Capital structure

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  • Capital Structure And Capital Value

    value been the subject of considerable studies for both academics ‎and professionals, especially how capital structure decision affects firm value in what way and to ‎what extent. However, the overall effect of leverage on firm’s value is still a debatable issue and ‎there is no certainty about it. This research aims to examine the impact of capital structure decision ‎on firm value for firms listed on American stock exchanges and included within S&P 500 index, in ‎addition to examining determinants of leverage. Furthermore, the research tested empirically the ‎influence of leverage structure on firm value given different growth and size opportunities of firms ‎included in sample. The sample included…

    Words: 4969 - Pages: 20
  • Macroeconomic Variables In Capital Structure

    Yeh & Roca (2010) investigated the influence of macroeconomic variables and their relation with firm-specific variables to determine the capital structure of the textile, plastics and electronics industries in Taiwan. They found that macroeconomic factors have significant positive impact on growth opportunities but the results become reversed when macroeconomic conditions worsen. Stephan & Talavera (2004) analyzed the relationship between optimal debt and macroeconomic volatility and their study…

    Words: 848 - Pages: 4
  • Capital Structure

    Capital structure choices are among the most important choices an organization can make. The wrong capital structure can push the organization into serious budget cost. Capital structure alludes to the breakdown of an organization 's money related assets. The objective capital structure of an organization determines how much the company will obtain, what sorts of debt it will have to pay and the amount of cash the shareholders must contribute. The first thing that mangers are quick to consider…

    Words: 839 - Pages: 4
  • The Pros And Cons Of Strategic Capital Structure

    Long term sustainability of a company depends on various factors. Strategic capital structure would cater long term financial solution for the company. Capital structure of a company will be consisting of both debts and equity. The ratio between debt and equity will be decided based on number of strategic factors such as industry, PEST factors, legal and corporate governance of the company. When deciding the capital structure, organizations should understand both positives and negatives of the…

    Words: 1544 - Pages: 7
  • Importance Of Capital Structure

    To begin with, it is a vital role in determining the most appropriate capital structure for a business organization. One of the main reasons is to maximize shareholder wealth which has been the main priority. Besides that, the decision made on the type of capital structure to be applied can also impact the company itself in dealing with its competitive environment. Based on Modigliani and Miller (1958), optimal capital structure exists when risk of bankruptcy is balanced with the savings of…

    Words: 1225 - Pages: 5
  • Costco Capital Structure

    Capital Structure Debt and equity are the principal components of a company’s long term capital and capital structure describes this composition (combination of debt and equity) of the company’s permanent/long term capital. Capital structure is an indicator of how a firm finances its overall operations and growth using the different sources of funds available. It is a mix of long-term debt, short-term debt, common equity and preferred equity. Debt is in the form of bond issues or long-term…

    Words: 1954 - Pages: 8
  • Theories Of Capital Structure: The Trade-Off Theory Of Capital Structure

    Trade-off theory of capital structure refers to the idea that a firm chooses how much debt finance and how much equity finance to use by balancing the costs and welfares. Trade-off theory of capital structure essentially involves offsetting the costs of debt against the benefits of debt. The Trade-off theory of capital structure converses the several corporate finance selections that a firm experience. Theories propose that there is a best capital structure that maximizes the value of the…

    Words: 2064 - Pages: 9
  • The Importance Of Capital Structure Management

    Super-size and large companies have huge amounts of money/resources to deal with in different ways. Financial executives of big companies have to keep all the immediate, intermediate and future financial necessities of companies in mind while taking any of the important policy decisions. Investment, financing, dividend and working capital decisions entails large amounts of money allocation/elicitation and has considerable impact on the financial well-being of a firm. Hence, all the policy…

    Words: 825 - Pages: 4
  • Capital Structure And Solvency: Starbucks

    2. Capital Structure and Solvency: Solvency refers to the company’s ability to meet its long-term obligations. The capital structure of a company details how the company is financed, that is, the proportion of debt to equity. Below are the ratios for Starbucks Corp. and the Dunkin’ Brands Group Inc. (Subramanyam, 2014). Table 6: Capital Structure & Solvency-Starbucks. & Dunkin’ Brands Group. Prepared by Kyria Aho 2.1. Total debt to equity: This ratio compares the debt capital of the…

    Words: 1129 - Pages: 5
  • Capital Theory And Trade-Off Theory Of Capital Structure

    It explains the idea that a company chooses how much debt and how much equity finance it should use by balancing the costs and benefits. It basically entails offsetting the costs of debt against the benefits of the debt. The This theory of capital structure discusses the various corporate finance choices that a corporation can experience. Modigliani and Miller introduced the tax benefit of debt. Later it led to an optimal capital structure given by the trade-off theory. According to M& M, the…

    Words: 719 - Pages: 3
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