4 Corporate Issuers

CFA一级科目Corporate issuers，所有重要公式都在图上，让你高效备考，希望能给大家带来帮助。

Corporate Issuers

• Introduction to Corporate Governance and Other ESG Considerations
  • Corporate Governance Overview
    • Corporate governance can be defined as "the system of internal controls and proceduresbywhich individual companies are managed"
    • It provides a framework that defines the rights, roles and responsibilities of various groups within an organization
    • At its core, corporate governance is the arrangement of checks, balances, and incentives a company needs in order to minimize and manage the conflicting interests between insiders and external shareowners
    • 两种理论
      • Shareholder theory: takes the view that the most important responsibility of a company's managers is to maximize shareholder returns;
      • Stakeholder theory: broadens a company's focus beyond the interests of only its shareholders to its customers, suppliers, employees, and others who have an interest in the company
  • Company stakeholder
    • Stakeholder Groups
      • Shareholders
      • Managers and employees
      • Board of directors
      • Creditors
      • Suppliers
      • Customers
      • Governments/regulators
    • Principal–Agent and Other Relationships in Corporate Governance
      • 产生原因: A principal–agent relationship (also known as an agency relationship) is created when a principal hires an agent to perform a particular task or service
      • 分类
        • Shareholders and managers
          • In certain circumstances, managers may seek to maximize their personal benefits (e.g., remuneration and perquisites) to the detriment of shareholders' interests
          • Diverge with respect to risk tolerance
            • In some cases, shareholders with diversified investment portfolios may have a relatively high risk tolerance
            • Managers and directors, however, are typically more risk averse
          • Managers typically have greater access toinformation about the business and are more knowledgeable about its operations
            • Such "information asymmetry" makes it easier for managers to make strategic decisions that are not necessarily in the best interest of shareholders and weakens the ability of shareholders to exercise control
          • Another conflict of interest might arise between shareholders and directors when the board is influenced by insiders. In this case, the ability of the board to properly perform its monitoring and control role may be hindered
          • Finally, a conflict between the two groups may occur if directors favor certain influential shareholders over other shareholders
        • Controlling and minority shareholder relationships
          • In such ownership structures, the opinions of minority shareholders are often outweighed or overshadowed by the influence of the controlling shareholders
          • Minority shareholders often have limited or no control over management and limitedor novoice in director appointments or in major transactions
            • Straight voting vs. Cumulative: Straight voting (one vote for each share owned), controlling shareholders clearly wield the most influence in board of director elections, leaving minority shareholders with much less representation on the board
          • The multiple-class structure enables controlling shareholders to mitigate dilution of their voting power when new shares are issued
        • Manager and Board Relationships
        • Shareholder and creditor relationships: a divergence in risk tolerance
          • Shareholders would likely prefer riskier projects with a stronglikelihoodof higher return potential
          • Creditors would likely prefer stable performance and lower-risk activities
        • Other Stakeholder Conflicts
          • Conflict between customers and shareholders
          • Conflict between customers and suppliers
          • Conflict between shareholders and governments or regulators (tax)
  • Stakeholder Management
    • Overview
      • In general
        • Effective Communication and active engagement;
        • Balance their interests and limit the impact of conflicts.
