财务管理基础13版BRD5Word文档格式.docx

财务管理基础13版BRD5Word文档格式.docx

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Forbreak-evenanalysisbasedonaccountingflows,depreciationisconsideredpartoffixedcosts.Forcashflowpurposes,itiseliminatedfromfixedcosts.

Theaccountingflowsperspectiveislonger-terminnaturebecausewemustconsidertheproblemsofequipmentreplacement.

5-5.

Whatdoesrisktakinghavetodowiththeuseofoperatingandfinancialleverage?

Bothoperatingandfinancialleverageimplythatthefirmwillemployaheavycomponentoffixedcostresources.Thisisinherentlyriskybecausetheobligationtomakepaymentsremainsregardlessoftheconditionofthecompanyortheeconomy.

5-6.

Discussthelimitationsoffinancialleverage.

Debtcanonlybeuseduptoapoint.Beyondthat,financialleveragetendstoincreasetheoverallcostsoffinancingtothefirmaswellasencouragecreditorstoplacerestrictionsonthefirm.Thelimitationsofusingfinancialleveragetendtobegreatestinindustriesthatarehighlycyclicalinnature.

5-7.

Howdoestheinterestrateonnewdebtinfluencetheuseoffinancialleverage?

Thehighertheinterestrateonnewdebt,thelessattractivefinancialleverageistothefirm.

5-8.

Explainhowcombinedleveragebringstogetheroperatingincomeandearningspershare.

Operatingleverageprimarilyaffectstheoperatingincomeofthefirm.Atthispoint,financialleveragetakesoveranddeterminestheoverallimpactonearningspershare.AdelineationofthecombinedeffectofoperatingandfinancialleverageispresentedinTable5-6andFigure5-5.

5-9.

Explainwhyoperatingleveragedecreasesasacompanyincreasessalesandshiftsawayfromthebreak-evenpoint.

Atprogressivelyhigherlevelsofoperationsthanthebreak-evenpoint,thepercentagechangeinoperatingincomeasaresultofapercentagechangeinunitvolumediminishes.Thereasonisprimarilymathematical—aswemovetoincreasinglyhigherlevelsofoperatingincome,thepercentagechangefromthehigherbaseislikelytobeless.

5-10.

Whenyouareconsideringtwodifferentfinancingplans,doesbeingatthelevelwhereearningspershareareequalbetweenthetwoplansalwaysmeanyouareindifferentastowhichplanisselected?

Thepointofequalityonlymeasuresindifferencebasedonearningspershare.Sinceourultimategoalismarketvaluemaximization,wemustalsobeconcernedwithhowtheseearningsarevalued.Twoplansthathavethesameearningspersharemaycallfordifferentprice-earningsratios,particularlywhenthereisadifferentialriskcomponentinvolvedbecauseofdebt.

Problems

1.EnscoLightingCompanyhasfixedcostsof$100,000,sellsitsunitsfor$28,andhasvariablecostsof$15.50perunit.

a.Computethebreak-evenpoint.

b.Ms.Wattscomesupwithanewplantocutfixedcoststo$75,000.However,morelaborwillnowberequired,whichwillincreasevariablecostsperunitto$17.Thesalespricewillremainat$28.Whatisthenewbreak-evenpoint?

c.Underthenewplan,whatislikelytohappentoprofitabilityatveryhighvolumelevels（comparedtotheoldplan）?

5-1.Solution:

EnscoLightingCompany

a.

b.

Thebreakevenleveldecreases.

c.Withlessoperatingleverageandasmallercontributionmargin,profitabilityislikelytobelessatveryhighvolumelevels.

2.EatonToolCompanyhasfixedcostsof$200,000,sellsitsunitsfor$56,andhasvariablecostsof$31perunit.

b.Ms.Eatoncomesupwithanewplantocutfixedcoststo$150,000.However,morelaborwillnowberequired,whichwillincreasevariablecostsperunitto$34.The 

salespricewillremainat$56.Whatisthenewbreak-evenpoint?

5-2.Solution:

EatonToolCompany

c.Withlessoperatingleverageandasmallercontributionmargin,profitabilityislikelytobelessthanitwouldhavebeenatveryhighvolumelevels.

3Drawtwobreak-evengraphs—oneforaconservativefirmusinglabor-intensiveproductionandanotherforacapital-intensivefirm.Assumingthesecompaniescompetewithinthesameindustryandhaveidenticalsales,explaintheimpactofchangesinsalesvolumeonbothfirms’profits.

