Q: How can I tell if a company is financed by debt or equity?
A: here you need to know what is debt and equity debt means you're borrowing money from an outside…
Q: Please explain whether a change in the company's capital structure is likely to reduce its overall…
A: Weighted average cost of capital WACC gives the firms combined cost of capital, including the…
Q: Many factors affect a firm’s cost of capital. Discuss TWO factors that lie within the control of…
A: The cost of capital is the return required to make a capital budgeting venture advantageous, for…
Q: Is it true that the book value of a company equals the value or it's assets according to their…
A: Book value of the firm is the value of its liquidating i.e the total amount when its assets are sold…
Q: what determines the market value of a company are not profits, per se, but rather, cash flows?
A: Market value of a company : In simple words, the market value of a company refers to the value of a…
Q: What are the sources or capital available to business? Why is the capital mix of a company so…
A: The sources of capital available to business: Equity: A company's capital is raised by issuing…
Q: What is a simple capital structure? How is EPS determined for a company with a simple capital…
A: A simple capital structure is a firm that has no outstanding securities that could potentially…
Q: Distinguish between paid-in capital and retained earningsof a corporation. Why is such a distinction…
A: Paid-in capital and retained earnings are the two main categories of stockholders' equity.
Q: corporate
A: SOLUTION:- Non -Operating Assets -There are certain asset which do not contribute to the day to day…
Q: Why may a company wish to reduce its Share Capital?
A: Introduction:- Share capital means company raise funds through issuing of shares. shares are…
Q: What is capital structure of a company and explain why it is important?
A: The capital structure of a company and explain why is important will be explained:
Q: Why does Capital Structure Decisions sometimes cause one firm to take over another?
A: Capital Structure of a firm is the mix of its use of debt and equity in its financing needs. It is…
Q: What is a company's capital structure and why is it important?
A: Answer: Company consists of assets, liabilities and equity in the financials. Company capital…
Q: similarities and differences between paid in capital and retained earnings?
A: Paid in capital means the amount contributed by share holder in company as share capital Retained…
Q: Identify problems that occur when estimating the cost of capital fora privately held firm. What are…
A: Cost of capital is the minimum interest rate that the firm earns before value. It is essential for…
Q: According to IAS 39 Financial Instruments: Recognition and Measurement, at what amount should a…
A: IAS 39 is an Indian accounting standard which is related with the recognition and measurement of the…
Q: What are the limitations to using financial ratio analysis [such as profitability ratios, liquidity…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: How will a company view working capital – positive, negative, or a necessary evil?
A: The difference between current assets and current liabilities is used to calculate working capital.…
Q: What is the distinction between that of Paid-in-Capital and Retained Earnings, in both differences…
A: Paid in capital means the amount contributed by share holder in company as share capital Retained…
Q: How does a company determine whether to account for an equity investment using the fair value…
A: Financial Management: In layman’s words, financial management is the management of the finance or…
Q: company's cost of equity capital?
A: Given : Beta of Stock = 1.29 Risk free rate = 5.4% Expected return on market = 12.9% Formula for…
Q: What impact does the inability to issue common stock have on a not-for-profit business's capital…
A: We have to discuss the effect of the inability to issue common stock on Capital Structure and…
Q: What capital components are typically included when estimating a firm’s corporate cost of capital?…
A: Before we address the question, let's understand a bit about the capital itself.Capital:Capital is a…
Q: Explain what happens to the firm’s cost of equity, cost of debt, and cost of capital when the firm…
A: Modigliani and Miller's approach (M&M) states that the valuation of a firm is independent of the…
Q: In the extractive industries, businesses may pay dividendsin excess of net income. What is the…
A: Dividends: This is the amount of cash distributed to stockholders by a company out its earnings,…
Q: What does capital structure of a company means?
A: Capital structure of a company is the proportion of various long term sources of finance used to…
Q: Why do some companies use gross book value instead of net book value to measure a division’s…
A: Return on investment (R01): This financial ratio evaluates how efficiently the assets are used in…
Q: State two reasons why a company might prefer to issue debt capital rather than equity capital.
A: A company can raise capital either through equity by issuing common stock or through debt by issuing…
Q: How do a company’s investment opportunities, capital structure,and working capital policies affect…
A: Shareholders are the subscribers of the firm’s capital. They are the owners of the company. A…
Q: Indicate whether its TRUE or FALSE. Then provide a complete explanation! Financial risk is…
A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: Companies cannot as a general rule reduce the capital of the business. However, there may be a class…
A: Share capital is the capital which has been contributed by the shareholders of the company by the…
Q: How a firm splits its income between retained earnings and dividends does not affects its rate of…
A: Income is the revenue earned by the company after the charge of all the associated expenses. A…
Q: How can you Contrast the NOI approach with the MM approach to the theory of capital structure.
A: Capital structure means the mix of debt and equity in the capital. It is the combination of…
Q: Compare Dividend Valuation Model with Capital Asset Pricing Model in the context of calculating cost…
A: The dividend discount model and the capital asset pricing model are two methods for estimating cost…
Q: w does current ratio and quick ratio relate to a firm's financial profitability? What should the %s…
A: Current ratio and quick ratio are important from view point of liquidity and liquidity is very…
Q: Name some factors that are generally beyond the firm’s control butstill affect its cost of capital
A: The cost of capital is the cost of source of funds that are used to buy the assets.
Q: How and why should the cost of capital change when the Company must rely on new issues of common…
A: Issuance of new stock is the process by which a listed company tries to acquire additional capital…
Q: is NOT a consideration for Cost of Capital? A. Invetsor requirements B. Size of the Company C. All…
A: Cost of capital is very important for the company and cost of capital will decide the value of…
Q: What is capital structure? How do the capital structures of Ford and Microsoft differ?
A: The capital design is the specific blend of obligation and value utilized by an organization to back…
Q: How does shareholder value relate to capital structure?
A: The combination of various types of external funds, known as capital, used to finance a corporation…
Under what assumptions market value of a company does not depend on its capital structure? Discuss.
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Solved in 2 steps
- How does a semi-strong market affect a company’s capital structure? Discuss the possible exposures and impact. Provide examples to justify your reasoning.What factors contribute to the business risk of a company? What is financial risk? How do the various sources of risk affect the optimal capital structure?Is it realistic to believe that an optimal capital structure exists or might be achieved by a company?
- Explain in detail why company valuation is influenced by capital structure decisions.What is total net operating capital? Why is it important formanagers to calculate a company’s capital requirements?What is meant by capital structure, what are the characteristics of it's main components, and how that may affect a company solvency?
- What is capital structure of a company and explain why it is important?Should firms focus on book value or market value capital structures? How would the calculatedWACC be affected by the use of book weightsrather than market weights?What is one classification scheme that firms often use to obtain risk-adjusted costsof capital?