      • Corporate governance and stakeholder management frameworks
        • Legal infrastructure: defines rights established by law
        • Contractual infrastructure: shaped by the contractual arrangements entered
        • Organizational infrastructure: internal systems, governance procedures, andpractices adopted andcontrolled by the company in managing its stakeholder relationships;
        • Governmental infrastructure: regulations imposed on companies
    • Mechanisms of stakeholder management
      • General meetings
        • AGM (annual general meeting)simple majority
        • Extraordinary general meeting-supermajority vote: when significant resolutions requiring shareholder approval
        • Proxy voting: shareholders who are unable to attend a meetingtoauthorize another individual to vote on their behalf
        • Cumulative voting: enables each shareholder to accumulateand vote all his or her shares for a single candidate
      • Board of Director Mechanisms
        • Composition of the board of directors
          • One tier: comprise a mix of executive and non-executive directors
          • Two tier: the supervisory and management boards are independent fromeach other (E.g., separation of CEO and chairman)
          • Staggered boards
        • Functions and Responsibilities of the Board
          • The board guides and approves the company's strategic direction, taking into consideration the company's risk profile
          • The board also reviews corporate performance and determines relevant courses of action accordingly
          • The board is also responsible for selecting, appointing, and terminating the employment of senior managers (or the management board in case of a two-tier structure)
          • The board plays a central role in ensuring the effectiveness of the company's audit and control systems
          • In addition, the board typically ensures that the company has an appropriate enterprise risk management system in place
        • Board of Directors Committees
          • Audit committee
          • Remuneration or compensation committee
          • Nominations committee
          • Governance committee
          • Risk committee
          • Investment committee
          • Committee member independence
      • The Audit Function
      • Reporting and Transparency
      • Policies on Related-Party Transactions
      • Remuneration Policies
      • Say on Pay
      • Contractual Agreements with Creditors
      • Employee Laws and Contracts
      • Contractual Agreements with Customers and Suppliers
      • Laws and Regulations
  • Factors Affecting Stakeholder Relationships and Corporate Governance
    • Market Factors
      • Shareholder engagement
      • Shareholder activism
      • Competition and Takeovers
        • Proxy contest (or proxy fight)
        • Tender offer
        • Hostile takeover
    • Non-market factors
      • Legal environment
        • Common law system: the role of judges is generally limited to rigidly applying the statutes and codes to the specific case brought before the court
        • Civil law system: laws are created both from statutes enacted by the legislature and by judges through judicial opinions
        • The key difference between the two systems lies in the ability of a judge to create laws
      • The media
      • The corporate governance industry
  • Corporate governance and stakeholder management risks and benefits
    • Risks
      • Weak control systems:
      • Ineffective decision making
      • Legal, regulatory, and reputational
      • Default and bankruptcy risks
    • Benefits
      • Operational efficiency
      • Improved control
      • Better operating and financial performance
      • Lower default risk and cost of debt
  • Analyst Considerations in Corporate Governance and Stakeholder Management
    • Economic ownership and voting control
      • Dual-class structures: the most common way that voting power is decoupled fromownership
      • Proponents and critics about dual-class structures
        • Proponents: the systems promote company stability and enable management to make long-term strategic investments
        • Critics: they create conflicts of interest between the providers of capital and the management of the business
    • Board of directors representation
    • Remuneration and company performance
    • Investors in the company
    • Strength of shareholders' rights
    • Managing long-term risks
  • ESG Considerations for Investors
    • ESG Terminology
    • ESG Implementation Approaches
      • Negative screening refers to the practice of excluding certain sectors or companies that violate accepted standards(most common)
      • Positive screening typically implemented through an ESG ranking or scoring approach, isthe inclusion of certain sectors, companies, or practices in a fund or portfolio on the basis of specific ESG criteria
      • Relative/best-in-class screening,
      • Full integration,
      • Overlay/portfolio tilt,
      • Risk factor/risk premium investing,
      • Thematic investment,
      • Engagement/active ownership
    • Catalysts for ESG Growth
    • ESG Market Overview
    • ESG Factors in Investment Analysis
• Uses of Capital
  • Introduction
    • Steps in the Capital Allocation Process
      • 1||| Idea generation
      • 2||| Investment analysis
      • 3||| Captial allowcation planning
      • 4||| Monitoring and post-audit
    • Types of Capital Projects
      • Replacement projects
        • These are among the easier capital budgeting decisions
        • To maintain the current business
