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Essay example - Capital structures: the method of financing the resources through the blend of debentures, equity, and other securities

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Finance & Accounting
Pages 10 (2510 words)
Financial Management Table of Contents Part A 3 Importance of Capital Structure in Efficient Financial Management of Large Companies 3 Modigliani–Miller Theory of Capital Structure 4 Argument against Modigliani-Miller Theory 4 Cost of Capital 5 Importance of Cost of Capital in Efficient Financial Management of Large Companies 5 Capital Asset Pricing Model (CAPM) in Cost of Capital 6 Argument against CAPM 7 Existence of Optimal Capital Structure 7 Analysis of Optimal Capital Structure of BMW 8 Analysis of Optimal Capital Structure in Delta Airline and Southwest Airline 9 Part B 10 Significance of Dividend Policy to Investors in Large Companies 10 Dividend Policy Theories 10 Dividend Irreleva…

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The capital structure of an organisation is an arrangement or formation of the liabilities. The objective of capital structure is to combine the undying bases of capitals in such a way so that it can increase the value of common stock of an organisation. The capitals of an organisation which create fixed expenses in the form of long-term debt and equity capital can be mixed with shared equity in the percentage which is utmost suitable to the share market. Through capital structure this mix can be developed which in turn increases the value of common stock (Keown, 2003). Importance of Capital Structure in Efficient Financial Management of Large Companies Capital structure arrangement is much significant for large organisations in order to survive in the industry for long run. In balance sheet of every organisation there are two components, one is liability and the other one is asset. ...
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