure, lists some features of an optimal structure, and outlines several theories of capital structure, including the Net Income Approach and Modigl
Capital structure
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Capital structure
The document discusses capital structure, which refers to the mix of long-term financing sources like equity shares, preference shares, debentures, and retained earnings that a company uses. It provides examples of different capital structure patterns that companies can use, including all equity, equity with preference shares, and combinations including debt. The optimal capital structure balances the costs and benefits of debt versus equity to maximize shareholder value. Formulas for calculating earnings per share under different capital structures and the indifference point between structures are also presented.
Capital structure ppt
The document discusses capital structure and its theories. It defines capital structure as the proportion of long-term debt and equity used to finance a company's assets. A company's capital structure determines its risk and cost of capital. There are several theories on capital structure including the net income, net operating income, traditional, and Modigliani-Miller approaches. The optimal capital structure balances minimum costs and risks. Factors like tax rates, control, flexibility, and legal requirements influence a company's choice of capital structure.
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2) Several factors influence a firm's capital structure decisions, including business risk, tax exposure, financial flexibility, management style, growth rate, and market conditions.
3) Business risk, tax rates, financial flexibility, management aggressiveness, growth needs, and market access all impact the optimal mix of debt and equity financing for firms.
197.capital structure lecture
This document summarizes key concepts regarding capital structure analysis:
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2) Debt provides a tax shield benefit as interest payments reduce taxable income. This increases overall returns to investors compared to an unlevered firm.
3) There is a trade-off between the tax benefits of debt and the financial distress and agency costs of debt as leverage increases. Optimal capital structure balances these factors.
4) Practical considerations like industry standards, creditor requirements, maintaining borrowing capacity, and manager
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The document discusses various concepts related to capital structure and its impact on firm value. It begins by defining capital structure and its key components of debt and equity. It then discusses how capital structure can impact a firm's expected earnings, cost of capital, and overall value. The document also examines different theories of capital structure and factors that influence a firm's optimal capital structure decision, including profitability, solvency, taxes, firm size, industry, and life cycle stage.
Ch 15
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This document discusses capital structure and its determinants. It defines capital structure as the mix of different securities used to finance a firm's operations, including bonds, loans, ordinary shares, and preferred shares. It then lists and describes various determinants that must be considered when determining a firm's optimal capital structure, including financial leverage, growth and stability of sales, cost of capital, cash flow ability, nature and size of the firm, control, flexibility, requirements of investors, capital market conditions, assets structure, purpose and period of financing, costs of floating securities, personal considerations, corporate tax rates, and legal requirements. Finally, it briefly outlines four major capital structure theories: the net income approach, net operating income approach, Modig
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The document discusses capital structure, which refers to the mix of debt and equity used by a company to finance its long-term operations. It examines several factors that influence a company's capital structure choices as well as different theories about optimal capital structure. The Net Income Theory proposes that firms can maximize value and minimize cost of capital by using as much debt as possible. The Net Operating Income Theory argues capital structure is irrelevant to firm value and cost of capital. The Traditional Theory suggests an optimal debt-equity mix exists. Finally, the Modigliani-Miller Theory states that under certain assumptions, capital structure does not impact firm value or cost of capital, though when taxes are considered, more debt can increase value.
Capital structure irrelevance theory
The document discusses capital structure and the Modigliani-Miller approach. It provides definitions of capital structure and optimal capital structure. It then outlines the key assumptions of the Modigliani-Miller approach, including perfect capital markets, no taxes, 100% dividend payout, and constant business risk. The document explains the Modigliani-Miller propositions that the market value and cost of capital of a firm are independent of its capital structure. It provides an example to demonstrate how arbitrage would eliminate any differences in market values between levered and unlevered firms.
Capital structure defenition
The document discusses capital structure, which refers to the proportion of debt and equity used to finance a company's assets. An optimal capital structure maximizes share price value and minimizes cost of capital. Factors that affect a company's capital structure include financial risk, growth opportunities, cash flows, and tax policies. Several theories on capital structure are presented, including the Net Income, Net Operating Income, and Modigliani-Miller approaches.