        • For cost reduction purpose
      • Expansion projects
        • For current projects;
        • Increase the size of the business
        • May involve more uncertainties than replacement decisions, and these decisions will be more carefully considered
      • New products and services
        • Expose the company to even more uncertainties than expansion projects
        • These decisions are more complex and will involve more people in the decision-making process
      • Regulatory, safety, and environmental projects
        • Frequently required by a governmental agency, an insurance company, or some other external party
        • May generate no revenue and might not be undertaken by a company
        • Often, company will accept the required investment and continue to operate
        • Occasionally, the cost is so high that the company would cease operating altogether or to shut down any part of the business related to the project
      • Other projects
        • Projects that cannot be easily analyzed by using capital budgeting process
        • These are either pet projects of someone in the company or so risky that they are difficult to analyze by the usual methods
    • Basic Principles
      • Decisions are based on cash flows
      • Timing of cash flows is crucial( Time value of money)
      • Cash flows are based on opportunity costs
      • Cash flows are analyzed on an after-tax basis: Taxes must be fully reflected in all capital budgeting decisions
      • Financing costs are ignored: Financing costs have already been reflected in the required rate of return
      • Capital budgeting cash flows are not accounting net income
    • Some important concepts
      • Sunk cost: one that has already been incurred and cannot change
      • Opportunity cost: what a resource is worth in its next-best use
      • Incremental cash flow: the cash flow with a decision minus the cash flow without that decision
      • Externality: the effect of an investment on other things besides the investment itself
        • Positive
        • Negative: Cannibalization
      • Two types of cash flows
        • Conventional cash flows: an initial outflow followed by a series of inflows
        • Nonconventional cash flows: the initial outflow is not followed by inflows only, but the cash flows can flip from positive to negative again (or even change signs several times)
      • Types of project interactions
        • Independent projects VS mutually exclusive projects
          • Independent projects: cash flows are independent
          • Mutually exclusive projects: compete directly with each other
        • Project sequencing
        • Unlimited funds VS capital rationing
          • Unlimited funds environment: the company can raise the funds it wants for all profitable projects
          • Capital rationing: the company has a fixed amount of funds to invest
      • Deal with cash flows
        • Ignore
          • Sunk costs
          • Financing costs
        • Include
          • Externality
          • Opportunity costs
  • Investment Decision Criteria
    • Net Present Value(NPV)
      • Definition
      • Decision rules
        • For independent projects
          • NPV>0, increase wealth, accept
          • NPV<0, decrease wealth, reject
        • For mutually exclusive projects: Choose the one with highest NPV
      • Advantages and disadvantages
        • Advantages
          • Shows the amount of gains as currency amount;
          • Positive NPV of project adds value to the firm (or to shareholders) rather than creditors(creditors only gain the interest whatever project bring benefits or losses)
            • Key advantage of NPV: Consistent with the goal of shareholders wealth maximization
          • Realistic discount rate-included opportunity cost of funds (the expected return of stockholders
        • Disadvantage: Size of projects ignored
    • Internal Rate of Return(IRR)
      • Definition
      • Decision rules
        • For independent projects
          • IRR≥ the required date of return (hurdle rate), accept
          • IRR≥ the required date of return, reject
        • For mutually exclusive projects: Choose the one with highest IRR
      • Advantages and disadvantages
        • Advantages
          • Reflect the profitability (not reflect absolute amount of profit gain)
          • Comparable for projects with different size
        • Disadvantages
          • Unrealistic reinvestment assumption: assume the reinvestment rate is IRR
          • No IRR & multiple IRR;
          • Conflicting ranking results of mutually exclusive projects with NPV
            • NPV is superior to IRR
    • Advantages of NPV& IRR
      • Based on Cash flows
      • Considering Time value of money—-Opportunity cost
      • Take into account the cash flows generated over the whole project life
  • Real Options
    • 定义: apital budgeting options that allow managers to make decisions in the future that alter the value of capital budgeting investment decisions made today
    • 特点
      • Just deal with real assets instead of financial assets
      • Entail the right to make a decision, but not the obligation
      • The flexibility is given to managers to enhance the NPV of the company's capital investments
    • 分类
      • Timing Options: the company can delay investing
      • Sizing Options
        • Abandonment option: The company can abandon the project when the financial results are disappointingafter investing
        • Expansion option: The company can make additional investments when future financial results are strong after investing
