Free Capital Structure Essays and Papers

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  • Capital Structure

    1077 Words  | 5 Pages

    1. Capital Structure In finance, capital structure refers to the way a corporation finances its assets through some combination of equity, debt, or hybrid securities. A firm's capital structure is then the composition or 'structure' of its liabilities. For example, a firm that sells $20bn dollars in equity and $80bn in debt is said to be 20% equity financed and 80% debt financed. The firm's ratio of debt to total financing, 80% in this example, is referred to as the firm's leverage. The Modigliani-Miller

  • Capital Structure

    2723 Words  | 11 Pages

    Introduction The relationship between capital structure and firm value has been discussed frequently in the literature by different researcher accordingly, in both theoretical and empirical studies. It has also been discussed that whether the firm has any optimal capital structure that has been adopted by an individual firm, or whether the proportions of debt usage is completely irrelevant to the individual firm value. A firm can choose a mix of three modes of financing i.e. issuing shares, borrowing

  • Financial Capital Structure

    1550 Words  | 7 Pages

    Contents : Introduction on Capital Structure Summary and Evaluation of Articles Conclusion References/Bibliography Introduction On Capital Structure :- In the field of finance capital structure means a way an organization or firms finances their assets by the way of some mix and match of Equity, Debt or Hybrid Securities. The modern thinking on capital structure is based on the Modigliani-Miller theorem given by Franco Modigliani and Merton Miller. The theorem suggests that in a perfect

  • Capital Structure of a Firm

    1243 Words  | 5 Pages

    Does the capital structure of a firm really matter? If so, how and why does it matter? Practitioners and scholars of corporate finance have debated these questions for several years and have found it difficult to come up with definitive answers. The classical work of Modigliani and Miller (1958) provided the impetus for what is now, orthodox corporate finance theory on the optimal capital structure of firms. They postulated that, in a perfect or frictionless capital market, the choice between debt

  • Home Depot & Capital Structure

    987 Words  | 4 Pages

    Depot & Capital Structure Finding the perfect capital structure in terms of risk and reward can ensure a company meets shareholder expectations and protects a firm in times of recession. Capital structure refers to how a business puts its money to “work”. The two forms of capital structure are equity capital and debt capital. Both have their benefits and limitations. Striking that perfect balance between the two can mean the difference between thriving versus trying to survive. Equity capital represents

  • “Access to Capital Structure, and the Funding of the Firm”

    1615 Words  | 7 Pages

    Introduction In this essay, I will give brief review notes for “Access to Capital Structure, and the Funding of the Firm” (Omer Brav 2009) which will be focused on the goal of this easy, how and why the theoretical hypotheses are tested and what are the findings. Some discussions about data, methodology used and theory defects will also be included in this essay for critical comment. Content Objective Since earlier capital structure theories are usually subject to public companies, it is very interesting

  • Considerations for Capital Structure

    764 Words  | 4 Pages

    Capital structure is a mixture of debt and equity, this decision is very important for a company as it is a cost for the company because it is borrowed money. This decision is very critical for the company because of different tax implications of debt equity and also the effect of corporate taxes on the profitability and revenues of the firm. Firms must be careful in their borrowing activities in order to avoid financial distress, excessive risk and even bankruptcy. A firm's debt/equity ratio also

  • Capital Structure Analysis

    2501 Words  | 11 Pages

    of the most common ways for a firm to operate or finances its assets is capital structure. Capital structures refer as a combination of equity, debt and hybrid securities that used in the firm operation. In a perfect market, transaction or bankruptcy cost, inefficient information and taxes will not exist. Therefore, Modigliani and Miller created a theory of capital structure in a perfect market. The use of capital structure is important as it affect the firm profitability. Financial decision of

  • The Traditional Approach to Capital Structure

    885 Words  | 4 Pages

    approach to capital structure The traditional approach stresses the benefits of using the combination of cheaper debt and equity finance to find the optimal capital structure, so the total value of firms will be increased with the sensible debt. (Watson and Head, 2013) Of cause, the model was created which based on a certain assumption 1) There is no tax at a personal or a corporate level. 2) The perpetual debt finance and ordinary equity shares are the financial choices for firms. 3) The capital structure

  • DOES INNOVATION STRATEGY MATTER IN CAPITAL STRUCTURE DECISIONS? A STUDY IN INDONESIAN MANUFACTURING FIRMS

    537 Words  | 3 Pages

    1. Introduction Although many researches have been conducted in capital structure, nevertheless it is still a puzzle how firms choose their capital structure between debt and equity. There is no clear-cut consensus among corporate executives on how the capital structure should be, what the determinant factors are, or even, whether their financial decision really matters. In fact, the financial decisions are still surrounded by puzzles for many years after the seminal paper by Modigliani and Miller

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