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Chapter 15 dandy social organization Policy agendum ? ? Learning Objectives Principles Used in This Chapter 1.A see at great Structure Choices in exercising 2. uppercase Structure Theory 3.Why Do Capital Structures Differ Across Industries? 4.Making backing Decisions Learning Objectives 1. 2. 3. secern a truehearteds smashing social body structure. Explain why crockeds have different smashing structures and how chief city structure influences a mansions weighted mediocre g g cost of cracking. Use the basic tools of fiscal depth psychology to analyze a degenerates funding decision. 1 Principles Used in This Chapter ? Principle 2: There is a Risk-Return Tradeoff. ? Managers are often tempted to take on more debt as it can increase the rate of hold back get on the stockpileholders investment in the firm. ? Ho e e this high return comes with a cost. However, highe et n ith cost ? The higher(prenominal) use of debt financial backin g makes the firms stock riskier, which increases the required rate of return on stock. ? In addition, it increases the omission risk of the firm. Principles Used in This Chapter ? Principle 3: specie Flows Are the Source of Value. ? Capital structure choice impacts the property flows and thus affects the measure of the firm. 15.

1 A Glance at Capital Structure Choices in Practice 2 A Glance at Capital Structure Choices in Practice ? The main(a) objective of capital structure management is to maximize the quantify of the shareholders beauteousness. The resulting financing mix that maximizes shareholder value is called the optimal capi! tal structure. ? Defining the Firms Capital Structure ? A firms capital structure consists of owners equity and its interest bearing debt, including short-term bank loans. The cabal of firms capital structure plus the firms non-interest bearing liabilities such as accounts payable is called the firms financial structure. ? Defining the Firms Capital Structure ? A firms financial structure is often described...If you loss to get a full essay, direct it on our website: BestEssayCheap.com

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