      • Flexibility Options
        • Price-setting options: By increasing prices, the company could benefit from the excess demand, which cannot do by increasing production
        • Production flexibility options: The company can profit from working overtime or from adding additional shifts
      • Fundamental Options
        • 定义: The payoffs from the investment are contingent on an underlying asset, just like most financial options
        • 实例: High oil prices, drill a well
    • Four common sense approaches to real options analysis
      • Use DCF analysis without considering options: If the NPV is positive without considering real options, and the project has real options that would simply add more value, it is unnecessary to evaluate the options
      • Consider the Project NPV = NPV(based on DCF alone) - Cost of options + Value of options
      • Use decision trees
      • Use option pricing models
  • Common capital budgeting pitfalls
    • Incorrect anticipation for economic response
    • The template model does not match the project
    • Influential managers for pet projects
    • Investment decision made based on EPS, NI or ROE
    • Basing decisions on the IRR
    • Bad accounting for incorrect estimation for cash flows
    • Misstate the overhead costs
    • Use improper discount rate
    • Overspending and under-spending the capital budget
    • Failure to consider alternative investment ideas
    • Ignoring sunk cost or opportunity costs
• Sources of Capital
  • Corporate Financing Options
    • Internal and External Funding Sources
    • Debt vs. Equity
  • Evaluating Short-term Financing Choices
    • Sources of short-term funding from banks
      • Lines of credit: for large corporations with limited reliability
      • Uncommitted line of credit: bank reserves the right to refuse to honor any request for use of theline
      • Committed Line of credit: bank charges a fee for making a commitment for short termlending more reliable
      • A revolving line of credit: a commitment for longer term lending, more reliable than Committedterm lending
      • Pledge assets as collateral for bank borrowings
      • Banker's acceptances: mainly used by firms that export goods, who get guarantee fromthe buyer'sbank
    • Factoring: sale A/R to bank
    • Non-Bank Sources of Short-term Funding
    • Non-bank finance company: small weak borrowers with weak credits
    • Commercial paper: Large corporations and the rate for short-term fund is lowest
  • Managing and Measuring Liquidity
    • Liqudity management
      • Liquidity measures
        • Primary sources of liquidity: represent the most readily accessible resources available
          • Ready cash balances: cash available at bank accounts resulting frompayment collections, investment income, liquidation of near-cash securities
          • Short-term funds
          • Cash flow management
        • Secondary sources of liquidity: may result in a change in the company's financial and operatingpositions
          • Negotiating debt contracts
          • Liquidating long-term/short-term assets with no substantial loss in value
          • Filing for bankruptcy protection and reorganization
      • Drags and pulls on liquidity
        • Drags: pressures from credit management and deterioration
          • Uncollected receivables
          • Obsolete inventory
          • Tight credit
        • Pulls: the liquidity reserves may be stretched thin
          • Making payment early
          • Reduced credit limits
          • Limits on short-term lines of credit
          • Low liquidity positions
    • Ratios Used for Assessing Company Liquidity(具体计算见Financial Statement Analysis)
      • • Liquidity ratios(current, quick,cash)
        • Activity ratios(turnover,days)
• Cost of Capital-Foundational Topics
  • Weight average cost of capital(WACC)
    • 公式
      • Use market value to calculate w
    • 表示
      • t: the company's marginal tax rate
      • w: the proportion of each type of capital when it raises new funds
      • r: the current cost of each type of capital
    • The priority sequencing of choosing capital structure(从上到下，优先级递减)
      • The company's target capital structure
      • The company's current capital structure, at market value weights
      • Examine trends in the company's capital structure
      • The average of comparable company's capital structure
    • 图形
      • A company's marginal cost of capital (MCC) may increase as additional capital is raised, whereas returns to a company's investment opportunities are generally believed to decrease as the company makes additional investments, as represented by the investment opportunity schedule
  • Costs of the Various Sources of Capital
    • Cost of debt
      • Two approaches
        • Yield to maturity approach(annual return)
        • Debt-Rating Approach
          • 使用情况: When a reliable current market price for a company's debt is not available
            • Based on a company's debt rating, we estimate the before-tax cost of debt by using the yield on comparably rated bonds for maturities that closely match that of the company's existing debt
      • Issues in Estimating the Cost of Debt
        • Fixed-Rate Debt vs. Floating-Rate Debt
        • Debt with Option-like Features
        • Nonrated Debt
        • Leases
    • Cost of Preferred Stock
      • 公式
      • 各部分含义
        • D: preferred dividends
        • P: market price of preferred stock
    • Cost of Equity(common stock)
      • CAPM approach
        • 公式
        • 各部分计算
          • Estimate risk free rate
