LEVERAGES

I wrote this book Leverages with the following objectives.

·        To demonstrate to readers that the subject of Leverages simple to understand, relevant in practice and interesting to learn.

·        To help managers appreciate the logic for making better financial decisions.

·        To explain the concepts and theories of Leverages in a simple way so readers could grasp them very easily and be able to put them in to practice.

·        To provide a book that has a comprehensive coverage for leverages and their analysis.

·        To create a book that differentiates itself from other books in terms of coverage, presentation.

This book useful to Students, Job Interviews, Investors, Financial advisers, Financial managers and Fund managers to relate theories, concepts and data interpretation to practice.

This book Leverages aims to assist the reader to develop a thorough understanding of the concepts and theories underlying financial management in a systematic way. To accomplish this purpose, the recent thinking in the field of finance has been presented in a most simple, and precise manner.

The main features of the book are simple understanding and key concepts.

The book contains a comprehensive analysis of topics on Leverages with a view that readers understand financial decisions thoroughly well and able to evaluate their implications for shareholders and the company.

This book begins with the discussion of fundamental concepts of Leverages and Capital structure. With this foundation, readers can easily understand the leverages, decision criteria necessary to manage the funds and create and enhance the value of the firm.

The text material has been structured to focus on Leverages is in the financial decision making process.

The book discusses the theories, concepts, assumptions, underlying financial decisions i.e.  investment, financing, dividend and working capital management.

It is hoped that this will facilitate a better understanding of the subject matter.

 

CONTENTS

Definition of Leverage

Capital structure

Types of Leverages

   1. Operating leverage

           Degree of operating leverage

   2. Financial Leverage

           Degree of financial leverage

           Measures of Financial leverage

                Debt ratio

                Debt-equity ratio

                Interest coverage ratio

           Financial leverage & Shareholder’s return

          Calculation of EPS and ROE

              Calculation of EPS

              Calculation of ROE

              Effect of leverage on EPS & ROE

          Financial leverage and shareholder’s risk

   3. Combined leverage

           Degree of combined leverage

Case 1 and solution

Case 2 and solution

Case 3 and solution

Case 4 and solution

Case 5 and solution

Case 6 and solution

Case 7 and solution