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(^306) Financial Management is the mtio of net cash inflows to fixed charges (debt-servicing ratio). It indicates the number of ...

Capital Structure Theories^307 forced to reschedule repayments of its debt by the year 2003 instead of 1995. Nalco's debt- equit ...

(^308) Financial Management payments, that are matters of contract and should not be defaulted Policy obligations consist of tho ...

Capital Structure Theories^309 Cash Flow Analysis Versus Debt-Equity Ratio The cash flow analysis clearly reveals that a higher ...

(^310) Financial Management Further assume that the existing EBIT are Rs 120, 000, the tax rate is 35 per cent, outstanding ordi ...

Capital Structure Theories^311 Rs 25,000, Rs 60,000 and Rs 38,462 respectively. This level of EBIT may be termed as financial br ...

(^312) Financial Management (ii)EBIT = Rs 1,00,000 (5 per cent return) EBIT 1,00,000 1,00,000 1,00,000 1,00,000 Less interest - ...

Capital Structure Theories^313 It can be seen from above Table that when the EBIT level exceeds the financial break- even level ...

(^314) Financial Management N 1 = number of equity shares outstanding if only equity shares are issued N 2 = number of equity sh ...

Capital Structure Theories^315 Example 3: The financial manager of a company has formulated various financial plans to finance R ...

(^316) Financial Management Confirmation table Equity financingEquity + debt financing EBIT Rs 3,00,000 Rs 3,00,000 Less interes ...

Capital Structure Theories^317 or        = ¥ - X = Rs 4,80,000 Confirmation table Equity financing Equity+debt+ ...

(^318) Financial Management Less dividends preference shares - 1,30,000 Earnings for equity holders 2,92,500 1,75,500 Number of ...

Capital Structure Theories^319 (1-0.35). Thus, the starting point of preference share financial plan would be Rs 2 lakh. The ind ...

(^320) Financial Management should be identical. Thus, on the basis of level of EBIT which ensures identical market price for al ...

Capital Structure Theories^321 Less taxes 13,125 15,750 Earnings after tax 24,375 29,250 Number of equity shares 5,000 7,000 Ear ...

(^322) Financial Management Exhibit 3: Relation between ROI and ROE Under Capital Structures A and B Exhibit 4: Relationship bet ...

Capital Structure Theories^323 r = cost of debt D/E = debt-equity ratio t = tax rate Applying the above equation to Korex Limite ...

(^324) Financial Management Interest Coverage Ratio The interest coverage ratio (also referred to as the times interest earned r ...

Capital Structure Theories^325 cash flows. However, it too is characterised by the problem of establishing a suitable norm for j ...