MY ICT LESSON PLAN 3

1. DAY III

2. FACTORS DETERMINING CAPITAL
STRUCTURE
FINANCIAL LEVERAGE
CASH FLOW ABILITY
STABILITY OF SALES
COST OF CAPITAL
SIZE OF THE ITEM

3. FINANCIAL LEVERAGE
Financial
leverage is the use
of fixed interest
bearing sources of
funds along with

4. CASH FLOW ABILITY
Capital mix is divided on
the basis of ability of the
firm to generate sufficient
cash flow to serve

5. STABILITY OF SALES
If the sales is stable
company will get fair
return

6. COST OF CAPITAL
Cost of capital
means minimum
return expected from
the capital

7. SIZE OF THE FIRM
Huge companies depends
more debt capital and
small firms depends
more equity capital

8. Review Questions:
1. What do you mean by Financial leverage?
2. Explain the term cost of capital?
3. What are the different factors which affect
capital structure?
Follow up activity
“Prepare a brief note on the factors affecting
capital structure”