Capital structure
This document discusses capital structure and the factors considered when determining a firm's optimal capital structure. It discusses several approaches to determining the optimal capital structure, including:
1. The net income approach, which argues that changing capital structure affects overall cost of capital and firm value.
2. The net operating income/Modigliani-Miller approach, which argues that changing capital structure does not affect overall cost of capital or firm value.
3. The traditional/intermediate approach, which argues that increasing debt initially decreases overall cost of capital up to an optimal point, after which further increasing debt increases overall cost of capital.
The document analyzes the assumptions and implications of each approach. It also lists factors
Capital structure theories notes
The document discusses various theories of capital structure, including the Net Income Approach, Net Operating Income Approach, Traditional Approach, and Modigliani-Miller Model. The Modigliani-Miller Model proposes that in a perfect market without taxes, the value of a firm and its cost of capital are independent of its capital structure. It consists of two propositions: 1) a firm's value depends only on its operating income and risk level, and 2) the cost of equity rises with leverage to offset the benefit of low-cost debt. Later models incorporate taxes, showing firm value increases with debt due to tax deductibility of interest payments.
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This document discusses capitalization and capital structure. It defines capitalization as the total value of capital employed in a business. Capital structure comprises ownership capital and borrowed capital. An optimum capital structure balances risk and return with minimal cost of capital. Both over-capitalization and under-capitalization are disadvantageous, though under-capitalization can increase returns. Determinants of capital structure include cost of capital, firm size and nature, financial leverage, cost of raising funds, growth and stability of sales, and legal/tax factors.
Capitalisation
a word ordinarily used to refer to the sum of outstanding stocks and funded obligations which may represent fictitious values
Capital structure and firm valuation by anil dora
1. The document discusses various capital structure theories including the net income approach, net operating income approach, Modigliani-Miller approach, and traditional approach.
2. The net income approach states that a firm's cost of capital and value are impacted by its capital structure, while the net operating income approach argues they are independent.
3. The Modigliani-Miller approach also argues a firm's value is independent of capital structure under certain assumptions, but value increases with tax benefits of debt under more realistic assumptions.
Capital structure decisions
This document discusses capital structure decisions and optimal capital structure. It defines capital structure as the mix of long-term financing sources like debt and equity. An optimal capital structure minimizes costs while maximizing firm value. It balances financial risk from debt against non-employment of debt capital risk. The optimal structure achieves the lowest weighted average cost of capital.
Capital structure theories 1
The document discusses several theories of capital structure:
1) Net income approach assumes capitalization rates are constant as debt increases, making 100% debt optimal.
2) Net operating income approach finds no optimal structure as equity rates adjust to keep overall rates constant.
3) Traditional approach finds an optimal structure where costs initially fall then rise with more debt.
4) MM theory initially argues capital structure is irrelevant without taxes but debt provides tax shields with taxes.
5) Trade-off theory balances tax shields against costs of financial distress and agency, finding an optimal balance.
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Capitalism
This document defines and describes various aspects of capitalism. Capitalism is an economic system defined by private ownership of trade, industries and means of production that are operated for profit. It is based on wage labor, private ownership and production for exchange and profit. Under capitalism, money is invested to generate more money through the process of capital accumulating more capital. Key features include private property, large-scale production, profit as the main motive, competition, and the price mechanism being determined by supply and demand rather than production costs. The document also discusses various forms of capitalism and both pros and cons.
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optimal capital structure
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1. An optimal capital structure maximizes a company's market value while minimizing the cost of capital by striking a balance between risk and return. It occurs when the market price per share is at its maximum and cost of capital is at its minimum.
2. Several illustrations are provided to demonstrate how changes in the debt-equity mix impact total market value and overall cost of capital. Adding more debt initially increases value but can eventually increase costs if debt levels rise too high.
