CAPITAL

STRUCTURE
PLANNING
 Determinants of capital structure
1.EBIT - EPS Analysis

EBIT (Earnings Before Interest and Taxes) and EPS (Earnings

Per Share) are two important financial metrics that provide
insights into a company's profitability and financial
performance
 2.Risk
Some main factors include the firm's cost of capital, nature, size,
capital markets condition, debt-to-equity ratio, and ownership.
However, these factors might help to choose an appropriate capital
structure for a business, but checking all the side factors can help
adopt more appropriate and accurate adaption.
 A. Financial risk

Financial risk refers to the likelihood of losing money on a business

or investment decision. Risks associated with finances can result in
capital losses for individuals and businesses. There are several
financial risks, such as credit, liquidity, and operational risks.
B. N.E.D.C risk

Degree of Leverage The component of NEDC risk

are as follows: (i) The excessive reliance on equity
source leads to the sacrifice of the opportunity
earnings, higher EP on account of beneficial effect
of financial leverage, (ii) Financial plan should be
compatible with retaining control.
 Cash flow analysis
Cash flow analysis refers to the evaluation of inflows and outflows
of cash in an organisation obtained from financing, operating and
investing activities. In other words, we can say that it determines the
ways in which cash is earned by the company.
OPERATING CASH
FLOW
Operating cash flow (OCF) is how
much cash a company generated (or
consumed) from its operating activities
during a period
 NON OPERATING CASH
FLOW
Non-operating cash flow is comprised of the cash a
company takes in and pays out that comes from sources
other than its day-to-day operati ons. Examples of non-
operating cash flow can include taking out a loan,
issuing new stock, and a self-tender defense, among
many others.
 FINANCIAL CASH
FLOW
Cash flow financing is a kind of business loan . A company
will commit to using future cash flows as a means to pay
back a loan. Lenders use the information on a company's
cash flow statement, along with information about a
company's accounts payable and accounts receivable, to
project future cash flows.
THANK YOU