Capital structure ppt capital structure financial capital. This is also viewed as a capital structure that maximizes market price of shares and minimizes the. Theories of capital structure ppt cost of capital free 30day trial. In the static tradeoff theory, optimal capital structure is reached when the tax advantage to borrowing is balanced, at the margin, by costs of financial distress. Download this template to create optimal capital structure curve for powerpoint presentations making an optimal capital structure curve was never easier, as the sample diagrams n this template can be edited right down to basic objects.
In millions 100 0 equity debt capital structure b rs. Oct 17, 2019 revise fm capital budgeting and risk analysis in capital budgeting in just 2hrs 15 marksmaynov19 duration. The debt capital in a companys capital structure refers to borrowed money that is at work in the business. In millions 50 50 while the average cost of debt is fixed at 12%, the roidefmed as ebittotal assets may vary widely and is expected to be between 5% to 25%. Case study on wacc with additional finance youtube. To fund an organization plan this capital structure is required which is the combination of debt and equity. Although the total return provided will always be the same, the way those returns are distributed amongst investors. This paper develops a model of dynamic capital structure choice in the presence of recapitalization costs. Capital structure powerpoint template for presentation. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. Importance of the capital structure the objective of any firm is to mix the permanent source of funds used by it in a manner that will maximize the companys market price. The capital structure puzzle is unravelled and a clear.
Download unlimited powerpoint templates, charts and graphics for your presentations with our annual plan. Chart and diagram slides for powerpoint beautifully designed chart and diagram s for powerpoint with visually stunning graphics and animation effects. Cs executive, fm mcqs lectures capital structure youtube. Jun 25, 2019 in this approach to capital structure theory, the cost of capital is a function of the capital structure. Top 10 businessplan templates you can download free.
The combination of firms capital structure plus the firms noninterest bearing liabilities such as accounts payable is called the firms financial structure. If you want to continue this discussion or have a follow up question, please post it on the network. During the depression period, the companys capital structure generally consists of debentures and loans. Specifically, the paper concentrates on the connection. You can access more powerpoint templates here grab the free ppt now. This paper examines the relative importance of many factors in the capital structure decisions of publicly traded american firms from 1950 to 2003. Capital structure ppt template is an academic presentation tool which shows different. Revise fmcapital budgeting and risk analysis in capital budgeting in just 2hrs 15 marksmaynov19 duration. Capital structure is the mix of ownersupplied capital equity, reserves, surplus and borrowed capital bonds, loans that a firm uses to finance business operations. The most reliable factors for explaining market leverage are. Bankruptcy immunities, transparency, and capital structure presentation at the world bank, january 11, 2011 seton hall public law research paper no. Ludwig lachmann in 1956 set out to correct the problem that the economics profession had no coherent and working understanding of capital, a concept so integral to economic science and yet not explored at length since the takeover of macroeconomics by keynesian theory. This paper contrasts the static tradeoff and pecking order theories of capital structure choice by corporations.
Capital structure is a term which is referred to be the mix of sources from which the long term funds are required for business purposes which are raised to improve the capital of the company. The relationship between the corporate strategy and capital structure sultan omar alamoudi. Present a preliminary capital structure analysis for a company or industry. A decision about the proportion among these types of securities refers to the capital structure. The optimal capital structure refers to a proportion of debt and equity at which the marginal real cost of each available source of financing is same. Free capital powerpoint template with coins in a diagonal table is a nice background template for powerpoint with different coin stacks in the slide design and gray background and a negative trend which may be useful for presentations on cash capital crisis or the crisis of capital like indias capital crisis or other capital related presentations like financial crisis. Capital market conditionin the lifetime of the company, the market price of the shares has got an important influence.
Aswath damodaran 3 the objective in decision making n in traditional corporate finance, the objective in decision making is to maximize the value of the firm. Capital structure ppt free download as powerpoint presentation. Thesis for the master of management in finance and. Ppt cost of capital powerpoint presentation free to. Its important to remember, however, that this approach assumes an optimal capital structure.
The most important arguments for what could determine capital structure is the pecking order theory and the static trade off theory. Upload, search, share, and embed presentations and infographics with sharepresentation. Discuss the various types of risks and their role in capital structure analysis. The cost depends on the health of the companys balance sheeta triple aaa rated firm can borrow at extremely low rates vs. Many debates over whether an optimal capital structure exists are found in the financial literature. Meaning of capital structure capital structure refer to the proportion between the various long term source of finance in the total capital of firm a financial manager choose that source of finance which include minimum risk as well as minimum cost of capital. The theory of capital structure is closely related to the firms cost of capital. The value of an enterprise depends on expected earnings and cost of capital. Winner of the standing ovation award for best powerpoint templates from presentations magazine.
