Manajemen Keuangan

Ario, SST, SE Akt, MIEF

Overview (Diujikan)• Part 1: The Scope And Environment Of Financial Management

1. Definition of financial management2. Understanding Financial Statements, Taxes, and Cash Flows3. Evaluating a Firm's Financial Performance4. Financial Forecasting, Planning, and Budgeting

• Part 2: Valuation Of Financial Assets5. The Value of Money6. Risk and Rates of Return7. Valuation and Characteristics of Bonds8. Stock Valuation

• Part 3: Investment In Long-term Assets9. Capital Budgeting Decision Criteria10. Cash Flows and Other Topics in Capital Budgeting11. Capital Budgeting and Risk Analysis12. Cost of Capital13. Managing for Shareholder Value

Overview (Tidak Diujikan)

• Part 4: Capital Structure And Dividend Policy14. Raising Capital in the Financial Markets15. Analysis and Impact of Leverage16. Planning the Firm's Financing Mix17. Dividend Policy and Internal Financing

• Part 5: Working-capital Management And Special Topics In Finance

18. Working-Capital Management and Short-Term Financing19. Cash and Marketable Securities Management20. Accounts Receivable and Inventory Management

• Part 6: Special Topics In Finance21. Risk Management22. International Business Finance23. Corporate Restructuring: Combinations and Divestitures24. Term Loans and Leases

Chapter 16 Planning the Firm's Financing Mix

• Key Terms And Getting Started• A Glance At Capital Structure Theory• Extreme Position 1: Independence Hypothesis (NOI Theory)• Extreme Position 2: Dependence Hypothesis (NI Theory)• Moderate View: Saucer-shaped Cost Of Capital Curve• Agency Costs, Free Cash Flow, And Capital Structure• Basic Tools Of Capital Structure Management

Key Terms And Getting Started

• The objective of capital structure management is to mix the permanent sources of funds used by the firm in a manner that will maximize the company's common stock price. Alternatively, this objective may be viewed as a search for the funds mix that will minimize the firm's composite cost of capital.

A Glance At Capital Structure Theory• Excessive financial risk can put the firm into bankruptcy

proceedings.• The analytical setting for the discussion of capital structure

theory includes the following assumptions:– Corporate income is not subject to any taxation.– Capital structures consist of only stocks and bonds.– The expected values of all investors' forecasts of the future levels of

net operating income (EBIT) for each firm are identical.– Securities are traded in perfect or efficient financial markets.

• Three differ differing views on the relationship between use of financial leverage and common stock value.1. Independence Hypothesis2. Dependence Hypothesis3. Corporate Income Is Taxed And Firms May Fail

Extreme Position 1: Independence Hypothesis (NOI Theory)

• The firm's composite cost of capital, K0, and common stock price, P0, are both independent of the degree to which the company chooses to use financial leverage.

Independence Hypothesis (1)

Independence Hypothesis (2)

• Debt financing is not as cheap as it first appears to be. This will keep the composite cost of funds constant.

• The implication for management is that one capital structure is as good as any other; financial officers should not waste time searching for an optimal capital structure. One capital structure, after all, is as beneficial as any other, because all result in the same weighted cost of capital.

Extreme Position 2: Dependence Hypothesis (NI Theory)

• The dependence hypothesis is at the opposite pole from the independence hypothesis. It suggests that both the weighted cost of capital, Ko, and common stock price, Po, are affected by the firm's use of financial leverage.

Dependence Hypothesis (1)

Dependence Hypothesis (2)• The firm's cost of capital, K0, will decline as the debt-to-equity

ratio increases. • This also implies that the company's common stock price will

rise with increased leverage use. Because the cost of capital decreases continuously with leverage, the firm should use as much leverage as is possible.

Comparison

Moderate View (1)• This moderate view:

– admits to the fact that interest expense is tax deductible, and– acknowledges that the probability of the firm's suffering bankruptcy

costs is directly related to the company's use of financial leverage.

Moderate View (2)

• Saucer-shaped Cost Of Capital Curve

Agency Costs, Free Cash Flow, And Capital Structure (1)

• Capital structure management also gives rise to agency costs.

