Question

What are factors affecting capital structure?

Answer 1

Factors:1) Cash flow position

2) Interest coverage ratio

3) Debit service coverage ratio

4) Return on investments

5) Cost of debt

6) Tax rate

7) Cost of equity

8)Floatation costs

9) Risk consideration

10) Flexibility

11) Control

12) Regulatory framework

13) Stock market conditions

14) Capital structure of other companies.

Hope this will help you

Answer 2

Hello !

Factors Affecting Capital Structure

The Regularity of Earnings-A firm with large and stable incomes may incur more debt in its capital structure, unlike the one that is unstable.

Debt -Equity Ratio– As stated debt is a liability whose interest has to be paid irrespective of earning

Hope It Helps u :)