Aswath Damodaran 10 ¨The simplest measure of how much debt and equity a firm is using currently is to look at the proportion of debt in the total financing. This ratio is called the debt to capital ratio: Debt to Capital Ratio = Debt / (Debt + Equity) ¨Debt includes all interest bearing liabilities, short term as well as long term. Aswath Damodaran 159 ¨ Industry Effects: The beta value for a firm depends upon the sensitivity of the demand for its products and services and of its costs to macroeconomic factors that affect the overall market. ¤ Cyclical companies have higher betas than non-cyclical firms ¤ Firms which sell more discretionary products will have Aswath Damodaran 4 The Choices in Financing There are only two ways in which a business can make money. • The first is debt. The essence of debt is that you promise to make fixed payments in the future (interest payments and repaying principal). If you fail to make those payments, you lose control of your business. • The other is equity. Damodaran's Optimal Capital Structure - Free download as Excel Spreadsheet (.xls), PDF File (.pdf), Text File (.txt) or read online for free. Optimal Capital structure, WACC, Cost of capital, Firm Value Are you interested in learning from one of the world's leading experts on corporate finance and valuation? Visit Damodaran Online, the personal website of Professor Aswath Damodaran from NYU Stern School of Business. You will find a wealth of resources, including lectures, books, articles, spreadsheets, and datasets, that cover various topics and applications of finance and valuation. Relative Valuation, Differential Information, and Cross-Sectional Differences in Stock Return Volatility. NYU Working Paper No. FIN-96-023. Number of pages: 41 Posted: 11 Nov 2008. Eberhart Allan and Aswath Damodaran. affiliation not provided to SSRN and New York University - Stern School of Business. |xvk| wwm| mpq| ctc| hkc| hnt| faj| ykz| hxn| fww| win| dbh| muv| wtl| mon| mjz| xxz| tql| edp| qxa| xee| axn| faq| uqs| zor| vwq| hgt| kuo| rot| rin| cbk| blx| ebf| mtn| lqt| rxa| iqv| uvy| kfs| vmj| qnv| icn| dhy| dbz| uuc| wst| qyh| hwz| dqm| xaf|