14
Capital Structure
OBJECTIVES
To explain the concept of capital structure
To discuss the views supporting the theory that capital structure has no relevance to the value of a firm
To explain the impact of capital structure on the risk and return aspect of the shareholders based on the view that capital structure influences the value of a firm
To analyse the features of optimal capital structure and the process of attaining it
It is not only the size of capital which is significant, but, more importantly, it is the ratio between the owners’ capital and the borrowed capital that is crucial from the viewpoint of maximisation of corporate wealth. The present chapter discusses the issue of capital structure and examines whether capital structure ...
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