what do you meant by capital structure?write any two factors that affect capital structure of a company.
Answers
Answer:
The capital structure is how a firm finances its overall operations and growth by using different sources of funds.
Factors affecting capital structure are:
●Period of financing- When company wants to raise finance for short period, it goes for loans from banks and other institutions; while for long period it goes for issue of shares and debentures.
●Cost of financing- In a capital structure, the company has to look to the factor of cost when securities are raised. It is seen that debentures at the time of profit earning of company prove to be a cheaper source of finance as compared to equity shares where equity shareholders demand an extra share in profits.
Answer:
Answer:
The capital structure is how a firm finances its overall operations and growth by using different sources of funds.
Factors affecting capital structure are:
●Period of financing- When company wants to raise finance for short period, it goes for loans from banks and other institutions; while for long period it goes for issue of shares and debentures.
●Cost of financing- In a capital structure, the company has to look to the factor of cost when securities are raised. It is seen that debentures at the time of profit earning of company prove to be a cheaper source of finance as compared to equity shares where equity shareholders demand an extra share in profits.