Capital Structure Theory

Capital Structure The long-term financing of the company is funded through the capital structure owned by the company. It caters the whole company being a unique blend of financial sources, equity and debt. The capital developments mainly hang about a midway of equity...

What is Capital Structure?

A capital structure concerns the composition of the liability of a company or more specifically, the relative participation of the several financing sources in the composition of the total obligations. Capital structure decision is very essential for any organization;...

Factors affecting target capital structure

For the establishment of a target capital structure, the firm analyzes certain factors such as; mix of debt, preferred stock and common equity. The specific capital structure changes according to the conditions. The change in capital structure occurs due to the debt...

WACC – Weighted Average Cost of Capital

The capital structure of a firm comprises of three financing components i.e. shareholders’ funds (including retained earnings), borrowed funds, and preference shareholders funds. All capital components have one feature in common i.e. the investors who provided the...