You have new items in your feed. Click to view.
Question and answer
is the use of debt in a firm's capital structure
In finance, capital structure refers to the way a corporation finances its assets through some combination of equity, debt, or hybrid securities. A firm's capital structure is then the composition or 'structure' of its liabilities. [ For example, a firm that sells $20 billion in equity and $80 billion in debt is said to be 20% equity-financed and 80% debt-financed. The firm's ratio of debt to
total financing, 80% in this example, is referred to as the firm's leverage.[citation needed] In reality, capital structure may be highly complex and include dozens of sources. Gearing Ratio is the proportion of the capital employed of the firm which come from outside of the business finance, e.g. by taking a short term loan etc. The Modigliani-Miller theorem, proposed by Franco Modigliani and Merton Miller, forms the basis for modern thinking on capital structure, though it is generally viewed as a purely theoretical result since it disregards many important factors in the capital structure decision. The theorem states that, in a perfect market, how a firm is financed is irrelevant to its value. This result provides the base with which to examine real world reasons why capital structure is relevant, that is, a company's value is affected by the capital structure it employs. Some other reasons include bankruptcy costs, agency costs, taxes, and information asymmetry. This analysis can then be extended to look at whether there is in fact an optimal capital structure: the one which maximizes the value of the firm. ]
Expert answered|marionsal|Points 20|
Question
Asked 2/26/2013 1:55:36 PM
0 Answers/Comments
Get an answer
New answers
Rating

There are no new answers.

Comments

There are no comments.

Add an answer or comment
Log in or sign up first.
Questions asked by the same visitor
_____ is the use of debt in a firm s capital structure.
Weegy: What Are Signaling Effects in Capital Structure?. ... Investors only receive the firm's financial ... [ Capital structure in business is the use of debt and equity ... or Capital structure is a mix of a company's long-term debt, ... [ [ What Are the Advantages and Disadvantages to the Use of Debt in a Business Capital Structure? ] (More)
Question
Expert Answered
Asked 2/26/2013 1:50:47 PM
0 Answers/Comments
0 questions answered
Popular Conversations
Simplify -|-5 + 2| User: How many terms are in the expression shown ...
Weegy: -54 + 18 = -36 User: Simplify 3(x - 4) + 8(x + 2) User: What is the equation of the line that passes through ...
1/17/2017 1:07:03 PM| 5 Answers
3r = 10 + 5s, when r = 10?
Weegy: r(r+3) = 1 User: 5x + 2y = 20, when x = 0.3? User: What is the value of a in the equation 3a + b = 54, when b ...
1/17/2017 9:50:12 AM| 3 Answers
aphelion?
Weegy: C. [ July On July 4, 2008, our planet is at the distant end- a point astronomers call "aphelion." This puts ...
1/18/2017 1:59:28 AM| 3 Answers
All men were given the right to vote in the Fifteenth Amendment, ...
Weegy: All men were given the right to vote in the Fifteenth Amendment, and women in the Nineteenth Amendment. ...
1/17/2017 9:22:18 AM| 2 Answers
What always affects measurement error in an ...
Weegy: B. variability in nature. variability in nature always affects measurement error in an experiment User: The ...
1/17/2017 10:22:45 AM| 2 Answers
If you visit the Senate chamber during a session on an average day, ...
Weegy: Teamwork is a joint action by two or more people or a group, [ in which each person contributes with different ...
1/17/2017 11:14:47 AM| 2 Answers
How many seats in the Senate are up for election every two ...
Weegy: There are 2 pints in a quart. User: Articles 1 and 2 of the Constitution provide senators with all of these ...
1/17/2017 2:31:03 PM| 2 Answers
Solve for x. 7(x - 3) + 3(4 - x) = -8
Weegy: 7(x - 3) + 3(4 - x) = -8 4x - 9 = - 8 4x = - 8 + 9 4x = 1 x = 1/4 User: Solve for x. 7(x + 1) = ...
1/17/2017 3:10:12 PM| 2 Answers
Weegy Stuff
S
Points 329 [Total 329] Ratings 0 Comments 329 Invitations 0 Online
S
Points 196 [Total 208] Ratings 0 Comments 196 Invitations 0 Offline
S
P
Points 176 [Total 607] Ratings 2 Comments 156 Invitations 0 Offline
S
P
P
Points 89 [Total 984] Ratings 2 Comments 69 Invitations 0 Offline
S
Points 85 [Total 87] Ratings 5 Comments 35 Invitations 0 Offline
S
Points 60 [Total 60] Ratings 6 Comments 0 Invitations 0 Offline
S
L
P
P
P
Points 58 [Total 4017] Ratings 0 Comments 58 Invitations 0 Offline
S
Points 24 [Total 96] Ratings 0 Comments 24 Invitations 0 Offline
S
Points 20 [Total 20] Ratings 2 Comments 0 Invitations 0 Offline
S
Points 12 [Total 12] Ratings 0 Comments 12 Invitations 0 Offline
* Excludes moderators and previous
winners (Include)
Home | Contact | Blog | About | Terms | Privacy | © Purple Inc.