3. The document also defines capital structure, lists some features of an optimal structure, and outlines several theories of capital structure, including the Net Income Approach and Modigl
Capital structure
This document discusses various theories of capital structure and their impact on firm value. It begins by explaining the net operating income, traditional, and net income approaches. It then summarizes the Modigliani-Miller hypothesis without and with taxes. It discusses how taxes make debt financing advantageous via interest tax shields. However, costs of financial distress and agency costs limit this advantage. The trade-off theory and pecking order theory are also covered. Finally, it discusses approaches to establishing an optimal capital structure.
Capital structure
The document discusses capital structure, which refers to the mix of long-term financing sources like equity shares, preference shares, debentures, and retained earnings that a company uses. It provides examples of different capital structure patterns that companies can use, including all equity, equity with preference shares, and combinations including debt. The optimal capital structure balances the costs and benefits of debt versus equity to maximize shareholder value. Formulas for calculating earnings per share under different capital structures and the indifference point between structures are also presented.
Capital structure ppt
The document discusses capital structure and its theories. It defines capital structure as the proportion of long-term debt and equity used to finance a company's assets. A company's capital structure determines its risk and cost of capital. There are several theories on capital structure including the net income, net operating income, traditional, and Modigliani-Miller approaches. The optimal capital structure balances minimum costs and risks. Factors like tax rates, control, flexibility, and legal requirements influence a company's choice of capital structure.
Financial management
1) The capital structure of a firm refers to how it finances its operations and growth through different sources of funds, including debt, equity, and retained earnings.
2) Several factors influence a firm's capital structure decisions, including business risk, tax exposure, financial flexibility, management style, growth rate, and market conditions.
3) Business risk, tax rates, financial flexibility, management aggressiveness, growth needs, and market access all impact the optimal mix of debt and equity financing for firms.
197.capital structure lecture
This document summarizes key concepts regarding capital structure analysis:
1) EBIT/EPS analysis examines how different capital structures affect earnings available to shareholders and risk based on different levels of EBIT. Leverage increases EPS at high EBIT levels but decreases it at low levels.
2) Debt provides a tax shield benefit as interest payments reduce taxable income. This increases overall returns to investors compared to an unlevered firm.
3) There is a trade-off between the tax benefits of debt and the financial distress and agency costs of debt as leverage increases. Optimal capital structure balances these factors.
4) Practical considerations like industry standards, creditor requirements, maintaining borrowing capacity, and manager
Over capitalization and Under Capitalization
This document discusses over-capitalization and under-capitalization. Over-capitalization occurs when a company's earnings are not large enough to provide a fair return on the capital invested. Under-capitalization is the reverse, where a company earns extraordinarily high returns over its capital. Causes of over-capitalization include excessive purchase of fixed assets and liberal dividend policies. Causes of under-capitalization include high efficiency and conservative dividend policies. Both situations can impact companies, stockholders, society, and workers negatively. Remedies for over-capitalization include reducing shares or interest rates, while remedies for under-capitalization include splitting shares or issuing new shares. Overall, fair capitalization is ideal.
1b.leverage decision
The document discusses various concepts related to capital structure and its impact on firm value. It begins by defining capital structure and its key components of debt and equity. It then discusses how capital structure can impact a firm's expected earnings, cost of capital, and overall value. The document also examines different theories of capital structure and factors that influence a firm's optimal capital structure decision, including profitability, solvency, taxes, firm size, industry, and life cycle stage.
Ch 15
This chapter discusses various theories of capital structure and how it relates to the value of the firm and cost of capital. It outlines the Modigliani-Miller view that capital structure does not affect firm value versus the traditional view that moderate debt can lower costs. It also discusses how interest tax shields, bankruptcy costs, and agency costs factor into the optimal capital structure based on a trade-off theory. The chapter further examines pecking order theory and approaches for establishing an appropriate capital structure including cash flow analysis.
