PRESENTATION ON

CAPITAL
STRUCTURE

SUBMITTED BY:-
HARINDER
 FACTORS DETERMINING
THE CAPITAL STRUCTURE
Financial Leverage or Trading on Equity.

Growth and stability of Sales.

Cost of Capital.

Risk.

Cash flow ability to Service Debt.

CONTINUE……..
Nature & Size of a Firm.

Control.

Flexibility.

Requirement of Investors.

Capital Market Conditions.

Assets structure.
 CAPITAL GEARING
The term “CAPITAL GEARING” refers to the relationship
between equity capital and Long term debt. A company is
said to be in high gear, when it has a proportionately large
issue of debentures & preference shares for raising long
term resources, whereas low gear stands for a
proportionately large issue of equity shares.
This example illustrates clearly the terms ‘high gear’ &
‘low gear’ :-

LIABILITIES A. LTD. B. LTD.

Equity share capital 4,00,000 6,00,000
10%Preference Share
Capital 3,00,000 2,00,000

9%Debentures 3,00,000 2,00,000

10,00,000 10,00,000