Tag Archives | Capital Structure

Calculation of Point of Indifference | Capital Structure

After reading this article you will learn about Calculation of Point of Indifference. The EPS, earnings per share, ‘equivalency point’ or ‘point of indifference’ refers to that EBIT, earnings before interest and tax, level at which EPS remains the same irrespective of different alternatives of debt-equity mix At this level of EBIT, the rate of […]

Top 4 Theories of Capital Structure

This article throws light upon the top four theories of capital structure. The theories are: 1. Net Income Approach 2. Net Operating Income Approach 3. Traditional Approach 4. Modigliani and Miller Approach. Theory # 1. Net Income Approach:  According to this approach, a firm can minimise the weighted average cost of capital and increase the […]

Capital Structure: Forms, Importance and Planning

After reading this article you will learn about Capital Structure:- 1. Forms of Capital Structure 2. Importance of Capital Structure 3. Planning. Forms of Capital Structure: The capital structure of a new company may consist of any of the following forms: (a) Equity Shares only (b) Equity and Preferences Shares (c) Equity Shares and Debentures […]

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