Capital structure and its Determinants
This document discusses capital structure and its determinants. It defines capital structure as the mix of different securities used to finance a firm's operations, including bonds, loans, ordinary shares, and preferred shares. It then lists and describes various determinants that must be considered when determining a firm's optimal capital structure, including financial leverage, growth and stability of sales, cost of capital, cash flow ability, nature and size of the firm, control, flexibility, requirements of investors, capital market conditions, assets structure, purpose and period of financing, costs of floating securities, personal considerations, corporate tax rates, and legal requirements. Finally, it briefly outlines four major capital structure theories: the net income approach, net operating income approach, Modig
Capital Structure Theories
The document discusses capital structure, which refers to the mix of debt and equity used by a company to finance its long-term operations. It examines several factors that influence a company's capital structure choices as well as different theories about optimal capital structure. The Net Income Theory proposes that firms can maximize value and minimize cost of capital by using as much debt as possible. The Net Operating Income Theory argues capital structure is irrelevant to firm value and cost of capital. The Traditional Theory suggests an optimal debt-equity mix exists. Finally, the Modigliani-Miller Theory states that under certain assumptions, capital structure does not impact firm value or cost of capital, though when taxes are considered, more debt can increase value.
Capital structure irrelevance theory
The document discusses capital structure and the Modigliani-Miller approach. It provides definitions of capital structure and optimal capital structure. It then outlines the key assumptions of the Modigliani-Miller approach, including perfect capital markets, no taxes, 100% dividend payout, and constant business risk. The document explains the Modigliani-Miller propositions that the market value and cost of capital of a firm are independent of its capital structure. It provides an example to demonstrate how arbitrage would eliminate any differences in market values between levered and unlevered firms.
Capital structure defenition
The document discusses capital structure, which refers to the proportion of debt and equity used to finance a company's assets. An optimal capital structure maximizes share price value and minimizes cost of capital. Factors that affect a company's capital structure include financial risk, growth opportunities, cash flows, and tax policies. Several theories on capital structure are presented, including the Net Income, Net Operating Income, and Modigliani-Miller approaches.
Capital structure
This document discusses capital structure and the factors considered when determining a firm's optimal capital structure. It discusses several approaches to determining the optimal capital structure, including:
1. The net income approach, which argues that changing capital structure affects overall cost of capital and firm value.
2. The net operating income/Modigliani-Miller approach, which argues that changing capital structure does not affect overall cost of capital or firm value.
3. The traditional/intermediate approach, which argues that increasing debt initially decreases overall cost of capital up to an optimal point, after which further increasing debt increases overall cost of capital.
The document analyzes the assumptions and implications of each approach. It also lists factors
Capital structure theories notes
The document discusses various theories of capital structure, including the Net Income Approach, Net Operating Income Approach, Traditional Approach, and Modigliani-Miller Model. The Modigliani-Miller Model proposes that in a perfect market without taxes, the value of a firm and its cost of capital are independent of its capital structure. It consists of two propositions: 1) a firm's value depends only on its operating income and risk level, and 2) the cost of equity rises with leverage to offset the benefit of low-cost debt. Later models incorporate taxes, showing firm value increases with debt due to tax deductibility of interest payments.
Capitalization and capital structure
This document discusses capitalization and capital structure. It defines capitalization as the total value of capital employed in a business. Capital structure comprises ownership capital and borrowed capital. An optimum capital structure balances risk and return with minimal cost of capital. Both over-capitalization and under-capitalization are disadvantageous, though under-capitalization can increase returns. Determinants of capital structure include cost of capital, firm size and nature, financial leverage, cost of raising funds, growth and stability of sales, and legal/tax factors.
Capitalisation
a word ordinarily used to refer to the sum of outstanding stocks and funded obligations which may represent fictitious values
Capital structure and firm valuation by anil dora
1. The document discusses various capital structure theories including the net income approach, net operating income approach, Modigliani-Miller approach, and traditional approach.
2. The net income approach states that a firm's cost of capital and value are impacted by its capital structure, while the net operating income approach argues they are independent.
3. The Modigliani-Miller approach also argues a firm's value is independent of capital structure under certain assumptions, but value increases with tax benefits of debt under more realistic assumptions.
Capital structure decisions
This document discusses capital structure decisions and optimal capital structure. It defines capital structure as the mix of long-term financing sources like debt and equity. An optimal capital structure minimizes costs while maximizing firm value. It balances financial risk from debt against non-employment of debt capital risk. The optimal structure achieves the lowest weighted average cost of capital.
