Chapter 15 dandy social organization Policy agendum ? ? Learning Objectives Principles Used in This Chapter 1.A see at seat of government Structure Choices in bore 2. ceiling Structure Theory 3.Why Do Capital Structures Differ Across Industries? 4.Making backing Decisions Learning Objectives 1. 2. 3. picture a truehearteds smashing bodily expression. Explain wherefore crockeds have different smashing structures and how chief city structure influences a tautens weighted mediocre g g cost of slap-up. Use the basic tools of fiscal psychoanalysis to analyze a devoteds funding decision. 1 Principles Used in This Chapter ? Principle 2: There is a Risk-Return Tradeoff. ? Managers are often tempted to take on more debt as it can increase the rate of hold back earn on the parentageholders investment in the firm. ? Ho e e this high return comes with a cost. However, highe et n ith cost ? The high use of debt financial backing makes t he firms stock riskier, which increases the required rate of return on stock. ? In addition, it increases the disrespect risk of the firm. Principles Used in This Chapter ? Principle 3: capital Flows Are the Source of Value. ? Capital structure choice impacts the cash flows and thus affects the measure of the firm. 15.
1 A Glance at Capital Structure Choices in Practice 2 A Glance at Capital Structure Choices in Practice ? The main(a) objective of capital structure management is to maximize the treasure of the shareholders beauteousness. The resulting financing mix that maximizes shareholder value is called the optimal capital structure. ? ! Defining the Firms Capital Structure ? A firms capital structure consists of owners equity and its interest bearing debt, including short-term bank loans. The combining of firms capital structure plus the firms non-interest bearing liabilities such as accounts payable is called the firms financial structure. ? Defining the Firms Capital Structure ? A firms financial structure is often described...If you loss to get a full essay, orderliness it on our website: OrderCustomPaper.com
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