European Journal of Business and Management ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) 1905 2222 Vol.5‚ No.3‚ 2013 www.iiste.org The Effect of Leverage on Shareholders’ Return: An Empirical Study on Some Selected Listed Companies in Bangladesh Md. Abdullah Al Hasan1* Anupam Das Gupta2 Al1. Lecturer‚ Department of Finance and Banking‚ University of Chittagong. 2. Assistant Professor‚ Department of Finance and Banking‚ University of Chittagong. Email: anupam@cu.ac.bd. * E-mail of the corresponding
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Chapter 6 Exam Select the correct answer for each question. All questions are worth 4 points a piece. 1. Coors is smooth or both Beck’s is subtle and Guinness is heavy. a. C (B • G) b. C • (B G) c. (C B) • G d. (C • B) G e. C B • G 2. Budweiser is bland if either Heineken is balanced or Foster’s is refreshing. a. (H B) F b. (B H) F c. B (H F) d. B H F e. (H F) B 3 Alaskan is sweet
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Polaroid Corporation‚ 1996 In late March 1996‚ Ralph Norwood was faced with the task of restructuring Polaroid’s capital structure. In the past‚ Polaroid had a monopoly in the instant-photography segment. However‚ with upcoming threats in the emerging digital photography industry and Polaroid experiencing recent losses in their market share due to Kodak’s competition‚ Gary T. DiCamillo‚ recently appointed CEO of Polaroid‚ headed a restructuring plan to stimulate the firm’s performance. The firm’s
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Marriott Case 1. What is the WACC for Marriott Corporation? Cost of Debt Tax Rate We determined this number by taking income taxes paid/EBITDA = 175.9/398.9 = 44.1% Return on debt There are two clear components of debt: fixed and floating. In order to get the fixed debt rate we took the interest rates on fixed-rate government securities and added the premium
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Design of filter circuits for impedance matching of wideband transducers ABSTRACT Wide band piezo-composite transducer is a next generation transducer for under water application. The impedance matching on the interface between electro-acoustical transducer and electrical transmitter has been the most important subject to confirm the high transmitting efficiency. Because the impedance of a wide band transducer depends on signal frequency‚ it is difficult to design a matching network
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Question 6 What is the cost of capital for the lodging and restaurant divisions of Marriott? Answer: The cost of capital for lodging is 9.2% and the cost of capital for restaurants is 13.1% Calculation: WACC = (1-t) * rd * (D/V) + re* (E/V) Where: D= market value of DEBT re = aftertax cost of equity E = market value of EQUITY V = D+E rd = pretax cost of debt t = tax rate To calculate the formula above‚ we need to determine each component Tax rate (t) 56% --> calculated before LODGING
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OPTIMAL CAPITAL STRUCTURE The optimal capital structure for a company should be the mix of equity‚ debt and hybrid instruments that minimizes the overall cost of funding‚ i.e. it should minimize the company’s weighted average cost of capital. In practice‚ however‚ it is not possible to specify this optimal capital structure exactly‚ for any individual company. It clearly makes sense to obtain funds at the lowest possible cost. In the long run‚ debt is cheaper than equity. However‚ when a company’s
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PART-II DATA ANALYSIS AND INTERPRETATION 6|Page 2.0 What is Leverage? Leverage can be defined as the ability of a firm to use its fixed cost assets or funds to magnify the returns to shareholders. According to J. F. Weston‚ Scott‚ Besley and E. F. Brigham‚ “Leverage is created when a firm has fixed cost associated either with its sales and production operation or with its financing characteristics.” Leverage in other sense is the degree to which an investor or business is utilizing
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#2 Capital Structure -1 Dr. Kulbir Singh Advanced Corporate Finance (ACF) Term III 2013-14 IMT-Nagpur Capital Structure: Introduction Mix of debt and equity use to finance its business Goal of CS Decision: to determine the financial leverage or CS that maximizes the value of company by minimizing WACC. Theory of Corporate Financing MM Theory of CS Irrelevance Trade-Off Theory Agency Theory Dr. Kulbir Singh (IMT-Nagpur) ADF 2013-14 Pecking Order Theory 2 Capital Structure: Introduction……
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Managerial Finance – Problem Review Set – Capital Structure and Leverage 1) If a firm utilizes debt financing‚ an X% decline in earnings before interest and taxes (EBIT) will result in a decline in earnings per share that is larger than X. a. True b. False 2) Firm A has a higher degree of business risk than Firm B. Firm A can offset this by using less financial leverage. Therefore‚ the variability of both firms ’ expected EBITs could
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