Capital structure theories 1
The document discusses several theories of capital structure:
1) Net income approach assumes capitalization rates are constant as debt increases, making 100% debt optimal.
2) Net operating income approach finds no optimal structure as equity rates adjust to keep overall rates constant.
3) Traditional approach finds an optimal structure where costs initially fall then rise with more debt.
4) MM theory initially argues capital structure is irrelevant without taxes but debt provides tax shields with taxes.
5) Trade-off theory balances tax shields against costs of financial distress and agency, finding an optimal balance.
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Capitalism
This document contains a presentation arguing that capitalism is evil. It begins with an introduction of the presenter, D. Chowdhury, and their topic. The bulk of the document defines capitalism and discusses both its perceived advantages, such as growth and freedom, and disadvantages, like inequality, waste, pollution, and war driven by profit motives. It concludes by reiterating the position that capitalism only benefits the rich and is therefore another name for evil. The entire presentation is contained within this single document.
Capitalism
This document defines and describes various aspects of capitalism. Capitalism is an economic system defined by private ownership of trade, industries and means of production that are operated for profit. It is based on wage labor, private ownership and production for exchange and profit. Under capitalism, money is invested to generate more money through the process of capital accumulating more capital. Key features include private property, large-scale production, profit as the main motive, competition, and the price mechanism being determined by supply and demand rather than production costs. The document also discusses various forms of capitalism and both pros and cons.
Explaining Capitalism
When what one says is determined by what one sensually knows to be the case, then, the relationship existing between these two is said to be factual.
Such a factually based statement is said to truthfully represent that which it is referencing and that statement is called a truth.
Capitalism
Capitalism generates significant inequalities in income and wealth which reduce overall social welfare. While private ownership and market forces lead to economic growth, capitalism also produces goods and services that are harmful or do not meet real social needs. The system is also unstable and prone to economic crises. Some failed capitalist states have extreme poverty, while others require costly bailouts. Islam prohibits practices like usury and monopoly that are necessary for capitalism to grow. In conclusion, capitalism has become a curse by prioritizing profits over people through exploitation, unsafe products, pollution, and corruption.
Capitalization
This document outlines capitalization rules for proper nouns and the first words of sentences. It discusses capitalizing:
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Capitalism
The document discusses capitalism from several perspectives. It begins with an introduction to capitalism and its key principles of private ownership, profit, and voluntary exchange. It then provides a historical overview of capitalism from its pre-history through modern eras like mercantilism, industrialization, and globalization. The document also examines different types of capitalism like free market capitalism and state capitalism. It outlines both advocacy for capitalism's ability to drive economic growth and self-organization, as well as criticisms around inequality and unfair distribution of wealth and power.
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The document provides lessons on capitalization rules, including capitalizing proper nouns and adjectives like names and titles; pronouns like I; religions and locations like names of continents, countries, cities, and directions; institutions and events; languages and holidays; object names and abbreviations; greetings and closings; and titles of works. It gives examples of words that should and should not be capitalized according to the specific rules.
Dividend policy
This document discusses dividend policy and the various theories around it. It defines dividends and discusses Walter's model and Gordon's model, which propose that dividend policy affects firm value. It also covers the irrelevance theories of Modigliani-Miller and the traditional approach, which argue that dividend policy does not impact value. The document provides formulas for the different models and discusses their assumptions and criticisms.
Dividend policy ppt
The document discusses dividend policy and provides details about:
1. The meaning of dividend and dividend policy, and factors that affect dividend policy such as ownership considerations, nature of business, and investment opportunities.
