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Learning goals lg1 lg2 lg3 lg4 lg5 lg6 discuss the

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Unformatted text preview: nd return. LEARNING GOALS LG1 LG2 LG3 LG4 LG5 LG6 Discuss the role of breakeven analysis, the operating breakeven point, and the effect of changing costs on it. Understand operating, financial, and total leverage and the relationships among them. Describe the types of capital, external assessment of capital structure, the capital structure of non-U.S. firms, and capital structure theory. Explain the optimal capital structure using a graphical view of the firm’s cost-of-capital functions and a zerogrowth valuation model. Discuss the EBIT–EPS approach to capital structure. Review the return and risk of alternative capital structures, their linkage to market value, and other important considerations related to capital structure. 421 422 PART 4 Long-Term Financial Decisions everage involves the use of fixed costs to magnify returns. Its use in the capital structure of the firm has the potential to increase its return and risk. Leverage and capital structure are closely related concepts that are linked to capital budgeting decisions through the cost of capi...
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