• Protective covenants in the bond contract.• The likelihood of firm failure (financial distress)

Agency Costs, Free Cash Flow, And Capital Structure (2)

Agency Costs, Free Cash Flow, And Capital Structure (3)

• The pecking order theory of capital structure:– Firms adapt dividend policy to investment opportunities ;– Firms prefer to finance investment opportunities with

internally generated funds first;– When external financing is needed, the firm will first

choose to issue debt securities; issuing equity-type securities will be done last.

– As more external financing is required to fund projects with positive net present values, the financing pecking order will be followed.

Agency Costs, Free Cash Flow, And Capital Structure

• Professor Michael C. Jensen further extended the concept of agency costs into the area of capital structure management.– Substantial free cash flow can lead to misbehavior by

managers and poor decisions that are not in the best interests of the firm's common stockholders

– “threat hypothesis” or “control hypothesis“

Basic Tools Of Capital Structure Management (1)

• They assist us in answering this question: "The next time we need $20 million, should we issue common stock or sell long-term bonds?“

• The financial leverage effect:– First : the added variability in the earnings-per-share

stream that accompanies the use of fixed-charge securities in the company's capital structure (DFL)

– Second : the level of earnings per share at a given EBIT under a given capital structure (EBIT – EPS Analysis).

Basic Tools Of Capital Structure Management (2)

• EBIT-EPS Analysis1. Graphic Analysis

Basic Tools Of Capital Structure Management (2)

• EBIT-EPS Analysis2. Computing Indifference Points and the uncommitted earnings per share (UEPS)

3. Comparative Leverage Ratios

Chapter 17Dividend Policy and Internal Financing

• Dividend Payment Versus Profit Retention• Does Dividend Policy Affect Stock Price?• The Dividend Decision In Practice• Alternative Dividend Policies• Dividend Payment Procedures• Stock Dividends And Stock Splits• Stock Repurchases

Dividend Payment Versus Profit Retention

• The financial manager faces trade-offs (large dividends -> greater external financing)

Does Dividend Policy Affect Stock Price?

• Three Basic Views1. Dividend Policy Is Irrelevant2. High Dividends Increase Stock Value3. Low Dividends Increase Stock Value

• Improving Our Thinking• Why do companies continue to pay dividends?– Residual dividend theory?– the clientele effect– information effects– agency costs– expectations theory

1. Dividend Policy Is Irrelevant

• Assumptions:– investment and borrowing decisions have already

been made– Perfect capital markets

• There is no relationship between dividend policy and stock value, because:– To finance growth, the firm may choose to issue

stock OR may use internally generated funds. Thus total returns should be about the same.

2. High Dividends Increase Stock Value• Dividends are more predictable than capital

gains• management can control dividends, but it

cannot dictate the price of the stock.• "Bird-in-the-hand“ dividend theory

3. Low Dividends Increase Stock Value

• Based on the difference in tax treatment for dividend income and capital gains.– dividend income are paid when the dividend is

received– changes frequently– majority of investors are subject to taxes

The Dividend Decision In Practice

• Other Practical Considerations:– legal constraints– liquidity position– Absence or lack of other sources of financing– Earnings predictability– Ownership control– Inflation

Alternative Dividend Policies

• Constant dividend payout ratio• Stable dollar dividend per share payout• Small, regular dividend plus year-end extra

dividend payout

Dividend Payment Procedures

Stock Dividends And Stock Splits

• The only definite result from either a stock dividend or stock split is the increase in the number of shares of stock outstanding.

• The only difference between a stock dividend and a stock split relates to their respective accounting treatment.

• Because no economic benefit results, how do corporations justify these distributions?– stockholders receive a key benefit because the price of the stock will

not fall precisely in proportion to the share increase.– the conservation of corporate cash

Stock Repurchases• Several reasons have been given for a firm repurchasing its

own stock:– from the shareholders' perspective:

• the conventional method for distributing a firm's profits to its owners.• alter its debt-equity mix toward a higher proportion of debt.• management may view the firm's own stock as being materially

undervalued and representing a good investment opportunity.

– from the management perspective:• internal investment opportunity• modifying the firm's capital structure• Favorable impact on earnings per share• Elimination of a minority ownership group• Reduction in the firm's costs associated with servicing small stockholders