A mix of a company's long-term debt, specific short-term debt, common equity and preferred equity. The capital structure is how a firm finances its overall operations and growth by using different sources of funds.
there are three structures followed by the companies
1.Maturity matching policy - Current liabilities only can finance by the amount of temporary current assets.
low risk
2. Aggressive policy - Current liabilities can finance by the amount of temporary current assets and permanent current assets. too risky
3. Conservative approach - Current liabilities only can finance by a part of amount of the temporary current assets. it means temporary current assets> current liabilities.
the more safest mode to financing.
- AzR 13 -
Capital budgeting is related with the investments decisions which has to be made in long-term fixed assets and working capital management. Capital structure is related with the financing decisions regarding the debt and equity combinations,in which proportion debt and equity has to be maintained.
Capital budgeting is related with the investments decisions which has to be made in long-term fixed assets and working capital management. Capital structure is related with the financing decisions regarding the debt and equity combinations,in which proportion debt and equity has to be maintained.
capital structure decisions are structure with decisions
The objective of capital structure is minimize the WACC cost.
elements of capital structure
An all equity capital structure would be the most conservative type of working capital financing plan approach. The more long-term financing used the more conservative the financing plan, and equity is permanent financing.
The three types of financial management decisions include capital structure, capital budgeting and working capital. They are designed to answer the main source of capital used to run the firm.
The three types of financial management decisions include capital structure, capital budgeting and working capital. They are designed to answer the main source of capital used to run the firm.
Following are three decisons involved: 1 - Working capital management 2 - Capital Structure decsion 3 - Dividend policy
optimal capital structure means using the resources of capital optimally, at is where they can utilised properly. target capital structure means investment made in the certain project so that they can utilise the resource of capital properly.
capital structure is the structure/form/shape/component of total amount of capital owned by a company .... means the total issued or subscribed capital whether its in the form of ordinary shares, PTCs ,TFCs, etc optimal capital structure is the such amount of capital which a company maintains while seeings its cost.
capital structure