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Leverage And Its Impact On Earnings And Share Price
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Book Synopsis Leverage and Its Impact on Earnings and Share Price by : Elangkumaran Periyathampy
Download or read book Leverage and Its Impact on Earnings and Share Price written by Elangkumaran Periyathampy and published by . This book was released on 2016 with total page 6 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the impact of leverage on earnings and share price of listed companies on Colombo Stock Exchange (CSE) in Sri Lanka. The study was identified 20 companies listed on the CSE for the period from year 2007/2008 to 2011/2012. The Degree of Operating Leverages (DOL), Degree of Financial Leverage (DFL) & Degree of Combined Leverage (DCL) are the independent variables and Earning Per Share (EPS) and Share Price (SP) are the dependent variables for this study. The present study used the correlation coefficient and linear regression to measure the variables. The findings revealed that only 4% earnings can be explained by DOL, DFL and DCL and there is no significant relationship with EPS. It is also found that 3% SP is attributed by DOL, DFL and DCL and there is no significant relationship with SP. Thus, fixed operating expenses and the financing mix decisions of the firm are not significantly impact the earning capacity of the listed companies in CSE.
Book Synopsis The COVID-19 Impact on Corporate Leverage and Financial Fragility by : Sharjil M. Haque
Download or read book The COVID-19 Impact on Corporate Leverage and Financial Fragility written by Sharjil M. Haque and published by International Monetary Fund. This book was released on 2021-11-05 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the impact of the COVID-19 recession on capital structure of publicly listed U.S. firms. Our estimates suggest leverage (Net Debt/Asset) decreased by 5.3 percentage points from the pre-shock mean of 19.6 percent, while debt maturity increased moderately. This de-leveraging effect is stronger for firms exposed to significant rollover risk, while firms whose businesses were most vulnerable to social distancing did not reduce leverage. We rationalize our evidence through a structural model of firm value that shows lower expected growth rate and higher volatility of cash flows following COVID-19 reduced optimal levels of corporate leverage. Model-implied optimal leverage indicates firms which did not de-lever became over-leveraged. We find default probability deteriorates most in large, over-leveraged firms and those that were stressed pre-COVID. Additional stress tests predict value of these firms will be less than one standard deviation away from default if cash flows decline by 20 percent.
Book Synopsis The Debt/equity Choice by : Ronald W. Masulis
Download or read book The Debt/equity Choice written by Ronald W. Masulis and published by . This book was released on 1988 with total page 168 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Corporate Capital Structures in the United States by : Benjamin M. Friedman
Download or read book Corporate Capital Structures in the United States written by Benjamin M. Friedman and published by University of Chicago Press. This book was released on 2009-05-15 with total page 404 pages. Available in PDF, EPUB and Kindle. Book excerpt: The research reported in this volume represents the second stage of a wide-ranging National Bureau of Economic Research effort to investigate "The Changing Role of Debt and Equity in Financing U.S. Capital Formation." The first group of studies sponsored under this project, which have been published individually and summarized in a 1982 volume bearing the same title (Friedman 1982), addressed several key issues relevant to corporate sector behavior along with such other aspects of the evolving financial underpinnings of U.S. capital formation as household saving incentives, international capital flows, and government debt management. In the project's second series of studies, presented at the National Bureau of Economic Research conference in January 1983 and published here for the first time along with commentaries from that conference, the central focus is the financial side of capital formation undertaken by the U.S. corporate business sector. At the same time, because corporations' securities must be held, a parallel focus is on the behavior of the markets that price these claims.
