August 21, 2019

What are the factors determining the Capital Structure?

Factors determining the capital structure Financial leverage or trading on equity The use of long term debt increases, magnifies the EPS if the firm yields a return higher than the cost of debt. The EPS also increases with the use of preference share capital but due to the fact that interest is allowed to be […]

What are the factors that determine the capital structure?

Financial leverage or trading on equity The use of long term debt increases, magnifies the EPS if the firm yields a return higher than the cost of debt.  The EPS also increases with the use of preference share capital but due to the fact that interest is allowed to be deducted while computing tax. Growth […]

What are the essential features of sound capital mix?

Maximum possible use of leverage Flexible To avoid undue financial/business risk with the increase of debt The use of debt should be within the capacity of the firm It must avoid undue restrictions in agreement of debt Should have minimum possible risk of loss of control The capital structure should be conservative. It should be […]