2. Different types of dividends including cash dividend, stock dividend, property dividend, and debenture dividend.
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Capitalism, socialism & mixed economy
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3:国家专业人才认证中心颁发入库证书
4:这个认证书并且可以归档倒地方
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5:凡事获得留信网入网的信息将会逐步更新到个人身份内，将在公安局网内查询个人身份证信息后，同步读取人才网入库信息
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1:该专业认证可证明留学生真实身份
2:同时对留学生所学专业登记给予评定
3:国家专业人才认证中心颁发入库证书
4:这个认证书并且可以归档倒地方
5:凡事获得留信网入网的信息将会逐步更新到个人身份内，将在公安局网内查询个人身份证信息后，同步读取人才网入库信息
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留信网认证的作用:
1:该专业认证可证明留学生真实身份
2:同时对留学生所学专业登记给予评定
3:国家专业人才认证中心颁发入库证书
4:这个认证书并且可以归档倒地方
5:凡事获得留信网入网的信息将会逐步更新到个人身份内，将在公安局网内查询个人身份证信息后，同步读取人才网入库信息
6:个人职称评审加20分
7:个人信誉贷款加10分
8:在国家人才网主办的国家网络招聘大会中纳入资料，供国家高端企业选择人才
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Capitalisation
- 2. CAPITALISATION & CAPITAL STRUCTURE TWO ISSUES CAPITAL EMPLOYED PROPORTION OF DIFFERENT FORMS OF CAPITAL CAPITALISATION → MAGNITUDE OF CAPITAL EMPLOYED BOTH LONG / SHORT TERM. OPTIMAL CAPITALISATION – BASIS TWO APPROACHES – COST THEORY & EXPECTED EARNINGS COST THEORY - CAPITAL EMPLOYED = VALUE OF IT’S ASSETS INCLUDING FIXED, CURRENT & INTANGIBLES i.e. GOODWILL, PATENTS etc. THEORY INADEQUATE WHEN EARNINGS FLUCTUATE CAUSING SHARE PRICE FLUCTUATIONS LEADING TO DISCREPANCY INVALUE OF FIRM’S ASSETS/VALUE OF SHARES.
- 3. EARNINGS THEORY EARNINGS THEORY – SUGGESTS FIRM SHOULD BE CAPITALISED ON THE BASIS OF EXPECTED EARNINGS. NET ANNUAL EARNINGS Rs. 5, 000, MINIMUM ACCEPTABLE RETURN 10% CAPITAL (Rs.5,000/0.10) = Rs.50,000 ESTIMATES OF FUTURE ANNUAL INCOME BASED ON HISTORICAL PROFIT (NORMAL – NOT BASED ON BOOM OR BUST TIME, ELIMINATING NON-RECURRENT GAINS/LOSSES i.e ONLY OPERATIONAL PROFIT) CAPITALISATION RATE (CR) → MINIMUM ACCEPTABLE RATE OF RETURN. THIS CAN BE ESTIMATED BY COMPILING A LARGE SAMPLE OF SIMILAR FIRMS. PRICE EARNING RATIO → MARKET PRICE OF THE SHARE/EPS. CAPITALISATION RATE IS THE OBVERSE EPS / MARKET PRICE. EXAMPLE - SHARE MARKET PRICE Rs. 50, EPS Rs. 5.00, CR 5/50=10%, PE= 50/5 =10 ANNUAL FUTURE EARNINGS → SAY Rs.5,000 WILL ENTAIL CAPITALISATION OF Rs. 5,000/0.10 = Rs. 50,000 EARNINGS THEORY→PREFERABLE AS IT IS ALIGNED TO FIRM’S EARNING CAPACITY. IT IS ADOPTED BY GOING CONCERNS, WHERE ESTIMATES OF FUTURE INCOME CAN BE MADE RELIABLY. IN NEW FIRMS HAVING NO RECORD OF HISTORICAL PROFIT, COST THEORY IS USED.
