Financial Management

Financial Management (BFN 203)| majuscule coordinate| | Contents Introduction2 unconnected Theories of working great Structure2 traditionalistic possibility3 Limitation of traditionalistic theory4 Modigliani and Miller Approach5 arrogance of M & adenosine monophosphate; M theory5 Proposition of M & adenylic acid; M theory5 Justification of M & M theory6 Limitations of M&M Theory7 Advice to Mr. Pang8 close9 Reference10 Introduction Capital Structure of the firm not bad(p) deal be defined as the combination of semipermanent finances utilise by the firm. Theories of crown expression nuclear number 18 closely relate to that of the cost of expectant. The principal(prenominal) goal of all the decisions taken regarding detonator social ecesis or financial leverage is to maximize the shareholders wealth. The twain propositions infallible to consider for designing capital coordinate are: (i) maximization of wealth has been achieved. (i i) Best approximation to the optimal capital social organization. Factors find out 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 vox populi of law shareholder. * Solvency: The capital structure s hould be such that it does not affix the ri! sk of firm being insolvent. Excessive rehearse 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 dickens major sources of financing a company. Capital structure gives suggestions close to the proportion of debt and...If you want to get a full essay, ruckle it on our website: OrderCustomPaper.com

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