--%>
Assignment Help - homework help

Internal factors which influencing the capital structure

Write down the internal factors which influencing the capital structure?

E

Expert

Verified

The internal factors which are influencing capital structure are illustrated below :-

1) Cost of capital : - it is a procedure of raising the funds that engages the cost in planning the capital structure, the employ of capital must be able of earning revenue to meet the cost of capital. There are changes in this due to two reasons:

i) Interest rates are least than dividend rates.

ii) Interest paid on borrowed capital is a permissible for income tax reasons.

2) Risk factor : Company increasing the capital by borrowed capital, as it admits the risk in two ways:

i) Company manages the payment of interest and installments of borrowed capital at prerecorded rate and time devoid of being concerned about the losses and profits.

ii) Borrowed capital is safe capital in the case where the company unsuccessful to meet the contract done with the lenders of the money.

3) Control Factor : These factors have been considered through the private companies while increasing extra funds and planning the capital structure. In this company plans to elevate long term funds by issue the preference and equity shares. It does not have relation with the borrowed capital.

   Related Questions in Business Economics

  • Q : Distribution of endowments 1. We have

    1. We have discussed the importance of resource endowments and institutions for an economy's successful development. a. In this game, what are the resources that make up the endowments, and what defines a given player's endowment o

    		•
  • Q : Factors of production and the method

    Who owns the factors of production and the method used to coordinate economic activity?

    		•
  • Q : Construct a 2-D graph which comprises

    How to construct a 2-D graph which comprises drawing a horizontal and a vertical axis?

    		•
  • Q : Managerial Economics Managerial

    Managerial Economics Meaning and definition Managerial economics general refer to the integration of economy th

    		•
  • Q : Checkout problem A grocery store chain

    A grocery store chain is considering ways to improve the performance of the waiting lines at their checkout stands. A heavily trafficked checkout stand is monitored for 120 min. In that period, 60 customers have their groceries rung up, and depart from the store. The

    		•
  • Q : Circular flow model to confirm this

    Use the circular flow model to confirm this assertion for the construction of a new high school in Blackhawk county?

    		•
  • Q : Tax revenues to reduce rate of inflation

    Explain how government might manipulate its expenditures and tax revenues to reduce rate of inflation?

    		•
  • Q : Market system automatically adjustment

    Concept of Adam Smith that the market system automatically adjusts as when guided through an “invisible hand” most intimately resembles: (1) flows of electricity across the microcircuits within computer chips. (2) homeosta

    		•
  • Q : Problem on prisoners dilemma game Lets

    Lets assume an infinitely repeated prisoner’s dilemma game by two players. The resulting payoffs at each phase by the actions of two players are illustrated below in the table (payoffs are symbolized like (payoff for player 1, payoff for player 2)). Two players

    		•
  • Q : Introduction of the term Control Factor

    Give a brief introduction of the term Control Factor?

    		•