introduction
play

Introduction What is this all about? Javier Go Estrada Finding - PDF document

Feb 10, 2024 •1.52k likes •1.75k views

Corporate Finance Capital Structure Javier Estrada Spring, 2014 1. Introduction Where are we going? 2. Tonka Implications Limitations 3. Polaroid Costs of financial distress Agency costs and covenants Implications

  1. Corporate Finance Capital Structure Javier Estrada Spring, 2014 1. Introduction • Where are we going? 2. Tonka • Implications • Limitations 3. Polaroid • Costs of financial distress • Agency costs and covenants • Implications Introduction  What is this all about? Javier Go Estrada  Finding the best ( cheapest ) way to finance the long ‐ IESE Business term projects of a company School • What financial instruments, and in what proportions, Barcelona Spain minimize the company’s cost of capital? • Optimal capital structure  x D and x E (or D/E) that minimize the WACC  We will do this in two steps  The positive side of debt • The limitations of the set‐up  The positive and negative sides of debt • The process of finding an optimal capital structure Go MBA CorpFin Spring, 2014 1

  2. Recap  Tonka: Assumptions Javier Estrada  Some are harmless, some are rather implausible, IESE Business and some are very implausible School  Tonka: Results Barcelona Spain  As x D increases, what happens with net income, EPS, DPS, and the share price?  More debt cannot always be better • There must be trade‐offs Go  Tonka: Usefulness  What it shows and what it hides  Target variable  Tonka: Stock price (Maximize)  Polaroid: Cost of capital (Minimize) MBA  Both targets should lead to the same (D/E) * CorpFin Spring, 2014 The Costs of Debt  Costs of financial distress Javier Estrada  Two types IESE Go Business • Direct School Barcelona • Indirect Spain  Typically thought of as putting downward pressure on the company’s cash flows  Agency costs  Typically thought of as putting upward pressure on the cost of debt ( R D ) • The role of covenants Go MBA CorpFin Spring, 2014 Go ‐ Xls 2

  3. Optimal Capital Structure  Critical result Javier Estrada  In general and in the case IESE Business • The evidence clearly indicates that the WACC is not School minimized at a AAA rating Barcelona Spain  Why?  Latest trends in ratings Go  Non‐quantitative factors  Not only quantitative factors are relevant • Qualitative factors are (very) relevant too Go MBA CorpFin Spring, 2014 Appendix Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 3

  4. Introduction Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Introduction Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 4

  5. Introduction Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Introduction Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Back 5

  6. Introduction Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Back Trade ‐ Offs Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 6

  7. Trade ‐ Offs Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Back Costs of Financial Distress – Direct Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 7

  8. Costs of Financial Distress – Direct Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Costs of Financial Distress – Direct Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 8

  9. Costs of Financial Distress – Direct Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Costs of Financial Distress – Indirect Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Back 9

  10. Agency Costs – Covenants Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Agency Costs – Covenants Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Back 10

  11. Optimal Capital Structure & Ratings Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Optimal Capital Structure & Ratings Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 11

  12. Optimal Capital Structure & Ratings Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Optimal Capital Structure & Ratings Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 12

  13. Optimal Capital Structure & Ratings Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Optimal Capital Structure & Ratings Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 13

  14. Optimal Capital Structure & Ratings Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Optimal Capital Structure & Ratings Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Back 14

  15. Qualitative Factors Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Qualitative Factors Javier Estrada IESE Business School Barcelona Spain MBA CorpFin Spring, 2014 Back 15

Download Presentation
Download Policy: The content available on the website is offered to you 'AS IS' for your personal information and use only. It cannot be commercialized, licensed, or distributed on other websites without prior consent from the author. To download a presentation, simply click this link. If you encounter any difficulties during the download process, it's possible that the publisher has removed the file from their server.

Recommend

INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION

INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION

TRAINING COURSE ON SOCIAL PROTECTION & FORMALIZATION TRINIDAD AND TOBAGO MARCH 15, 2017 INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION INTRODUCTION Design of the NIS Assistance from the

547 views • 23 slides
INTRODUCTION Introduction 2/42 INTRODUCTION Alternations I am giving bread to the

INTRODUCTION Introduction 2/42 INTRODUCTION Alternations I am giving bread to the

Patterns of variation in the expression of case and agreement Andrs Brny Leiden University Centre for Linguistics 9 November 2019, BaSIS Workshop a.barany@hum.leidenuniv.nl INTRODUCTION Introduction 2/42 INTRODUCTION

1.37k views • 42 slides
Introduction Introduction Introduction Introduction Outline Motivation Failures

Introduction Introduction Introduction Introduction Outline Motivation Failures

Introduction Introduction Introduction Introduction Outline Motivation Failures Definition and concepts Process and product properties Principles SE Approaches Motivation Software and the economy The economies of

