Investment opportunity and capital structure, Finance Basics

Investment Opportunity and Capital Structure

Investment Opportunity

Lack of suitable investment opportunities, that is so, by positive returns or N.P.V., may encourage a firm to raise its dividend distribution.  If a firm has much type of investment opportunities, it will pay low dividends and have high retention.

Capital Structure

A company's management may want to achieve or restore an optimal capital structure that is if they consider gearing to be higher, they may pay low dividends and permit reserves to accumulate till a more optimal or suitable capital structure is restored or achieved.

Posted Date: 1/31/2013 2:57:24 AM | Location : United States

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