Factors of capital structure, Finance Basics

Factors of Capital Structure

1. Availability of securities - This influences the company's employ of debt finance that means such if a company has enough securities, so then it can afford to employ debt finance in large capacities.

2. Cost of finance as both explicit and implicit - If low, so a company can employ more of debt or equity finance.

3. Company gearing level - if high, so then the company may not be capable to employ more equity or debt finance since potential investors would not be willing to invest in that a company.

4. Sales stability - If a company has stable sales so like profits, it can afford to utilize various finances in particular debt in such far as it can service like finances.

5. Competitiveness of the industry whether the company operates - If the company operates in a highly competitive industry, hence it may be dangerous to utilize high levels of debt since chances of servicing this debt may be lead and may low a company in receivership.

Posted Date: 1/30/2013 2:48:35 AM | Location : United States







Related Discussions:- Factors of capital structure, Assignment Help, Ask Question on Factors of capital structure, Get Answer, Expert's Help, Factors of capital structure Discussions

Write discussion on Factors of capital structure
Your posts are moderated
Related Questions
Stock Exchange Index or SEI Stock Exchange Index is a measure of relative changes in prices of stocks from one duration to another index. Nairobi Stock Exchange twenty (20) -

Tank Industries Washers decides to pay the following dividends over the next four years: $2.50, $3.20, $4.75 and $5.20 respectively (starting at time 1). a.    After year 4, the

(a) RBC has 100 loans outstanding, each for $1 million, which it expects to be repaid today.  Each loan has a 5% probability of default, in which case the bank is not repaid anythi

From the following selected operating date, determaine the DOL. Which company has the greater amount of business risk? Why? Particulars A Ltd

Illustrate in brief about the Investment  Process A  typical  investment  decision  undergoes  a  five  step  procedure which, in turn, forms the foundation of investment pr

what are financial markets. why do they exist

given profit margin 7%, total asset turnover is 1.94, Return on equity is 23.7%, what is the debt equity ratio

How often does the "on the run" tsy change?

some report about credit bank

Intercontinental Baseball Manufacturers (IBM) has an outstanding bond with a $1,000 face value that matures in 10 years. The bond, which pays $25 interest every six months ($50 per