            • Risk free asset is defined as an asset that has no default risk
            • A common proxy for the risk-free rate is the yield on a default free government debt instrument
          • Estimate market risk premium: [E(rm )- rf ]: The premium that investors demand for investing in a market portfolio relative to theriskfree rate
          • Estimate β
            • 计算
            • Beta is affected by
              • Business risk
                • The risk related to the uncertainty of revenues
                • Sales risk is affected by the elasticity of the demand of the product
                • Operating risk is affected by the relative mix of fixed and variable operating costs
              • Financial risk: Fixed cost from using debt and leases brings uncertainty to net income and net cash flows
            • Estimate beta of a non-public company(Pure-Play Method)
              • Convert the observed, equity beta of the comparable public company, into an asset beta, or pure project beta , β ∗, removing the effects of financial leverages
              • Calculate the new equity beta of this non-public company for the proposed capital structure of the new line of business
        • Country Risk Premium
          • • Sovereign yield spread: The difference between the government bond yield in that country, denominated in the currency of a developed country, and the treasury bond yield on a similar maturity bond in the developed country
      • Dividend Discount Model(DDM)
        • 计算
          • r(ce)>g
          • • D1/ P0 :dividend yield
            • g=(retention rate)(ROE)=(1-PR)(ROE)
            • PR=Payout ratio=D/EPS
      • Flotation cost
        • 描述
          • Charged by investment bank, while based on the size and type of offering
          • Preferred stock & debt: do not usually incorporate flotation costs in the estimated cost of cost of capital because this cost is quite small<1%
          • Common stock: should be considered(about 5%)
        • 计算
          • 定量
          • In fact, flotation costs are a cash flow at the initiation of the project Consider as CF0
• Capital Structure
  • Capital Structure and Company Life Cycle
    • Capital Structure
      • 定义: The specific mix of debt and equity used to finance a company's assets and operations
      • 特点
        • Equity: Expensive; permanent source; financial flexibility
        • Debt：cheaper; finite to maturity; fixed
      • 影响因素
        • Company life cycle
        • Cost of capital
        • Financing considerations
        • Competing stakeholder interests
    • Company Life Cycle
      • The ratios are calculated based on the market value
  • Modigliani–miller Propositions
    • 假设
      • Homogeneous expectations
      • Perfect captial markets
      • Risk-free rate
      • No agency costs
      • Independent decisions
      • We can slice the pie in any number of ways, yet the total size remains the same
    • MM proposition 1 without taxes: capital structure irrelevance
      • Value is not created simply by changing company's capital structure;
      • With the increase in leverage, the increase in equity returns is offset by increases in the risk and the associated increase in the required rate of return on equity
      • For simplification, assume 2 firms have the same cash flow (FCFF) and uncertainty
      • The firm value is the same as the discount rate is the same
      • The market value is not affected by the captial structure of the company
    • MM proposition 2 without taxes: higher leverage raises the cost of equity
      • The cost of equity is a linear function of D/E
      • Assumption
        • Financial distress has no cost
        • Debt holders have prior claim to assets and income: rd < re
      • re rises with higher D/E to offset the increased use of cheaper debt to maintain constant WACC
    • MM proposition with taxes
      • MM proposition 1: The tax deductibility of interest payment creates a tax shield that adds value to the firm,and the optimal capital structure is 100% debt
      • MM proposition 2: WACC is minimized at 100% debt
      • 公式
    • Costs of financial distress
      • Direct costs
        • Legal fees
        • Administrative fees
      • Indirect costs
        • Foregone investment opportunities
        • Impaired ability to conduct business
        • Agency costs associated with the debt during periods in which the company is near or in bankruptcy
      • Probability that financial distress and bankruptcy happen
        • Operating leverage and financial leverage
        • Quality of management and corporate governance structure
  • Types of Capital Structures
    • Optimal capital structure
      • 定义: The theoretical point at which the value of the company is maximized
      • Static trade-off theory
      • Key points of static trade-off theory
        • The tax shield add value to the firm
        • The impact of cost of financial distress, agency cost and cost of asymmetric reduce the firm value
        • Once the value adding from tax shield and value reduction from these costs are balanced, the company reaches a max value with lowest cost of capital optimal capital structure
    • When a company recognizes its optimal capital structure, it may adopt it as its target capital structure, which may or may not equal to the optimal capital structure
    • Actual capital structure is set for a particular project, while target capital structure is measured at the consolidated company level
  • Agency costs
    • 定义: the incremental costs arising from conflicts of interest when an agent makes decisionsfor a principal.
