Hamada Equation-Meaning, Example and More
Hamada equation distinguishes the financial risk from the business risk of a levered firm. A levered firm’s capital structure consists of both equity and… Read Article
Capital Structure
Financial Structure – Meaning, Importance and More
The Financial structure is how a company finances its assets and operations. Or, we can say it is the mix of debt and equities… Read Article
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
Debt vs Equity
When a business seeks funds through investors, it considers two options: debt vs equity. Debt financing involves borrowing funds from investors by issuing corporate… Read Article
Trading on Equity – This Financing Option Is Not For All
Trading on Equity is a financial process that involves taking more debt to boost the return of the shareholders. Trading on Equity occurs when… Read Article
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
Factors affecting Capital Structure Decisions
Capital Structure in GeneralEvery company needs capital to support its operations. Capital structure is a blend of various sources of finance. To be more… Read Article
Factors affecting Dividend Policy
A company is raising funds from different sources, and it includes debentures, preference shares, and equity shares. Payment to debenture holders and preference shareholders… 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