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Capital Structure(7)

Capital Structure(7)

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Published by Surender Singh

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Published by: Surender Singh on Nov 21, 2010
Copyright:Attribution Non-commercial

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11/07/2012

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1
Capital Structure DecisionsCapital Structure Decisions
UnitUnit --22
 
Capital StructureCapital Structure
Capital Structure refers to the combination or mix of debtCapital Structure refers to the combination or mix of debtand equity which a company uses to finance its long termand equity which a company uses to finance its long termoperationsoperations
Raising of capital from different sources and their use inRaising of capital from different sources and their use indifferent assets by a company is made on the basis ofdifferent assets by a company is made on the basis ofcertain principles that provide a system of capital so thatcertain principles that provide a system of capital so thatthe maximum rate of return can be earned at a minimumthe maximum rate of return can be earned at a minimumcost. This sort of system of capital is known as capitalcost. This sort of system of capital is known as capitalstructure.structure.
Capital structure of a company refers to the compositionCapital structure of a company refers to the compositionor makeor make ²  ²up of its capital. It includes all long term capitalup of its capital. It includes all long term capital resources as well as short term capital resourcesresources as well as short term capital resources
 
3
F
orms/patterns of capital structure
F
orms/patterns of capital structure
E
quity shares only
E
quity shares only
E
quity and preference shares
E
quity and preference shares
E
quity shares and debentures
E
quity shares and debentures
E
quity shares, preference shares and debentures
E
quity shares, preference shares and debentures

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