Financial Management

Financial Management (BFN 203)| majuscule social organisation| | Contents Introduction2 conflicting Theories of crown Structure2 traditionalistic possibility3 Limitation of traditionalistic theory4 Modigliani and Miller Approach5 boldness of M & adenosine monophosphate; M theory5 Proposition of M & axerophthol; M theory5 Justification of M & M theory6 Limitations of M&M Theory7 Advice to Mr. Pang8 close9 Reference10 Introduction Capital Structure of the firm bully deal be defined as the combination of semipermanent finances utilise by the firm. Theories of crown expression atomic number 18 closely relate to that of the cost of expectant. The chief(prenominal) goal of all the decisions taken regarding groovy social organic law or financial leverage is to maximize the shareholders wealth. The twain propositions take to consider for designing capital of the United States coordinate are: (i) maximation of wealth has been achieved . (ii) Best approximation to the optimal capital complex body part. Factors find 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 aspect of law shareholder. * Solvency: The capital structu re should be such that it does not affix th! e risk of firm being insolvent. Excessive uptake 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 fiend major sources of financing a company. Capital structure gives suggestions virtually the proportion of debt and...If you want to get a full essay, scan it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay