The document discusses capital structure, which is the mix of debt and equity used to finance a firm. The value of a firm is equal to the value of its debt plus the value of its equity. The optimal capital structure maximizes firm value by balancing the debt-equity ratio. Factors that influence the capital structure decision include business risk, taxes, financial flexibility, growth opportunities, and market conditions. Leverage increases risk for shareholders but also increases potential returns, as interest payments are tax deductible. Higher debt leads to greater financial risk.
This presentation is an overview of Capital Structure Theories.
Dr. Soheli Ghose ( Ph.D (University of Calcutta), M.Phil, M.Com, M.B.A., NET (JRF), B. Ed).
Assistant Professor, Department of Commerce,St. Xavier's College, Kolkata.
Guest Faculty, M.B.A. Finance, University of Calcutta, Kolkata
Some of the major different theories of dividend in financial management are as follows: 1. Walter’s model 2. Gordon’s model 3. Modigliani and Miller’s hypothesis.
On the relationship between dividend and the value of the firm different theories have been advanced.
This presentation is an overview of Capital Structure Theories.
Dr. Soheli Ghose ( Ph.D (University of Calcutta), M.Phil, M.Com, M.B.A., NET (JRF), B. Ed).
Assistant Professor, Department of Commerce,St. Xavier's College, Kolkata.
Guest Faculty, M.B.A. Finance, University of Calcutta, Kolkata
Some of the major different theories of dividend in financial management are as follows: 1. Walter’s model 2. Gordon’s model 3. Modigliani and Miller’s hypothesis.
On the relationship between dividend and the value of the firm different theories have been advanced.
Approaches to determine appropriate capital structure - EBIT-EPS Approch
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This PPT contains the full detail of topic leverage in financial management
it covers following topics :-
Meaning of Leverage
Types of Leverage
Operating Leverage
Financial Leverage
Difference between Operating & Financial Leverage
Combined Leverage
Illustrations
Exercise
Approaches to determine appropriate capital structure - EBIT-EPS Approch
anybody can join my google class (financial Mangement)
by entering class code : avkkvj5
This PPT contains the full detail of topic leverage in financial management
it covers following topics :-
Meaning of Leverage
Types of Leverage
Operating Leverage
Financial Leverage
Difference between Operating & Financial Leverage
Combined Leverage
Illustrations
Exercise
determinants of corporate dividend policyArfan Afzal
Determinants of Corporate Dividends Policy: Evidence from an Emerging Economy, the attributes of non-financial companies listed on Abu Dhabi Securities Exchange (ADX). panel data for the period between 2010 and 2012 were collected from the listed companies annual reports published on ADX website.
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
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Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
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what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
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1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
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It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
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Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
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2. 2
Definition: Capital Structure is the mix of financial
securities used to finance the firm.
The value of a firm is defined to be the sum of the value
of the firm’s debt and the firm’s equity.
V = B + S
If the goal of the management of the firm is to make the
firm as valuable as possible, then the firm should pick the
debt-equity ratio that makes the pie as big as possible.
Value of the FirmBS
3. Business Risk
Company Tax exposure
Financial Flexibility
Management Style
Growth Rate
Market Condition
Cost of Fixed Assets
Size of Business Organization
Nature of business Organization
Elasticity of Capital Structure
4. Net Income Approach (NI)
Net Operating Income Approach (NOI)
Traditional Approach (TA)
Modigliani and Miller Approach (MM)
5. Need to consider two kinds of risk:
◦ Business risk
◦ Financial risk
6. Standard measure is beta (controlling for financial
risk)
Factors:
◦ Demand variability
◦ Sales price variability
◦ Input cost variability
◦ Ability to develop new products
◦ Foreign exchange exposure
◦ Operating leverage (fixed vs variable costs)
7. The additional risk placed on the common
stockholders as a result of the decision to finance
with debt
8. If the same firm is now capitalized with 50% debt
and 50% equity – with five people investing in debt
and five investing in equity
The 5 who put up the equity will have to bear all
the business risk, so the common stock will be
twice as risky as it would have been had the firm
been all-equity (unlevered).
9. Financial leverage concentrates the firm’s
business risk on the shareholders because debt-
holders, who receive fixed interest payments, bear
none of the business risk.
10. Leverage increases shareholder risk
Leverage also increases the return on equity (to
compensate for the higher risk)
11. Interest is tax deductible (lowers the effective cost
of debt)
Debt-holders are limited to a fixed return – so
stockholders do not have to share profits if the
business does exceptionally well
Debt holders do not have voting rights
12. Higher debt ratios lead to greater risk and higher
required interest rates (to compensate for the
additional risk)
Previous chapters discuss the capital budgeting decisions. Chapter 15&16 focus on the right hand side of the balance sheet model – capital structure.