1.03k views • 49 slides
Introduction Introduction Introduction Nationwide Cause for Concern 1

Introduction Introduction Introduction Nationwide Cause for Concern 1

Introduction Introduction Introduction Nationwide Cause for Concern 1 https://www.cdc.gov/std/stats17/infographic.htm Introduction Epidemiology in Western Colorado CPHE Surveillance Data Report, May 2018 Chlamydia Epidemiology in Western

977 views • 39 slides
DAQ introduction Purpose of this talk : (1) Introduction for those who have not been in every

DAQ introduction Purpose of this talk : (1) Introduction for those who have not been in every

DAQ introduction Purpose of this talk : (1) Introduction for those who have not been in every meeting (2) Some ideas of diagrams for section 7.1 (Introduction) of TP. Giles Barr 25 Jan 2018, Pembroke College On DUNE, the reality is there is a

474 views • 10 slides
INTRODUCTION cf. Schneider, Chapter 1 INTRODUCTION THEY ARE OUT TO GET YOU INTRODUCTION WHAT

INTRODUCTION cf. Schneider, Chapter 1 INTRODUCTION THEY ARE OUT TO GET YOU INTRODUCTION WHAT

ADVANCED COMPUTER SECURITY INTRODUCTION cf. Schneider, Chapter 1 INTRODUCTION THEY ARE OUT TO GET YOU INTRODUCTION WHAT IS SECURITY? A systems security policies describe What the system is supposed to do Store and provide access

479 views • 16 slides
Overview Introduction to SMIL Introduction to W3C and XML Introduction to SMIL

Overview Introduction to SMIL Introduction to W3C and XML Introduction to SMIL

Overview Introduction to SMIL Introduction to W3C and XML Introduction to SMIL Writing a SMIL file Adding Media Objects Martin Halvey Clipping media files January 2008 Timing and Synchronising Layout World Wide

387 views • 14 slides
14 Introduction Introduction Bad guys can put malware into Example: hosts

14 Introduction Introduction Bad guys can put malware into Example: hosts

Introduction Introduction source Encapsulation ISO/OSI reference model message M application segment H t H t M transport network datagram H n H n H t M presentation: allow applications to frame link H l H n H t M interpret

583 views • 4 slides
Previous Lecture Introduction to SMIL 2 Introduction to W3C and XML Introduction to SMIL

Previous Lecture Introduction to SMIL 2 Introduction to W3C and XML Introduction to SMIL

Previous Lecture Introduction to SMIL 2 Introduction to W3C and XML Introduction to SMIL Writing a SMIL file Adding Media Objects Martin Halvey Clipping media files January 2008 Timing and Synchronising Layout

322 views • 8 slides
Lecture 1 Andreas Habegger Introduction Zynq Introduction Zynq Introduction Zynq PS vs. PL

Lecture 1 Andreas Habegger Introduction Zynq Introduction Zynq Introduction Zynq PS vs. PL

Introduction Zynq Lecture 1 Andreas Habegger Introduction Zynq Introduction Zynq Introduction Zynq PS vs. PL Processing System Processor Peripherals Data Buses AXI Bus Conclusion BTE5380 - Embedded Systems Octobre 2014 Andreas Habegger

1.81k views • 30 slides
2018.06 01 SMILE5 Introduction S E 5 02 Alpha Cloud M I L 03 Company Introduction 04

2018.06 01 SMILE5 Introduction S E 5 02 Alpha Cloud M I L 03 Company Introduction 04

2018.06 01 SMILE5 Introduction S E 5 02 Alpha Cloud M I L 03 Company Introduction 04 Project References S E 5 PART.1 SMILE5 Introduction M I L Introduction STORION-SMILE5 Residential Energy Storage System Inverter 5kW Output Input

1.06k views • 25 slides
Introduction to CICS Course introduction Course introduction What is CICS? What is an

Introduction to CICS Course introduction Course introduction What is CICS? What is an

Introduction to CICS Course introduction Course introduction What is CICS? What is an application server? Why use an application server? Course introduction Services provided by CICS How CICS applications are defined Scaling CICS to meet

1.84k views • 146 slides
Network Visualization Introduction Presented by Shahed Introduction Introduction Basic

Network Visualization Introduction Presented by Shahed Introduction Introduction Basic

Network Visualization Introduction Presented by Shahed Introduction Introduction Basic building blocks Node Links (relationship between nodes) Spatial information Network data

584 views • 9 slides
Introduction Introduction (1) Main argument of the paper: universities are not only

Introduction Introduction (1) Main argument of the paper: universities are not only

Le jugement des pairs comme outil de management des universits Peer-review as a management tool Christine Musselin (CSO, Sciences Po et CNRS) Avril 2013, Lirrsistible ascension du capitalisme acadmique Introduction Introduction (1)

