Capital Structure Decisions – Importance, Factors, Tips and More
Capital Structure, as the name suggests, means arranging capital from various sources in order to meet the need for long-term funds for the business.… Read Article
Capital Structure Theories
Capital Structure Analysis
Need for Capital Structure AnalysisYou may have heard that the ultimate goal of any organization is to maximize the wealth of the shareholders by… Read Article
Pecking Order Theory
Pecking order theory is a theory related to capital structure. Donaldson initially suggested it. In 1984, Myers and Majluf modified the theory and made… Read Article
Net Income (NI) vs. Net Operating Income (NOI) Approach
The difference between the net income and operating income approach of capital structure is mainly due to the role of capital structure, the cost… Read Article
Capital Structure Theory – Modigliani and Miller (MM) Approach
The Modigliani and Miller approach to capital theory, devised in the 1950s, advocates the capital structure irrelevancy theory. This suggests that the valuation of… Read Article
Capital Structure Theory – Traditional Approach
The traditional approach to capital structure suggests an optimal debt to equity ratio where the overall cost of capital is the minimum and the… Read Article
Capital Structure Theory – Net Operating Income Approach
Net Operating Income Approach to capital structure believes that the value of a firm is not affected by the change of debt component in… Read Article
Capital Structure Theory – Net Income Approach
The Net Income Approach suggests that the value of the firm can be increased by decreasing the overall cost of capital (WACC) through a… Read Article
Capital Structure and its Theories
Capital Structure means a combination of all long-term sources of finance. It includes Equity Share Capital, Reserves and Surplus, Preference Share capital, Loan, Debentures,… Read Article