Busıness Fınance Iı Deneme Sınavı Sorusu #1013247
What is the other factors affected by the capital structure of an enterprise
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Factors that affect the capital structure are: tangibility, firm size, profitability, and free cash flows. |
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Other factors are structure of assets, non-debt tax shields, profitability, size of the company and free cash flow. |
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Factors that affect the capital structure are, economic environment, industry specific factors and firm-specific factors. |
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It is important for a company to have an appropriate capital structure |
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There are two types of capital structure according to the nature and type of the firm, viz, (a) simple and (b) complex. a. simple: when the capital structure is composed of equity capital only or with retained earnings, the same is known as simple capital structure. |
As the main goal of investors is wealth maximization, companies seek to attain an optimal capital structure which maximizes the firm value. However, there cannot be a prescribed optimal capital structure for any business because there are many different factors influencing the capital structure decisions. Even for a single company, the optimal capital mix might require variations in the level of financial leverage over time in relation to changing market forces as a , economic environment, industry specific factors and firm-specific factors.
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