capitalstructure∶thefinancingdetails(编辑修改稿)

capitalstructure∶thefinancingdetails(编辑修改稿)内容摘要：

imes under rate a firm, and markets can under price a firm’s stock or bonds. If this occurs, firms should not lock in these mistakes by issuing securities for the long term. In particular, • Issuing equity or equity based products (including convertibles), when equity is under priced transfers wealth from existing stockholders to the new stockholders • Issuing long term debt when a firm is under rated locks in rates at levels that are far too high, given the firm’s default risk.  What is the solution • If you need to use equity? • If you need to use debt? Aswath Damodaran 21 Designing Debt: Bringing it all together Duration Currency Effect of Inflation Uncertainty about Future Growth Patterns Cyclicality amp。 Other Effects Define Debt Characteristics Duration/ Maturity Currency Mix Fixed vs. Floating Rate * More floating rate if CF move with inflation with greater uncertainty on future Straight versus Convertible Convertible if cash flows low now but high exp. growth Special Features on Debt Options to make cash flows on debt match cash flows on assets Start with the Cash Flows on Assets/ Projects Overlay tax preferences Deductibility of cash flows for tax purposes Differences in tax rates across different locales Consider ratings agency amp。 analyst concerns Analyst Concerns Effect on EPS Value relative to parables Ratings Agency Effect on Ratios Ratios relative to parables Regulatory Concerns Measures used Factor in agency conflicts between stock and bond holders Observability of Cash Flows by Lenders Less observable cash flows lead to more conflicts Type of Assets financed Tangible and liquid assets create less agency problems Existing Debt covenants Restrictions on Financing Consider Information Asymmetries Uncertainty about Future Cashflows When there is more uncertainty, it may be better to use short term debt Credibility amp。 Quality of the Firm Firms with credibility problems will issue more short term debt If agency problems are substantial, consider issuing convertible bonds Can securities be designed that can make these different entities happy? If tax advantages are large enough, you might override results of previous step Zero Coupons Operating Leases MIPs Surplus Notes Convertibiles Puttable Bonds Rating Sensitive Notes LYONs Commodity Bonds Catastrophe Notes Design debt to have cash flows that match up to cash flows on the assets financed Aswath Damodaran 22 Approaches for evaluating Asset Cash Flows  I. Intuitive Approach • Are the projects typically long term or short term? What is the cash flow pattern on projects? • How much growth potential does the firm have relative to current projects? • How cyclical are the cash flows? What specific factors determine the cash flows on projects?  II. Project Cash Flow Approach • Project cash flows on a typical project for the firm • Do scenario analyses on these cash flows, based upon different macro economic scenarios  III. Historical Data • Operating Cash Flows • Firm Value Aswath Damodaran 23 I. Intuitive Approach Disney Aswath Damodaran 24 6 Application Test: Choosing your Financing Type  Based upon the business that your firm is in, and the typical investments that it makes, what kind of financing would you expect your firm to use in terms of • Duration (long term or short term) • Currency • Fixed or Floating rate • Straight or Convertible Aswath Damodaran 25 II. Project Specific Financing  With project specific financing, you match the financing choices to the project being funded. The benefit is that the the debt is truly customized to the project.  Project specific financing makes the most sense when you have a few large, independent projects to be financed. It bees both impractical and costly when firms have portfolios of projects with interdependent cashflows. Aswath Damodaran 26 Duration of Disney Theme Park Duration of the Project = 58,375/2,050 = years Aswath Damodaran 27 The perfect theme park debt…  The perfect debt for this theme park would have a duration of roughly 20 years and be in a mix of Latin American currencies (since it is located in Brazil), reflecting where the visitors to the park are ing from.  If possible, you would tie the interest payments on the debt to the number of visitors at the park. Aswath Damodaran 28 III. Firmwide financing Rather than look at individual projects, you could consider the firm to be a portfolio of projects. The firm’s past history should then provide clues as to what type of debt makes the most sense. In particular, you can look at 1. Operating Cash Flows  The question of how sensitive a firm’s asset cash flows are to a variety of factors, such as interest rates, inflation, currency rates and the economy, can be directly tested by regressing changes in the operating ine against changes in these variables.  This analysis is useful in determini。