Book Synopsis A Tea Reader by : Katrina Avila Munichiello
Download or read book A Tea Reader written by Katrina Avila Munichiello and published by Tuttle Publishing. This book was released on 2017-03-21 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: A Tea Reader contains a selection of stories that cover the spectrum of life. This anthology shares the ways that tea has changed lives through personal, intimate stories. Read of deep family moments, conquered heartbreak, and peace found in the face of loss. A Tea Reader includes stories from all types of tea people: people brought up in the tea tradition, those newly discovering it, classic writings from long-ago tea lovers and those making tea a career. Together these tales create a new image of a tea drinker. They show that tea is not simply something you drink, but it also provides quiet moments for making important decisions, a catalyst for conversation, and the energy we sometimes need to operate in our lives. The stories found in A Tea Reader cover the spectrum of life, such as the development of new friendships, beginning new careers, taking dream journeys, and essentially sharing the deep moments of life with friends and families. Whether you are a tea lover or not, here you will discover stories that speak to you and inspire you. Sit down, grab a cup, and read on.
Book Synopsis Financial Markets and Corporate Strategy by : David Hillier
Download or read book Financial Markets and Corporate Strategy written by David Hillier and published by McGraw-Hill Education. This book was released on 2011-10 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The second European edition of Financial Markets and Corporate Strategy provides comprehensive coverage of financial markets and corporate finance, brought to life by real world examples, cases and insights. Placed in a truly international context, this new and updated edition takes an academic and practical view-point to guide students through the challenges of studying and practicing finance. Aimed specifically at an international audience, this edition boasts hundreds of references to new and relevant non-US research papers from top finance journals. Whilst retaining the well respected structure of the successful US text, Professor David Hillier has also made a number of additions which include: Fully updated research, data and examples in every chapter. Coverage of the global financial crisis, the impact it made on the financial markets and the lessons being learnt by the finance industry. A stronger emphasis on corporate governance and agency theory. Updates on accounting standards, bankruptcy laws, tax rules and tax systems.
Download or read book Super Stocks written by Kenneth L. Fisher and published by McGraw Hill Professional. This book was released on 2007-10-12 with total page 290 pages. Available in PDF, EPUB and Kindle. Book excerpt: Target the Super Stocks that deliver huge returns One of the most successful investing books ever published, Super Stocks showed investors how to use innovative techniques and fundamental analysis for valuing stocks and predicting future profit margins. You'll gain valuable insight into Fisher's original thinkin for valuing stocks and predicting future profit margins. A pioneer in the use of the Price Sales Ratio-a powerful analytical tool-Fisher regales readers with instructive tales of the businesses he invested in and profited from. Super Stocks gives a historical perspective on how Fisher successfully researched companies and stocks—who he saw and what he asked—to get a better read on profitable returns. “As rich in investment war stories as it is in knowledge.”-The Motley Fool
Book Synopsis Capital Structure and Corporate Financing Decisions by : H. Kent Baker
Download or read book Capital Structure and Corporate Financing Decisions written by H. Kent Baker and published by John Wiley & Sons. This book was released on 2011-03-31 with total page 504 pages. Available in PDF, EPUB and Kindle. Book excerpt: A comprehensive guide to making better capital structure and corporate financing decisions in today's dynamic business environment Given the dramatic changes that have recently occurred in the economy, the topic of capital structure and corporate financing decisions is critically important. The fact is that firms need to constantly revisit their portfolio of debt, equity, and hybrid securities to finance assets, operations, and future growth. Capital Structure and Corporate Financing Decisions provides an in-depth examination of critical capital structure topics, including discussions of basic capital structure components, key theories and practices, and practical application in an increasingly complex corporate world. Throughout, the book emphasizes how a sound capital structure simultaneously minimizes the firm's cost of capital and maximizes the value to shareholders. Offers a strategic focus that allows you to understand how financing decisions relates to a firm's overall corporate policy Consists of contributed chapters from both academics and experienced professionals, offering a variety of perspectives and a rich interplay of ideas Contains information from survey research describing actual financial practices of firms This valuable resource takes a practical approach to capital structure by discussing why various theories make sense and how firms use them to solve problems and create wealth. In the wake of the recent financial crisis, the insights found here are essential to excelling in today's volatile business environment.