590 views • 28 slides
Introduction Introduction to storage and to storage and filesystems filesystems Introduction

Introduction Introduction to storage and to storage and filesystems filesystems Introduction

Moreno Baricevic Gilberto Daz Axel Kohlmeyer Stefano Cozzini ULA ICTP CNR-IOM DEMOCRITOS Merida, VENEZUELA Trieste, ITALY Trieste, ITALY Introduction Introduction to storage and to storage and filesystems filesystems Introduction

1.19k views • 51 slides
JABLOTRON JA-100 introduction November 2011 Introduction Todays goals First introduction of

JABLOTRON JA-100 introduction November 2011 Introduction Todays goals First introduction of

JABLOTRON JA-100 introduction November 2011 Introduction Todays goals First introduction of the brand new JA-100 alarm system Visions Basic architecture System components Setting Help us with final validations You are the FIRST ones

1.69k views • 111 slides
Outcome Outcome- -Based Education (OBE) Based Education (OBE) and Generic Skills (GS) and

Outcome Outcome- -Based Education (OBE) Based Education (OBE) and Generic Skills (GS) and

Chemical Engineering Department Workshop, 15 - 17 December 2007 Outcome Outcome- -Based Education (OBE) Based Education (OBE) and Generic Skills (GS) and Generic Skills (GS) Prof. Dr. Shahrin Mohammad Civil Engineering Faculty Universiti

1.17k views • 32 slides
Outcome-Based Education (OBE) an overview Prof. Dr. Shahrin Mohammad Civil Engineering

Outcome-Based Education (OBE) an overview Prof. Dr. Shahrin Mohammad Civil Engineering

Outcome-Based Education (OBE) an overview Prof. Dr. Shahrin Mohammad Civil Engineering Faculty Universiti Teknologi Malaysia Learning outcomes for this presentation By the end of the presentation, participants should be able to: about

996 views • 28 slides
The Human Rights Act 2019 (Qld) Bridget Burton Human Rights Month (QHRC) 21 Nov 2019 The

The Human Rights Act 2019 (Qld) Bridget Burton Human Rights Month (QHRC) 21 Nov 2019 The

The Human Rights Act 2019 (Qld) Bridget Burton Human Rights Month (QHRC) 21 Nov 2019 The Human Rights Act 2019: Requires the Qld Parliament to consider human rights when making law Instructs Courts to interpret law in line with

779 views • 18 slides
http://www.greenland-guide.gl/ The population of Greenland is 56,000 humans, with 14,000 living

http://www.greenland-guide.gl/ The population of Greenland is 56,000 humans, with 14,000 living

Lecture 3 images and cultural/historic notes : 12x2004 Kalaallit Nunaat (Greenland) and Nunuvut (Canada) Greenland towns and villages have 2 names: Home Rule began in 1979; visit www.nanoq.gl www.gh.gl/uk/govern/organiza.htm Greenland is a

835 views • 14 slides
Video Archive Search and Analysis TRECVID Interactive Surveillance Event Detection Task 2012

Video Archive Search and Analysis TRECVID Interactive Surveillance Event Detection Task 2012

Standards based Approach to Video Archive Search and Analysis TRECVID Interactive Surveillance Event Detection Task 2012 Suzanne Little, DCU suzanne.little@dcu.ie Outline Standards based Approach to Who are we? Video Archive Search and

563 views • 15 slides
Using multimodal mining to drive clinical guidelines development Emilie Pasche 1 , Julien Gobeill

Using multimodal mining to drive clinical guidelines development Emilie Pasche 1 , Julien Gobeill

Using multimodal mining to drive clinical guidelines development Emilie Pasche 1 , Julien Gobeill 2 , Douglas Teodoro 1 , Dina Vishnyakova 1 , Arnaud Gaudinat 2 , Patrick Ruch 2 and Christian Lovis 1 1 SIMED, University of Geneva and University

736 views • 16 slides
Computer certified efficient exact reals in Coq Bas Spitters Robbert Krebbers Eelis van der

Computer certified efficient exact reals in Coq Bas Spitters Robbert Krebbers Eelis van der

Computer certified efficient exact reals in Coq Bas Spitters Robbert Krebbers Eelis van der Weegen Radboud University Nijmegen Supported by EU FP7 STREP FET-open ForMATH Why do we need certified exact arithmetic? There is a big gap

802 views • 36 slides
Salford Royal Transplant First Team Who we are 2 x live donor nurses 2 x CKD nurses

Salford Royal Transplant First Team Who we are 2 x live donor nurses 2 x CKD nurses

Salford Royal Transplant First Team Who we are 2 x live donor nurses 2 x CKD nurses Consultant 2 managers Patients Pre - transplant population of half of Greater Manchester 500 patients with eGFR <20 Where we

70 views • 6 slides

More recommend