THE COST OF RETAINED EARNINGS: A FURTHER NOTE, AN ILLUSTRATION AND A COMPUTER PROGRAM

This paper presents the personal and corporate tax adjusted version of the cost of retained earnings, with particular reference to the problem of computing the effective rate of tax on a unit of pre tax profit when one allows for the delayed incidence of part of the tax impost. The argument is illustrated numerically and supported by a computer program which enables the user to consider and work out the effect of changing one or more variables. A term which appeared in a previous article (Lister 1981) is corrected.     

A NOTE ON THE RELATIONSHIP BETWEEN SYSTEMATIC RISK AND GROWTH IN EARNINGS

This paper provides a simple analytical derivation of the relationship between growth in earnings and systematic risk. Theoretically and empirically it concludes that this relationship is positive.     

OPPORTUNITY COST, DISCOUNTING, AND DEFERRED TAX LIABILITIES: A FINAL NOTE

A decade of discussion regarding deferred tax liabilities has been narrowed to the question of whether pre- or post-tax discount rates should be employed. A recent article has once again presented the case for pre-tax rates. This note raises problems with that argument and presents an alternative case for the use of post-tax rates of discount.     

A NOTE ON THE MARGINAL COST OF DEBT CAPITAL

The firms marginal cost of debt capital was interpreted in this author's previous publications as the "full marginal cost of relaxing the money capital availability constraint' when the incremental money capital employed takes the form of debt capital. Account is thereby taken of the effects on financing costs of the increased risk exposure that debt financing implies for both debt and equity holders. The present paper clarifies a misconception in a recently published paper by Draper and Findlay, and exhibits the linkage between concepts relevant to the firm's fmancing decision and the general marginal analysis.     

THE REDUNDANCY OF EARNINGS LEVERAGE IN A COST OF CAPITAL DECISION FRAMEWORK

We hope to make clear why earnings-per-share financial leverage analysis is inadequate as a management tool for financial structure determination. We argue that under either of the currcntly received cost of capital theories, the "traditional" theory or the "Modigliani-Miller" theory, earnings leverage analysis as it is used adds nothing to our understanding of the capital structure issue. We maintain further, that for security analysis there are better tools.
Le but de cette discussion est d'éclaircir la raison pour laquelle on a reconnu que "l'analyse des bénéfices par action en rapport au leverage financier' s'avère être une méthode insuffisante àétablir la structure financière. Que l'on s'appuie sur les théories établies relatives au coüt du capital, sur la théorie traditionnelle ou sur la théorie "Modigliani-Miller", 'l'analyse des bénéfices par action bade sur le leverage financier' telle qu'elle se présente ne nous apprend rien de nouveau au sujet de la structure financière. Dans cet article, nous affinnons plus loin que de emilleurs moy-ens existent pour l'analyse des titres.
Dieser Beitrag versucht zu erklären, warum der Gewinn pro Actie-Leverage-Analyse unzureichend als Unternehmensleitungsinstrument bezüglich der Kapitalstrukturplanung ist. Nach der traditionellen, sowie der Modigliani-Miller Theorie der Kapitalkosten, trägt Gewinn pro Atkie-Leverage-Analyse nichts zum Verständnis des Kapitalstrukturproblems bei. Es wird auch behauptet, dass es bessere Instrumente für eine Wertpapieranalyse gibt.