Book Synopsis The Trade-Off Theory Revisited by : Kristoffer J. Glover
Download or read book The Trade-Off Theory Revisited written by Kristoffer J. Glover and published by . This book was released on 2013 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the effect of operating leverage, and the subsequent abandonment option available to managers, on the relationship between corporate earnings and optimal financial leverage, thereby providing an alternative (rational) explanation for the observed negative relationship between these two quantities. Working in a dynamic capital structure setting, where corporate earnings are modelled as an exogenous stochastic process, we explicitly add fixed operating costs to the firm's value optimisation. This introduces a degree of operating leverage and a non-zero value to the implicit abandonment option of the firm's manager. Solving for the firm's optimal timing and financing decisions we are able to derive the relationship between current corporate earnings and optimal financial leverage for a large class of earnings uncertainty assumptions. The theoretical implications are then tested empirically using a large selection of S&P 500 firms. Our analysis reveals that the manager's flexibility to abandon the project introduces nonlinearities into the valuation that are sufficient to reconcile the trade-off theory with the empirically observed negative earnings/financial leverage relationship. We further find theoretical and empirical evidence of a positive relationship between operating and financial leverage. Previous studies have used mean-reverting earnings as an explanation for the observed negative earnings/financial leverage relationship in a trade-off theory setting. We show that the relationship does not need to be process specific. Instead, it is a direct result of the financial flexibility of managers.
Download or read book Payout Policy written by and published by . This book was released on 2007 with total page 83 pages. Available in PDF, EPUB and Kindle. Book excerpt: Dividend policy continues to be among the premier unsolved puzzles in finance. A number of theories have been advanced to explain dividend policy. This e-book briefly reviews the principal theories of payout policy and dividend policy and summarizes the empirical evidence on these theories. Empirical evidence is equivocal and the search for new explanation for dividends continues.
Book Synopsis Accounting for Value by : Stephen Penman
Download or read book Accounting for Value written by Stephen Penman and published by Columbia University Press. This book was released on 2010-12-30 with total page 265 pages. Available in PDF, EPUB and Kindle. Book excerpt: Accounting for Value teaches investors and analysts how to handle accounting in evaluating equity investments. The book's novel approach shows that valuation and accounting are much the same: valuation is actually a matter of accounting for value. Laying aside many of the tools of modern finance the cost-of-capital, the CAPM, and discounted cash flow analysis Stephen Penman returns to the common-sense principles that have long guided fundamental investing: price is what you pay but value is what you get; the risk in investing is the risk of paying too much; anchor on what you know rather than speculation; and beware of paying too much for speculative growth. Penman puts these ideas in touch with the quantification supplied by accounting, producing practical tools for the intelligent investor. Accounting for value provides protection from paying too much for a stock and clues the investor in to the likely return from buying growth. Strikingly, the analysis finesses the need to calculate a "cost-of-capital," which often frustrates the application of modern valuation techniques. Accounting for value recasts "value" versus "growth" investing and explains such curiosities as why earnings-to-price and book-to-price ratios predict stock returns. By the end of the book, Penman has the intelligent investor thinking like an intelligent accountant, better equipped to handle the bubbles and crashes of our time. For accounting regulators, Penman also prescribes a formula for intelligent accounting reform, engaging with such controversial issues as fair value accounting.
Download or read book Senior Capital written by Julien J. Wade and published by . This book was released on 1972 with total page 350 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Financial Statement Analysis and Security Valuation by : Stephen H. Penman
Download or read book Financial Statement Analysis and Security Valuation written by Stephen H. Penman and published by . This book was released on 2010 with total page 754 pages. Available in PDF, EPUB and Kindle. Book excerpt: Valuation is at the heart of investing. A considerable part of the information for valuation is in the financial statements.Financial Statement Analysis and Security Valuation, 5 e by Stephen Penman shows students how to extract information from financial statements and use that data to value firms. The 5th edition shows how to handle the accounting in financial statements and use the financial statements as a lens to view a business and assess the value it generates.