    • Agency costs to equity
      • Smaller stake the mangers have HIGHER cost
      • Net agency cost of equity
        • Monitoring costs are the costs borne by owners to monitor the management of the company
        • Bonding costs are the costs borne by management to assure owners that they are working in the owners' best interest
        • Residual losses are the costs incurred even when there is sufficient monitoring and bonding, because monitoring and bonding mechanisms are not perfect
      • 影响因素
        • The better the company is governed, the lower agency cost
        • The increase in use of debt vs. equity, decrease the agency cost
  • Cost of asymmetric information
    • The provider of both debt and equity capital demand higher returns from companies with higher asymmetry in information because there is a great likelihood of agency cost
    • Pecking order theory
      • 主要观点: the management of the company prefers the way of financing that disclose less information
      • Pecking order
        • Managers prefer internal financing
        • If internal financing is insufficient, managers next prefer debt
        • The final choice is equity
      • Conclusion
        • The management prefers to issue equity when it is overvalued; but is reluctant to issue equity whenit is undervalued
        • Issuance of equity is a negative signal of the company
  • Factors affect capital structure
    • Capital structure policies and targets: guidelines set by management and the board that seek to establish sensible borrowing limits for the company based on the company's risk appetite and abilityto support debt
    • Capital investment financing: financing opportunities or requirements associated withacquisitionsorother major investments
    • Market conditions: current share price levels and market interest rates for a company's debt
    • Asymmetric information: the unequal information distribution that exists between management and other stakeholders
  • Shareholder and Stakeholder Theory
    • Shareholder theory: The interests of other stakeholders are considered only to the extent that they affect shareholder value.
    • Challenges for doing stakeholder theory
      • The complexity of balancing multiple objectives
      • A lack of clarity on how non-shareholder objectives are defined, measured, and balanced
      • The challenges of competing globally when competitors may not face similar constraints
      • The direct costs in adhering to higher ESG standards
    • Principal Stakeholder Groups
  • 其他
    • Role of debt rating
      • Debt ratings are an important consideration in the practical management of leverage
        • As leverage rises, rating agencies tend to lower the ratings of the company's debt to reflect the higher credit risk resulting from the increasing leverage
      • In practice, most managers consider the company's debt rating in their policies regarding capital structure
      • Managers must be mindful of their company's bond ratings because the cost of capitalis tied closely to bond ratings
    • Evaluating capital structure policy
      • Factors an analyst should consider when evaluating a firm's capital structure
        • The capital structure of the company over time
        • The capital structure of competitors that have similar business risk
        • Company-specific factors, such as the quality of corporate governance
      • A common goal of capital structure decisions is to finance at the lowest cost of capital
        • Analysts can use a scenario approach to assess this point for a particular company, starting with the current cost of capital for a company and considering various changes
    • Market Value vs. Book Value
      • Market values can fluctuate substantially and seldom impact the appropriate level of borrowing
      • For management, the primary concern is the amount and types of capital invested by the company,not in the company
      • Capital structure policy ensures management's ability to borrow easily and at low cost: lenders, debt investors, and rating agencies generally focus on the book value of debt and equity for their calculation measures
• Measures of Leverage
  • Basic concepts
    • Leverage
      • 定义: Leverage is the use of fixed costs, operating or financial, in a company's structure, which increases the risk and potential return of a firm's earnings and cash flows
      • 来源
        • Operating leverage results from fixed operating cost
        • Financial leverage results from the use of debt financing and its associated fixed costs
    • Business risk
      • 定义: the risk associated with operating earnings(EBIT) and results from a combination of sales risk and operating risk
      • 分类
        • Sales risk: the uncertainty with respect to the price and quantity of goods and services
        • Operating risk: risk attributed to the operating cost structure, the greater the fixed costs relative to variable costs, the greater the operating risk
  • Measure of Leverage
    • Degree of operating leverage (DOL)
      • Definition
        • The degree of operating leverage can be regarded as the operating income elasticity, which is the percentage change in EBIT that results from a given percentage change in sales
        • A quantitative measure of operating risk
      • 计算
        • 定义
    • Degree of financial leverage (DFL）
      • Definition
        • The sensitivity of the cash flows available to owners when operating income（EBIT）changes
        • A quantitative measurement of financial risks
      • 计算
        • 定义式
    • Degree of total leverage(DTL)
      • Definition
        • A measure of the sensitivity of net income to changes in the number of units produced and sold
        • The ratio gives a combined effect on both operating leverage and financial leverage
      • 计算
  • Breakeven analysis
    • Breakeven quantity of sales(Q(BE))
      • 定义: the level of sales that a firm must generate to cover all of its fixed and variable costs
      • 计算
    • Operating breakeven quantity of sales(Q(OBE))
      • 定义: Calculate as breakeven quantity of sales but only consider fixed operating costs and ignore fixed financing cost.
      • 计算