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PART VI: THE COST OF CAPITAL, CAPITAL STRUCTURE, AND DIVIDEND POLICY

Link-sets

Breakeven Analysis

Business Classification Code

• "After the Revolution" This July 1998 CFO Magazine article revisiits the Modigliani and Miller (M&M) propositions concerning the value of the firm and its capital structure.
  http://www.cfo.com/Article?article=1444
• "Ascertaining the divisional Beta for project evaluation -- the Pure Play Method -- a discussion". Nice discussion of the pure-play method by which divisional Betas can be estimated -- courtesy of The Chartered Accountant (Volume 31, No 5, November 2002).
  http://icai.org/icairoot/publications/complimentary/cajournal_nov02/p546-549.pdf
• Breakeven Analysis Web Sites
  1. Bean Counter|Cost-Volume-Proft Relationships. Nice Breakeven Analysis tutorial plus a set of breakeven links.
     http://www.dwmbeancounter.com/breakeven.html
  2. Breakeven Analysis Applet. Calculates a firm's breakeven point.
     http://www.stfrancis.edu/ba/ghkickul/btools/bkeven/index.htm
  3. Breakeven Calculator. Cool interactive breakeven calculator courtesy of KJE Computer Solutions.
     http://www.dinkytown.com/java/BreakEven.html
  4. The HBS Toolkit: Break-Even Analysis. Downloadable interactive workbook from the HBS Toolkit helps calculate a break-even point or target-profit level based on the fixed costs, variable costs, and unit price of the product or service being analyzed.
     http://hbswk.hbs.edu/item.jhtml?id=1262&t=finance
  5. The SOHO Guidebook -- Breakeven Analysis. A discussion of breakeven analysis as a tool for management decision making.
     http://www.toolkit.cch.com/text/P06_7530.asp
  6. TANRO|Break Even Analysis. "Cool" online Business Simulation introduces you to Break-Even Analysis. You play the role of a beginning finance professional in a fictitious lawnmowing manufacturer named Tanro who has to help make critical business decisions. Along the way you will learn some basic break-even financial fundamentals through an interactive experience.
     http://www.knowledgedynamics.com/demos/Breakeven/index.htm
• Business Classification Code Web Sites
  1. "Ask Alice About Business Classification Codes". CCH Business Owner's Toolkit's online advice columnist, Alice Magos, does a great job in explaining SIC and NAICS codes. Also visit "Ask Alice!" Archive for other excellent business columns.
     http://www.toolkit.cch.com/advice/200-99askalice.asp
  2. NAICS Association. Provides a collection of NAICS (pronounced "nakes") and SIC products, information, and resources.
     http://www.naics.com/
  3. NAICS -- North American Industry Classification System. NAICS replaces the U.S. Standard Industrial Classification (SIC) system.
     http://www.census.gov/pub/epcd/www/naics.html ftp://ftp.census.gov/pub/epcd/www/naics.html
  4. NAICS: Unofficial Clearinghouse. Georgetown University Library's unofficial clearinghouse of information concerning NAICS.
     http://www.library.georgetown.edu/bic/help/naics/
  5. UK SIC(92). Information concerning the UK Standard Industrial Classification of Economic Activities (UK SIC(92)), which is used to classify business establishments and other statistical units by the type of economic activities they are engaged in.
     http://www.statistics.gov.uk/methods_quality/sic/contents.asp
• Cost of Capital Resources. Morningstar provides (for a fee) cost of capital analysis. Take a look at this site to learn more about the type of detailed information that they provide.
  http://corporate.morningstar.com/ib/asp/subject.aspx?xmlfile=1422.xml
• "Debt Maturity: What Do Economists say? What Do CFOs Say?". Federal Reserve Bank of Philadelphia article discusses recent theories of how firms choose their debt maturity.
  http://www.phil.frb.org/files/br/Q1_06_DebtMaturity.pdf
• "Declaration, Ex-dividend, and Record Date Defined". Nice article on some of the procedural aspects of dividend policy courtesy of the folks at Investopedia.com.
  http://www.investopedia.com/articles/02/110802.asp
• DirectInvesting.com. Information on Direct Investment Plans, also known as dividend reinvestment plans (DRPs or DRIPs).
  http://www.directinvesting.com/
• DRIP Investor. Brings you the latest information on Dividend Reinvestment Plans (DRIPs).
  http://www.dripinvestor.com/
• Fundamental Analysis 101: Zooming in on Net Operating Income. Nice tutorial on Net Operating Income (NOI), which sometimes goes by the name of NOPAT (net operating profit after taxes) or NOPLAT (net operating profit less adjusted taxes).
  http://www.investopedia.com/articles/fundamental/101602.asp
• Guide to Direct Investment Plans. Learn about DRPs, DRIPs, and DSPPs.
  http://www.guidetodrips.com/
• "How Do CFOs Make Capital Budgeting and Capital Structure Decisions?". Compressed version of a paper that won the Jensen prize for the best JFE paper in corporate finance in 2001.
  http://faculty.fuqua.duke.edu/~charvey/Research/Published_Papers/P76_How_do_CFOs.pdf
• Interactive Leverage Model (ILM). Interactive graphical model that helps you understand the the impact of operating, financial, and combined (total) leverage on the performance of a firm -- courtesy of Professors Jonathan Stewart and Mike Wiggins.
  http://www.acu.edu/ilm
• Investing Through DRIPs. Dividend Reinvestment Plan (DRIP) tutorial courtesy of The Motley Fool.
  http://www.fool.com/school/Drips.htm
• Online Tutorial #8: How Do You Calculate A Company's Cost of Capital? One of a series of online tutorials and downloadable spreadsheets to supplement the book "Expectations Investing" by Rappaport and Mauboussin.
  http://www.expectationsinvesting.com/tutorial8.shtml
• What are stock splits? The Motley Fool provides a detailed answer to this FAQ.
  http://www.fool.com/FoolFAQ/FoolFAQ0035.htm

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