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Talk financial lever (2)

From;  Author:Stand originally
Talk financial lever (2)

Because company investment gain rate is more than indebted interest rate,the essence of lever interest is, the one share profit that gains by indebted place changed capital of rights and interests, make thereby yield of capital of rights and interests rises. And if company investment gain rate is equal to or be less than indebted interest rate, the profit that so indebted place generates can the interest that perhaps can't offset indebted place to need, use the profit that uses place of capital of rights and interests to obtain to be able to 't offset interest even, and must come in order to reduce sth used to one's own advantage of rights and interests countervail debt, this is place of essence of financial lever losing.

Indebted financial leverage uses financial lever coefficient normally (Degree Of Financial Leverage, DFL) will measure, financial lever coefficient shows gains of capital of business rights and interests changes the profit before opposite duty changes the multiple of rate. Its theory formula is:

Fluctuant rate of gains of capital of rights and interests of = of financial lever coefficient / the profit before interest duty is fluctuant lead ③

The formula after be out of shape through maths can turn into:

Gain of tax of interest of = of financial lever coefficient / (the profit before interest duty - money rate of indebted rate × )

The profit margin before = interest duty / (the profit margin before interest duty- - money rate of indebted rate × ) ④

According to finance affairs of these two formulary calculative leverage is counted, latter announces the relation between the profit before duty of indebted rate, interest and indebted money rate, former and OK report gives dominion capital yield to change the profit before be equivalent to interest duty changes the multiple of rate. The enterprise uses debt financing to be able to raise the yield of dominion capital not only, and also can make dominion fund yield under the profit margin before interest duty, the financial lever interest that this is financial leverage generation (loss) .

2, financial risk (Financial Risk)

The risk is an as associated as loss photograph notion, it is a kind of uncertainty or the loss that produce possibly. Financial risk is to point to what the enterprise arises because of using debt capital to decide the additional risk that assumes by dominion capital below the circumstance in prospective accrual inaccuracy. If the enterprise manages in order, make company investment gain rate is more than indebted money rate, acquire financial lever interest, if the enterprise runs a state not beautiful, make company investment gain rate is less than indebted money rate, acquire financial lever loss, cause business failure even, this kind of uncertainty is the financial risk that the enterprise manages indebted place to assume.

The size of risk of company finance affairs basically depends on the discretion of financial lever coefficient. Usually, financial lever coefficient is bigger, dominion capital yield is bigger to the flexibility of the profit margin before interest duty, if the profit margin before interest duty rises, criterion dominion capital yield can rise with rapidder rate, if the profit margin before interest duty drops, so dominion capital profit margin can drop with rapidder rate, thereby the risk is bigger also. Conversely, financial risk is less. Because be in debt,the essence that financial risk exists is manage make thereby that one part of indebted place burden manages risk impute to capital of rights and interests. The example below will conduce to the relation between lever of understanding finance affairs and financial risk.
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