Question

explain the features of an appropriate capital structure

Answer 1

1..solvency
2..profitability
3..flexibility
4..control
5..conservatism


hope it helps buddy..mark as brainleast if it helpd

Answer 2

The term capital structure is used to proportionate relationship between the various long-term kinds of capital arrangement. An appropriate capital should includes:                                                                                                                              *Flexibility-It gives the finance manager the ability to alter the firm's capital structure with a maximum cost and delay, if warranted in the changed environment.                                                                                                                         *Profitability-A sound capital structure should permit of maximum use of  leverage at a maximum cost so that to provide better profitability and thus maximizing earning per share.                                                                                                                          *Control-The capital structure should not lead to lost of control in the company.                                                                                                                      *Conservatism-No company should exceed it's debt capacity. As already explained that the interest is to be paid on debts and principal sum is also be to be paid.                                                                                                                         *Solvency-Extensive debt threatens the solvency and credit rating of the company. The debt financing should be only to the extent that it can be serviced fully and also be paid back(if required).