财务管理Chapter 16.pdf

School of Management in HUST Chapter 16 Operating and Financial Leverage School of Management in HUST Operating and Financial Leverage l Operating Leverage l Financial Leverage l Total Leverage l Cash-Flow Ability to Service Debt l Other Methods of Analysis l Combination of Methods Copyright 2001 Prentice-Hall, Inc. 1 Fundamentals of Financial Management, 11/e by Van Horne and Wachowicz. Slides prepared by Wu Xiaolan School of Management in HUST The Du Pont Identity l Breaks ROE into three parts: operating efficiency asset use efficiency financial leverage Net profit Sales Assets ROE Sales Assets Equity Profit margin Total asset turnover Equity multiplier Copyright 2001 Prentice-Hall, Inc. 2 Fundamentals of Financial Management, 11/e by Van Horne and Wachowicz. Slides prepared by Wu Xiaolan School of Management in HUST Operating Leverage l One potential “effect” caused by the presence of operating leverage is that a change in the volume of sales results in a “more than proportional” change in operating profit (or loss). Sales