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Capital structure is a term which is referred to be the mix of sources from which the long term funds are required …
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Cost Principle: this principle deals with the ideal capital structure which should minimize cost of financing and maximize the earnings per share…
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The internal factors which are affecting capital structure are as follows:-…
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The external factors which are affecting the capital structure are as follows:-
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The general factors which are affecting the capital structure are as follows:-Company constitution,Company characteristics,Stability of Earnings…
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The component cost is the one which comes under the cost of capital and it has three levels:-…
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Average cost is also called as unit cost which is equal to the total cost divided by number of goods
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Explicit cost is the cost which is external to the business like wage, rent and materials…
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Cost of the capital is the rate of return which is minimum which has to be earned on investments in order…
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Cost of capital is measured in terms of weighted average cost of capital. In this the total capital value of a firm …
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Traditional approach is also known as Net income approach but it is the simplest form. It is in between…
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Modigilani-Miller approach is also known as MM approach which looks similar to Net operating income approach….
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Cost of debt, preference shares, equity shares, reatined earnings…
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Composite cost of capital - Composite cost of capital is also known as weighted average cost of capital which is a measurable unit for it….
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Cost of equity share is the part of cost of capital which allows the payment to only the equity shareholders….
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Earning per share (EPS) is the amount of earning per each share of a company s stock. Companies…
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Price earnings ratio (P/E Ratio) is the ratio which is between the market price per equity and earning per share. …
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Leverage is a general term which is used in financial management and it is used as a technique to multiply…
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Different types of leverage computed for financial analysis and they are as follows:-
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Operating leverage works on fixed cost as well as variable costs. It analyzes both of the costs and it remains in the company…
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Financial leverage is the leverage in which a company decides to finance majority of its assets by taking on debt….
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Combined leverage is a leverage which refers to high profits due to fixed costs. It includes fixed operating expenses…
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High operating leverage and high financial leverage indicates the risky investment made by the company s shareholders. …
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Capital structure is a term which is referred to be the mix of sources from which the long term funds…
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Net income (NI) approach as this is also called as traditional approach. This is an approach in which both cost of debt….
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Operating income approach is the approach which suggests the decision of capital structure…
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