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Capital Structure
Capital Structure NI approach
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Capital structure
Capital structure refers to thecombination or mix of debt and equity which a company uses to finance itslong term operations.
The capital structure is how a firmfinances its overall operations andgrowth by using different sources of funds.
Meaning:
Raising of capital from differentsources and their use in differentassets by a company is make on thebasis of certain principles thatprovide a system of capital so thatthemaximum rate of returncan beearned at aminimum cost.
This sort of system of capital isknown ascapital structure
Optimal Capital Structure
The optimal or the best Capitalstructure implies the most economicaland safe ratio between various types of securities.
It is that mix of debt and equity whichmaximizes the value of the companyand minimizes the cost of capital.
Essentials of optimal capital structureminimum cost of capital, minimum risk,maximum return, maximum control.
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Capital Structure
Capital Structure NI approach
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| Upload Date: | 08/09/2009 |
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