CL 1: Analysis and lactofLewerage Operating Leverage Financial Leverage @2002 Prentice Hall. Inc
• Operating Leverage • Financial Leverage © 2002, Prentice Hall, Inc
What is Leverage? D
What is Leverage?
What is Leverage? D
What is Leverage?
What is Leverage?
What is Leverage?
2 concepts that enhance our understanding ofrisk. 1) Operating Leverage- affects a firm? s business risk。 2) Financial Leverage-affects a firm’ s financial risk
2 concepts that enhance our understanding of risk... 1) Operating Leverage - affects a firm’s business risk. 2) Financial Leverage - affects a firm’s financial risk
Business risk The variability or uncertainty of a firms operating income (EBIT)
Business Risk • The variability or uncertainty of a firm’s operating income (EBIT)
Business risk The variability or uncertainty of a firms operating income (EBIT) EBIT
Business Risk • The variability or uncertainty of a firm’s operating income (EBIT). EBIT
Business risk The variability or uncertainty of a firms operating income (EBIT) EBIT> FIRM
Business Risk • The variability or uncertainty of a firm’s operating income (EBIT). EBIT FIRM
Business risk The variability or uncertainty of a firms operating income (EBIT) EBIT> FIRM EPS
Business Risk • The variability or uncertainty of a firm’s operating income (EBIT). EBIT FIRM EPS
Business risk The variability or uncertainty of a firms operating income (EBIT) Stocke EBIT> FIRM EPS holders
Business Risk • The variability or uncertainty of a firm’s operating income (EBIT). EBIT FIRM EPS Stockholders