- 4. OVER CAPITALISATION IS A HANDICAP TO A FIRM TO ARRIVE AT & MAINTAIN MARKET BASED RATE OF RETURNS; OPTIMAL CAPITALISATION OVER CAPITALISATION CAPITALISATION CAPITALISATION 200,000 250,000 RETURN RETURN RATE OF RETURN 20,000 20,000 RATE OF RETURN 10% 8% CLEARLY THE EXCESS CAPITALISTATION (Rs.50,000) IS IDLE & HENCE WASTEFUL OVER CAPITALISATION – CAUSES ASSET COST INFLATED – WHEN FIRM IS TRANSFERRING FROM PARTNERSHIP TO SAY PRIVATE COMPANY OR DURING INFLATIONARY PERIOD. HIGHER EARNINGS EXPECTATION SETTING UP MORE CAPACITY THAN CAN BE ACTUALLY ACHIEVED; ESPECIALLY DURING EARLY STAGE OF OPERATIONS LOW EARNINGS DUE TO HIGHER PRODUCTION COSTS, INTEREST RATE, TAXATION AS WELL AS DEFECTIVE POLICIES LIKE DIVIDEND, DEPRECIATION ETC. EFFECTS OF OVER CAPITALISATION MARKET SHARE PRICES FALL AT TIMES BELOW THEIR BOOK VALUE (CAPITAL STOCK + SURPLUS / OUTSTANDING SHARES) & / OR REAL VALUE (CAPITALISTATION VALUE OF FIRM’S ASSETS / NUMBER OF OS SHARES) OPERATIONAL EFFICIENCY SUFFERS CREDIT WORTHINESS SUFFERS JEOPARDISING LIQUIDITY SHARE HOLDERS INTERESTS COMPROMISED DUE TO MARKET SHARE PRICES REDUCTION & FALL IN THEIR COLLATERAL VALUE. PRODUCT QUALITY SUFFERS AFFECTING SOCIETY.
- 5. CAUSES OF UNDER CAPITALISTATION REAL VALUE OF FIRM’S SHARES IS ABOVE THEIR BOOK VALUE & MARKET SHARE PRICE > PAR VALUE A FIRM INCORPORATED DURING RECESSION WITH LOW CAPITAL ASSETS COSTS TENDS TO FETCH RAPID INCREASE IN RATE OF RETURN. CONSERVATIVE DIVIDEND POLICY → PLOUGH BACK OF RETAINED EARNINGS REDUCING INTEREST COST. UNDER CAPITALISTAION – IMPACT ADVANTAGEOUS TO SHARE HOLDERS – MARKET PRICE & COLLATERAL VALUE GOES UP. ENHANCES FIRM’S CREDIT WORTHINESS SOCIETY BENEFITS - CHEAPER HI-QUALITY PRODUCTS HIGH MARKET SHARE PRICE MAY LEAD TO HIGH SPECULATION
- 6. RE-ORGANISATION OF CAPITAL MEASURES REDEMPTION OF HI INTEREST DEBT / HI DIVIDEND PREF; SHARES – CONVERT TO LOW COST SHARES CHANGE IN PAR VALUE CHANGES IN NO. OF SHARES EFFECTS EARNINGS NO.OF SHARES PAR VALUE CAPITALISATION EPS RETURN ON EQUITY SHARES EXISTING 10,000 5,000 20.00 100,000 2.00 10.00% OVER 10,000 5,000 10.00 50,000 2.00 20.00% CAPITALISATION UNDER 10,000 10,000 10.00 100,000 1.00 10% CAPITALISATION OVER CAPITALISATION: PAR VALUE REDUCTION (FROM Rs. 20.00 TO RS. 10.00), & THE SAME AMOUNT TRANSFERRED TO A SURPLUS ACCOUNT, THEREBY REDUCING CAPITALISATION & DOUBLING RETURN ON EQUITY SHARES. UNDER CAPITALISATION: SHARE STOCK SPLIT (FROM 5,000TO 10,000 SHARES) WITH CORRESPONDING REDUCTION IN PAR VALUE (Rs.20.00 TO Rs.10.00): NO CHANGE IN CAPITALISATION WHILE EPS REDUCES FROM Rs.2.00 TO Rs. 1.00 SHARE HOLDERS SHOULD BE O.K AS THEY HAVE TWO SHARES INSTEAD OF ONE – TOTAL EARNINGS SAFE GUARDED.
- 7. MAINTAINING DESIRED EARNINGS INCREASE IN NO.OF SHARES CAN BE DONE BY ISSUING BONUS SHARES. OVER CAPTILISATION : INCREASE PROFIT MARGIN, ASSETS TURNOVER. UNDER CAPITALISATION: EXPANSION SCHEMES, LABOUR WELFARE SCHEMES.