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

Capital structures: the method of financing the resources through the blend of debentures, equity, and other securities Essay example
Masters
Essay
Finance & Accounting
Pages 10 (2510 words)
Download 0
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…

Introduction

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. ...
Download paper
Not exactly what you need?

Related papers

Financing Plan to Raise Capital
The Marina Restaurant was blessed with an interest from very influential people and customers even from the beginning. It usually hosts live bands apart from food and this has helped it solidify its image as the premier casual rock and roll diner. With all the success, the company has grown globally. The vast amounts of locations reflect the effective and efficient management which has led a small…
Business Financing and the Capital Structure
Financial planning of the corporation would include building a plan to meet the expenses of the future through its holdings on assets after considering the predicted future cash flows and plans for withdrawal or allocation of funds. Financial planning help the corporations to understand the changes required in the areas of investment and allocation of assets in order to meet their financial goals.…
Business Financing and the Capital Structure
Working capital is expressed as the difference between the short term assets and the short term liabilities. Inventory turnover, accounts payable, accounts receivables are considered for working capital management by companies. Financial instruments used as marketable securities to park excess cash The financial instruments used to park excess cash by corporations are bonds and debentures. These…
Business Financing and the Capital Structure
The total cost of each resource has to be determined and summarized. On the basis of the summarized reports of cost of resources, a budget will be prepared by the finance and accounts department which would help the organization to determine next course of action (Summers, 2011, pp.2-11). Working Capital Management Proper working capital management is necessary to carry out day to day business…
Business Financing and Capital Structure
This enables the determination of the basis of procurement; whether short or long term. ?Forecasting on the availability of funds: most organizations experience steady cash flow. The manager should forecast properly the amounts available to reduce the amount of money borrowed and save on interest payments. ?Establishment and maintenance of control system: proper control measures enhance…
Business Financing and the Capital Structure
Concept of working capital management Working capital management is fundamentally described as a managerial technique to preserve the financial health of a company in repaying its short-term debts and simultaneously, sufficing the need for short-term operating expenses. Advantages of working capital management can be viewed in terms of increased earnings of a company. Contradictorily, the…
Business Financing and the Capital Structure
Afterwards the pro-forma financial statements and ratios are estimated management will want to know how realistic those results are, which steps are necessary to attain expected results and what impact changes in projected operations would have on our estimates. At this stage the firm will enter into the financial control phase in which firms will be concerned with implementing steps needed to…