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CAPITAL STRUCTURE

CAPITAL STRUCTURE

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Published by Harinder Kaur

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Published by: Harinder Kaur on Jan 27, 2011
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01/27/2011

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PRESENTATION ON CAPITAL STRUCTURE

SUBMITTED BY:HARINDER

COST OF CAPITAL. RISK. GROWTH AND STABILITY OF SALES. .FACTORS DETERMINING THE CAPITAL STRUCTURE FINANCIAL LEVERAGE OR TRADING ON EQUITY. CASH FLOW ABILITY TO SERVICE DEBT.

.CONTINUE««. ASSETS STRUCTURE. NATURE & SIZE OF A FIRM. FLEXIBILITY. REQUIREMENT OF INVESTORS.. CONTROL. CAPITAL MARKET CONDITIONS.

WHEREAS LOW GEAR STANDS FOR A PROPORTIONATELY LARGE ISSUE OF EQUITY SHARES. . WHEN IT HAS A PROPORTIONATELY LARGE ISSUE OF DEBENTURES & PREFERENCE SHARES FOR RAISING LONG TERM RESOURCES. A COMPANY IS SAID TO BE IN HIGH GEAR.CAPITAL GEARING THE TERM |CAPITAL GEARING} REFERS TO THE RELATIONSHIP BETWEEN EQUITY CAPITAL AND LONG TERM DEBT.

B. LTD.00.000 10.000 10%Preference Share Capital 9%Debentures 3.00.00.THIS EXAMPLE ILLUSTRATES CLEARLY THE TERMS ~HIGH GEAR & ~LOW GEAR :LIABILITIES A.000 2. LTD.000 .000 2. 6.00.00.000 Equity share capital 4.00.000 10.00.000 3.00.

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