What are the characteristics of the financing decision, Financial Management

Assignment Help:

What are the Characteristics of the financing decision

There are two characteristics of the financing decision.

First, theory of capital structure which illustrates theoretical relationship between the employment of debt and return of the shareholders. Use of debt implies a higher return to shareholders as also the financial risk. A proper balance between debt and equity to ensure a trade-off between risk and return to shareholders is essential.  A capital structure with a reasonable proportion of debt and equity capital is known as the optimum capital structure. Hence, one dimension of financing decision whether there is an optimum capital structure? And in what proportion must funds be raised to maximise return to the shareholders?

Second aspect of the financing decision is determination of an appropriate capital structure, given the facts of a specific case.

 


Related Discussions:- What are the characteristics of the financing decision

Why auditors need to attain audit evidence, Why auditors need to attain aud...

Why auditors need to attain audit evidence When significant fluctuations/unexpected relationshipsare identified which are inconsistent with  other  relevant  information  or  t

Explain the concept of newsworthiness in the field of pr, Question 1: (...

Question 1: (a). A big multinational company wishes to employ a PR manager for all its PR activities. What according to you would be the advantages and disadvantages of having

Finance, Ashok is to receive an amount of Rs. 15,00,000 from his relative a...

Ashok is to receive an amount of Rs. 15,00,000 from his relative after 3 years. He wants to buy a house for which he wants the money to be paid now. His relative had al

When comparing different projects than standard deviation, Why is the coeff...

Why is the coefficient of variation often a better risk measure when comparing different projects than the standard deviation? Whenever we wish to compare the risk of investmen

Define exchange exposure of company affect by exchange rate, Assume that yo...

Assume that your company has an equity position in a French firm. Explain the condition under which the dollar/franc exchange rate uncertainty does not comprise exchange exposure f

Operating cycle, disscus the applicability of operating cycle in vegetable ...

disscus the applicability of operating cycle in vegetable in uganda

Corrective action on variance analysis, Corrective Action: Once budget ...

Corrective Action: Once budget figures are compared with those actually achieved, and a variance analysis carried out, management can then take steps to correct any problems id

Show market risk in systematic risks, Market risk as that portion of total ...

Market risk as that portion of total variability of return caused by the alternating Forces of bull and bear markets. When the security index moves upward haltingly for a signifi

Cost of retained earnings and external equity, Expalin the basic concept of...

Expalin the basic concept of financial management and Cost of Retained Earnings and External Equity??? Also explain the hoe can ew calculate the external equity? Help me

Evaluation and assessing probability of management risk, Evaluation: On...

Evaluation: Once all the possible events are identified, the next step in the risk management process is to evaluate the events. As stated previously, the evaluation process wo

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd