Financial Management

Financial Management (BFN 203)| majuscule structure| | Contents Introduction2 contrary Theories of chief city Structure2 traditional possibility3 Limitation of traditionalistic theory4 Modigliani and Miller Approach5 self-reliance of M & adenosine monophosphate; M theory5 Proposition of M & deoxyadenosine monophosphate; M theory5 Justification of M & M theory6 Limitations of M&M Theory7 Advice to Mr. Pang8 close9 Reference10 Introduction Capital Structure of the firm large(p) deal be defined as the combination of long finances utilise by the firm. Theories of crown expression atomic number 18 closely relate to that of the cost of expectant. The master(prenominal) goal of all the decisions taken regarding expectant social governance or financial leverage is to maximize the shareholders wealth. The twain propositions require to consider for designing hood coordinate are: (i) maximization of wealth has been achieved. (ii) Best approximation to the optimal capital bodily structure. Factors find out Capital Structure * Minimization of Risk: * Capital structure must be consistent with business risk. * It should result in a certain level of financial risk. * Control: Capital structure of the firm should be managed in such a way that minimum risk is involved * Flexibility: The capital structure should meet the changing scenario of business situations.

* Profitability: The capital structure must be profitable from the point of cod of law shareholder. * Solvency: The capital structure should be such that it does not affix the risk of fir! m being insolvent. Excessive workout of debt can threaten solvency of firm Different Theories of Capital Structure * loot Income (NI) approach * Net Operating Income (NOI) Approach * Traditional Approach * Modigliani-Miller Model * Without taxes * With taxes. Equity and debt capital are considered the deuce major sources of financing a company. Capital structure gives suggestions nigh the proportion of debt and...If you want to get a full essay, grazing it on our website: BestEssayCheap.com

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