5-3.Solution:

Labor-Intensiveandcapital-intensivebreak-evengraphs

Thecompanyhavingthehighfixedcostswillhavelowervariablecoststhanitscompetitorsinceithassubstitutedcapitalforlabor.Withalowervariablecost,thehighfixedcostcompanywillhavealargercontributionmargin.Therefore,whensalesrise,itsprofitswillincreasefasterthanthelowfixedcostfirmandwhenthesalesdecline,thereversewillbetrue.

4TheHarmonCompanymanufacturesskates.Thecompany’sincomestatementfor2008isasfollows:

HARMONCOMPANY

IncomeStatement

FortheYearEndedDecember31,2008

Sales（30,000skates@$25）

$750,000

Less:

Variablecosts（30,000skatesat$7）

210,000

Fixedcosts

270,000

Earningsbeforeinterestandtaxes（EBIT）

Interestexpense

170,000

Earningsbeforetaxes（EBT）

100,000

Incometaxexpense（35%）

35,000

Earningsaftertaxes（EAT）

$65,000

Giventhisincomestatement,computethefollowing:

a.Degreeofoperatingleverage.

b.Degreeoffinancialleverage.

c.Degreeofcombinedleverage.

d.Break-evenpointinunits.

5-4.Solution:

HarmonCompany

Q=30,000,P=$25,VC=$7,FC=$270,000,I=$170,000

c.

d.

5.U.S.Stealhasthefollowingincomestatementdata:

UnitsSold

TotalVariableCosts

Fixed

Costs

TotalCosts

TotalRevenue

OperatingIncome（Loss）

40,000

$80,000

$50,000

$130,000

$160,000

$30,000

60,000

120,000

50,000

170,000

240,000

70,000

a.ComputeDOLbasedontheformulabelow（seepage128foranexample）:

b.ConfirmthatyouranswertopartaiscorrectbyrecomputingDOLusingformula

5–3onpage___.Theremaybeaslightdifferenceduetorounding.

Qrepresentsbeginningunitssold（allcalculationsshouldbedoneatthislevel）.Pcanbefoundbydividingtotalrevenuebyunitssold.VCcanbefoundbydividingtotalvariablecostsbyunitssold.

5-5.Solution:

U.S.Steal

5-5（Continued）

6Leno’sDrugStoresandHall’sPharmaceuticalsarecompetitorsinthediscountdrugchainstorebusiness.TheseparatecapitalstructuresforLenoandHallarepresentedbelow.

Leno

Hall

Debt@10%

$100,000

$200,000

Commonstock,$10par

200,000

Total

$300,000

Shares

20,000

Commonshares

10,000

a.Computeearningspershareifearningsbeforeinterestandtaxesare$20,000,$30,000,and$120,000（assumea30percenttaxrate）.

b.ExplaintherelationshipbetweenearningspershareandthelevelofEBIT.

c.Ifthecostofdebtwentupto12percentandallotherfactorsremainedequal,whatwouldbethebreak-evenlevelforEBIT?

5-6.Solution:

a.LenoDrugStoresandHallPharmaceuticals

EBIT

$20,000

Less:

Interest

10,000

20,000

EBT

Taxes@30%

3,000

0

EAT

7,000

Shares

EPS

$.35

$30,000

6,000

14,000

$.70

$120,000

110,000

33,000

30,000

77,000

70,000

$3.85

$7.00

5-6.（Continued）

b.Before-taxreturnonassets=6.67%,10%and40%attherespectivelevelsofEBIT.Whenthebefore-taxreturnonassets（EBIT/TotalAssets）islessthanthecostofdebt（10%）,LenodoesbetterwithlessdebtthanHall.Whenbefore-taxreturnonassetsisequaltothecostofdebt,bothfirmshaveequalEPS.ThiswouldbewherethemethodoffinancinghasaneutraleffectonEPS.Asreturnonassetsbecomesgreaterthantheinterestrate,financialleveragebecomesmorefavorableforHall.

c.12%$300,000=$36,000break-evenlevelforEBIT.

7.GlynnEnterprisesandMonroe,Inc.,bothproducefluidcontrolproducts.Theirfinancialinformationisasfollows:

CapitalStructure

Gly