SELECT * FROM question_mgmt as q WHERE id=10929 AND status=1 SELECT id,question_no,question,chapter FROM question_mgmt as q WHERE courseId=3 AND subId=20 AND chapterId=598 and ex_no='4' AND status=1 ORDER BY CAST(question_no AS UNSIGNED)

Question:

What are the factors that influence a company’s capital structure? Discuss in detail.

Answer:

Several factors influence a company’s decision on capital structure:

  • Cost of debt vs. cost of equity: Debt is usually cheaper because of tax benefits, but it increases financial risk. Equity is costlier but involves less risk.
  • Company’s cash flow: A company with strong cash flow can afford to take on more debt.
  • Debt service coverage ratio (DSCR): A high DSCR indicates that the company can comfortably meet its debt obligations, encouraging the use of debt.
  • Market conditions: Favorable stock market conditions may prompt a company to issue more equity, while poor conditions may lead to more debt financing.
  • Interest coverage ratio: This measures the company's ability to pay interest on its debt. A higher ratio reduces the risk of using debt.
  • Floatation costs: The costs of issuing new securities, especially equity, can discourage the company from raising funds through equity.
  • Control considerations: Issuing more equity can dilute the control of existing shareholders, while debt financing allows the current owners to retain control.


< Previous Question

Next Question >

SELECT ex_no,question,question_no,id,chapter FROM question_mgmt as q WHERE courseId='3' AND subId='20' AND ex_no!=0 AND status=1 and id!=10929 ORDER BY views desc, last_viewed_on desc limit 0,10

  • Popular questions of class 12 Business Studies

SELECT ex_no,question,question_no,id,chapter FROM question_mgmt as q WHERE courseId='3' AND subId='20' AND ex_no!=0 AND status=1 and id!=10929 ORDER BY last_viewed_on desc limit 0,10

  • Recently Viewed Questions of Class 12 Business Studies

Comments

  • Answered by Ekta Mehta
  • 4 months ago

Taking Screenshots on your Samsung Galaxy M31s is very easy and quick.

  • Answered by Ekta Mehta
  • 4 months ago

Taking Screenshots on your Samsung Galaxy M31s is very easy and quick.

  • Answered by Ekta Mehta
  • 4 months ago

Taking Screenshots on your Samsung Galaxy M31s is very easy and quick.

Comment(s) on this Question


Important links

Quick Links

Resources

Support