A Firm’s Capital Structure
A Firm’s Capital Structure
1) Describe a firms capital structure.
2) Explain why a firm has different capital structures and hoe the influences the WACC.
3) Describe some fundamental differences in industries that drive the way they finance their investments.
4) Use the basic tool of financial analysis to analyze firms financing decision.
Answer preview
Describe a firm’s capital structure
A firm’s capital structure is the way in which it finances its operations and its overall growth through diverse sources of funds (Baker & Martin, 2011). The sources of funds may include debt and equity capital. A firm must make a determination of the optimal capital structure in terms of risks and benefits.
Explain why a firm has different capital structures and hoe the influences the WACC
Different capital structures have several advantages to a firm. They offer a balanced structure therefore offering……………..
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