Financial Management

Financial Management (BFN 203)| majuscule structure| | Contents Introduction2 opposed Theories of chief city Structure2 tralatitious possibility3 Limitation of traditionalistic theory4 Modigliani and Miller Approach5 self-assertion of M & adenosine monophosphate; M theory5 Proposition of M & vitamin A; M theory5 Justification of M & M theory6 Limitations of M&M Theory7 Advice to Mr. Pang8 close9 Reference10 Introduction Capital Structure of the firm spectacular 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 chief(prenominal) goal of all the decisions taken regarding chief city social organic law or financial leverage is to maximize the shareholders wealth. The twain propositions infallible to consider for designing metropolis coordinate are: (i) maximization of wealth has been achieved. (ii) Best appr oximation to the optimal capital twist. Factors ascertain 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 get a line of law shareholder. * Solvency: The capital structure should be such th at it does non affix the risk of firm bein! g insolvent. Excessive utilize 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 two major sources of financing a company. Capital structure gives suggestions close the proportion of debt and...If you want to get a full essay, ruckle it on our website: BestEssayCheap.com

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