Book Synopsis Portfolio Selection by : Harry Markowitz
Download or read book Portfolio Selection written by Harry Markowitz and published by Yale University Press. This book was released on 2008-10-01 with total page 369 pages. Available in PDF, EPUB and Kindle. Book excerpt: Embracing finance, economics, operations research, and computers, this book applies modern techniques of analysis and computation to find combinations of securities that best meet the needs of private or institutional investors.
Book Synopsis Introduction to Management Accounting 1-19 and Student Cd Package by : Charles T. Horngren
Download or read book Introduction to Management Accounting 1-19 and Student Cd Package written by Charles T. Horngren and published by . This book was released on 2002 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: For courses in Introduction to Management Accounting. Get refreshed with Horngren/Sundem/Stratton's Introduction to Management Accounting, Twelfth Edition. This best-selling text offers a relevant, real-world decision-making approach to management accounting. Students develop a solid understanding of costs and cost behavior and the use of cost information for planning and control decisions, not just inventory valuation. An exceptionally strong pedagogy and supplements package and flexible structure provide instructors with great latitude in choosing various combinations of breadth and depth, theory and procedures, simplicity and complexity. The Twelfth Edition now includes student-oriented real-world company examples such as Nantucket Nectars and McDonalds; new "Cognitive Exercises" and "Business First" boxes, new on-line courses and tutorial software package resources, and a new CD-ROM series, "Mastering Accounting."
Book Synopsis The Value Relevance of Changes in Financial Leverage by : Valentin Dimitrov
Download or read book The Value Relevance of Changes in Financial Leverage written by Valentin Dimitrov and published by . This book was released on 2012 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: Economic performance (economic profits, economic income, or underlying operating performance) of a firm is not observable. Market participants use accounting earnings and other proxies to measure the otherwise unobservable economic performance. Ball and Brown (1968) show that accounting earnings capture the economic performance to some extent. In particular, they find that accounting earnings are correlated with stock returns (value relevant). We hypothesize and show that changes in financial leverage are also value relevant. We document a significantly negative association between changes in financial leverage and contemporaneous risk-adjusted stock returns. The information in changes in financial leverage is incremental to the information in earnings-based measures. Furthermore, we find that changes in financial leverage are also negatively associated with future risk-adjusted returns. This evidence suggests that the information in changes in financial leverage is not impounded in stock prices in a timely fashion.
Book Synopsis Leverage, Dividend Policy, Profitability and Market Value Relationships by : Prof. Dr. Radhe Shyam Pradhan
Download or read book Leverage, Dividend Policy, Profitability and Market Value Relationships written by Prof. Dr. Radhe Shyam Pradhan and published by . This book was released on 2017 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the relationship among leverage, dividend policy, profitability and market value in the context of Nepalese commercial banks. The dependent variables are value of commercial banks defined in terms of dividend per share and market price per share. The independent variables are earnings per share, price earnings ratio, book value per share, return on assets, debt to equity, size and taxes are taken as independent variables. The data are collected from various issues of Banking and Financial Statistics and Bank Supervision Report published by Nepal Rastra Bank and annual reports of selected commercial banks. The study is based on 14 commercial banks of Nepal for the period of 2003 to 2014 leading to the total of 168 observations. The regression models are estimated to test the significance and importance of effect of leverage, dividend policy and profitability on value of Nepalese commercial banks.The result shows positive relationship of dividend per share with bank size, earning per share, financial leverage. This means that increase in bank size, earning per share and financial leverage lead to increase in dividend per share. Likewise, the results also shows that there is positive relationship of dividend per share with reserve and surplus, return on assets and tax liabilities indicating that higher the reserve, return on assets and tax liabilities, higher would be the dividend per share. Similarly, market price per share is positively related to earning per share, reserve and financial leverage. It indicates that increase in dividend per share, earning per share, reserve and financial leverage leads to increase in the market price per share. The beta coefficients are significant for size and reserve with dividend per share. Likewise, the beta coefficient is significant for leverage with market price per share.
