Debt and gearing

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• Gearing and Calculating Earnings Per Share

  Non-current debt 3,750,000 Total equity and reserves 8,250,000 Gearing/Debt ratio 45.45% = non-current debt/total equity and reserves 3.3 Calculate the revised EPS and gearing using ordinary share financing.

• Calculate gearing using ordinary share, preference share and debt finacing

  531428 Calculate gearing using ordinary share, preference share and debt finacing I need guidance on how to calculate gearing using ordinary share, preference share and debt financing and also how to evaluate and make a recommendation on which to use

• Current and Revised Gearing and EPS

  (Take debt to include both debentures and bank overdraft) Current equity is 22,020 Current debt is 12,000+18,370 = 30,370 Current Gearing = Debt/Equity = 30,370/22,020 = 1.38 3.3 Calculate the revised EPS and gearing using ordinary share financing

• WACC (weighted average cost of capital)

  : a) As the level of debt financing increases the cost of debt remains unchanged up to a certain level of gearing.

• Can one minimize WACC when there is a constraint on raising debt? If so, how? What are the effects of a corporate tax on the WACC of a business?

  Beyond this level, the cost of debt will increase b) The cost of equity rises as the level of gearing increases c) The weighted average cost of debt does not remain constant, but rather falls initially as the proportion of debt increases, and then

• Debt, Capital Structure, and Borrowing Costs

  The Gearing Company has an after-tax cost of debt capital of 4 percent, a cost of preferred stock of 8 percent, a cost of equity capital of 10 percent, and a weighted average cost of capital of 7 percent.

• Determining: The Debt Equity Mox

  Beyond this level, the cost of debt will increase b) The cost of equity rises as the level of gearing increases c) The weighted average of cost doesnot remain constant, but rather falls initially as of the proportional of debt capital increases, and

• EBIT-EPS analysis

  What will be the debt-to-equity ratio after each possible restructuring? b. If earnings before interest and tax will eb either $90,000 or $130,000, what will be earnings per share for each financing mix for both possible values of EBIT?

• Debt-equity comparisons considering WACC, corporate tax, leverage, cost of debt

  At high gearing the cost of debt also rises because the chance of the company defaulting on the debt is higher (i.e., bankruptcy risk). So at higher gearing, the WACC will increase.