Question

2 Which of the following factors does not affect the capital structure of company

s: A.
Cost of capital
B.
Size of the company
c
Composition of the current assets
D. O Expected nature of cash flows
reset answer​

Answer 1

Answer:

Option (c) Composition of the current assets does not affect the capital structure of a company.

Explanation:

Capital structure exists as the particular assortment of debt and equity used by a company to finance its overall operations and growth. Equity capital derives from ownership shares in a company and claims to its future cash flows and profits.

Current assets contain cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets. Current assets exist important to businesses because they can be utilized to fund day-to-day business operations and to pay for the ongoing operational expenses.

Hence, (c) the Composition of the current assets does not affect the capital structure of a company.

Thus, Option(c) is correct.

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