Ppt capital structure powerpoint presentation, free download id. Capital structure theory, evidence, and implications for managers. The capital structure theory was pioneered by modigliani and miller 1958. Capital structure theories introduction capital structure decision is a significant decision in financial management. There is also significant theory on the capital structure of firms and its determinants. It is that mix of debt and equity which maximizes the value of the company and minimizes the cost of capital. In their study, modigliani and miller 1958 argued that capital structure was irrelevant to firm value. Capital structure ratios are very important to analyze the financial statements of any company for the following reasons. Evidently, every company can not develop without investments and credits, so businessmen borrow money in banks or use obligations and bonds and the. Take an investor holding share s of firm 2, for a total of o 6. Rizzi amsterdam institute of finance october, 2014.
Turnover ratios in data driven powerpoint donut charts. Relate capital structure composition to owner and creditor investment objectives. There is a negative relationship between capital structure and financial performance. Capital structure powerpoint template for presentation slidebazaar. In this approach to capital structure theory, the cost of capital is a function of the capital structure.
Capital structure is the interdependence of the companys longterm and shortterm debts or the mix of the companys equity and debt capital and the capability of the company to cope with them. Global financial services firm vfinance offers a basic, 30page business plan template to download from its websiteone the company says has been downloaded more than a quarter of a million times. Capital structure capital structure of a company refers to the mix of the long term finances used by the firm. Forms of capital structure capital structure pattern varies from company to company and the availability of finance. Ppt capital structure i powerpoint presentation free. Theories of capital structure ppt free download as powerpoint presentation. Capital structure refers to the amount of debt market value of debt the market value of debt refers to the market price investors would be willing to buy a companys debt at, which differs from the book value on the balance sheet. A free powerpoint ppt presentation displayed as a flash slide show on powershow. Theories of capital structure ppt capital structure cost.
Jun 25, 2019 the debt capital in a companys capital structure refers to borrowed money that is at work in the business. Our new crystalgraphics chart and diagram slides for powerpoint is a collection of over impressively designed datadriven chart and editable diagram s guaranteed to impress any audience. Optimal capital structure curve for powerpoint slidemodel. Equity capital is the funds that the firms owners are trusting with the company and the retained earnings that represent profits from previous years, which are not distributed to the shareholders as dividends but are used towards the. Capital structure ppt template is an academic presentation tool which shows the different allocation of capital. The capital structure of a business enterprise is thus, related to the longterm financial requirements of the business. Capital structure denotes to the amount of debt andor equity employed by an organization or business to invest its operations and backing its assets. Theyll give your presentations a professional, memorable appearance the kind of sophisticated look that todays audiences expect. Capitalization table guide, example, download a cap table. We find that even small recapitalization costs lead. Objectives of capital structure decision of capital structure. Investors understand that the way a business is funded can have a lot of impact on the returns it provides. Hypotheses the following hypothesis is formulated for the study h 0.
Upload, share and search presentations, infographics. This ppt gives you the importance of capital structure and theories of capital structure. Capital structure meaning and factors determining capital. Capital structure a reading prepared by pamela peterson drake outline 1. Question the following is the capital structure of simons company ltd.
The share capital is often supplemented by debenture capital and others long term borrowed capital. Objectives of capital structure decision of capital structure aims at the following two important objectives. Capital structure ratios powerpoint donut charts slidemodel. Capital structure composition or make up of its capitalization and it includes all long term capital resources viz.
We find that even small recapitalization costs lead to wide swings in a firms debt ratio over time. The goal of this chapter is to discuss the various theories that help to explain the determination of capital structure. The value of a firm is defined to be the sum of the value of the firms debt and the firms equity. To evaluate the interrelationship between capital structure and performance to determine the determinants of a capital structure 5. Theories of capital structure ppt capital structure. This paper reacts to the general call for mix in the middle of money and methodology research by inspecting how monetary choices are identified with corporate system. Ppt capital structure theory powerpoint presentation free. Lecture 5 capital structure i specifics of different sources of longterm financing common stock vs preferred stock vs debt the modigliani and miller model a free powerpoint ppt presentation displayed as a flash slide show on id. While in period of boons and inflation, the companys capital should consist of share capital generally equity shares. The relationship between the corporate strategy and capital.
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