Common factors influencing capital structure

Write down the common factors influencing capital structure?

E

Expert

Verified

The common factors which are influencing the capital structure are illustrated below :-

1) Company constitution : In companies capital structure is extremely significant as many companies treat it as a dissimilar entity. Private companies considers control factor as significant whereas public company finds cost factor more significant.

2) Company characteristics : Characteristic of the company that explain its infrastructure as age, size and credit plays pivotal role in deciding the capital structure. Slighter or newly started companies depend more on equity capital as they can do limited bargaining. Large companies or having good credit companies are in the place to get funds from the source of their selection.

3) Stability of Earnings : Fluctuations takes place if the earnings and sales of the company are not secure enough over an era of time. Stable company can get the risk.

4) Attitude of the Management : Attitude performs a significant role as if the attitude is conventional then control factor gets the significance and if it is liberal then cost factor gets significant.

   Related Questions in Business Economics

  • Q : Micro economics and macro economics

    Micro economics and macro economics:Economic theory can be widely divided into micro and macroeconomics. The word micro means small and macro means big.In microeconomics, we deal

  • Q : Economic sense production methods

    Evaluate and explain the statements: “In the economic sense production methods are the most efficient methods, once resource prices are considered and are lesser in sense of engineering”.

  • Q : Characterized contestable markets

    Industries that are described as "contestable": (w) will experience long-run economic profits equal to zero. (x) are difficult for firms to enter, but not to exit. (y) are difficult for firms to exit, but not to enter. (z) will charge prices greater t

  • Q : Slope of a straight line is the ratio

    Explain the slope of a straight line is the ratio of the vertical change to horizontal change between any two points on the line?

  • Q : Distinguish between the resource market

    Distinguish between the resource market and product market in the circular flow model.  In what way are businesses and households both sellers and buyers in this model?  What are the flows in the circular flow model?

  • Q : Distinction between Component cost and

    Describe briefly Distinction between the term Component cost and Composite cost?

  • Q : Independent queue vs. pooled queue

    Instruction: McDonald's vs. Burger King - these two fast food chains use different waiting line design: Independent queue vs. pooled queue. To compare the two different queue systems on equal footing, let's assume that we pick a McDonald's sto

  • Q : Programs exchanged in the market For

    For the question below, utilize the given information. The market for gizmos is competitive, with an increasing sloping supply curve and a downward sloping demand curve. With no govt. intervention, the equilibrium price is $25 and the equilibrium quantity is 10,000 gi

  • Q : Freely Floating Currency Question: For

    Question: For a freely floating currency, currency i.____________________ occurs when the market value of a country's currency rises relative to the value of another country's currency, while currency ii.__________

  • Q : Organization of employees-Division of

    ‘Mama’ Jean consists of one employee bake crumbly, graham cracker crusts at Mama’s Home-Pies, whereas the other stirs gooey, hot, apple filling. Her staff is organized in accord with a/an: (1) Task management system. (2) Division of labor. (3) Compar

©TutorsGlobe All rights reserved 2022-2023.