Structure And Capital Management Policy

Finding the perfect capital structure in terms of risk and reward can ensure a company meets shareholder expectations and protects a firm in times of recession. Capital structure refers to how a business puts its money to “work”. The two forms of capital structure are equity capital and debt capital. Both have their benefits and limitations. Striking that perfect balance between the two can mean the difference between thriving versus trying to survive.

Capital budgeting is a long-term schedule that decides what investment projects to choose. When an option is selected, a company decides where and how to obtain the funds to support its investment and a way of determining the capital structure. A company should make sure it has access to working capital to maintain it operations daily. If this is not available, the company will not be able to maintain it daily operation until

Healthcare organizations have a way of handling the issues of the capital structure. The policy of the optimal capital structure in a health institute ensures that the financial strength of the company is obtained. Health organizations need to fund their projects for the sake of smooth running of the activities. However, some of them cannot be able to sell stocks to the public since they are non-profit organizations. Capital structure is a dynamic aspect; instead of static. It depends on the socio-economic sector and the conditions the company is operating in. there are three first types of approaches an organization can take when it comes to the optimal capital structure. It has to do with the balancing between equity and debt.

Don Hofstrand (2013) states that, capital budgeting that progression or technique that comprises the approximation of financial viability of the capital investment over the duration of the investment. He also states that unlike the other investment analysis techniques, it does focus on cash flows instead of profits. That is it aims at recognizing cash flow in and cash flow out. Don Hofstrand(2013) further states that there are a number of capital budgeting techniques that are at disposal to be used in the process of examining economic feasibility of a capital investment. They actually include payback period, discounted payment period, net present value, profitability index, internal rate of return and last but not least is the modified internal rate of return.

When making capital budgeting decisions, there are various techniques that can be utilised. Ross et al. (2008) describes that the predominant capital budgeting methods used as being the Net Present value (NPV) method, the Internal Rate of Return (IRR) method, the Payback method, and the Accounting Rate of Return (ARR) method. Conversely, Brealey, Myers and Allen (2011) proposes that the NPV and IRR methods are considered prestige compared to the ARR and the Payback Methods, as they take into account the time value of money. Thus, the following project evaluation will focus on using the NPV and IRR methods.

Examination of the changes of the capital structure of the company over pre-GFC and post-GFC period (2004-2010) reveals a range of considerations were deliberated in the financing decision; these include not only the capital market conditions but also the size and urgency of funding required as well as costs and availability of alternate sources of funds.

Tax rate of the company will influence in making capital structure decisions. The debt payments to the debtors are tax deductible. This would be the advantage for the company which has high tax rate. So, if the company has the high tax rate, they will tend to use debt capital structure to decrease their tax amount.

Capital structure is very important. Not only does it influence the return a company earns for its shareholders but can also be a determining factor on whether or not a firm survives a recession. A company’s capital structure is a mix of their short-term debt, long-term debt, and equity. A firm’s capital structure is the way the firm finances all of its operations, investments, and growth. When a firm’s debt-to-equity ratio maximizes its value and minimizes the firm’s weighted average cost of capital (WACC), it is said to be at the “target” or “optimal capital structure”. Debt usually offers

According to the United Nations a multinational corporation is "an enterprise which owns or controls production or service facilities outside the country in which it is based". .Multinational companies have been largely responsible for uplifting for all spheres of business life across the globe. They are the world leaders in high technology advancement and automation, which resulted in more efficient commerce worldwide. Global expansion has developed a tactical imperative for nearly all large organizations and multinational corporation (MNC) managers have a great deal on their hands in developing, monitoring and changing these strategies. Becoming international is an important factor in assisting organizations in becoming globally competitive.

There are a few ways that can be used in determining the company capital budgeting and in the research that been conduct by our group we used the net present value (NPV), internal rate of return (IRR), turnover ratio and profitability ratio method

Capital Structure: "Capital structure is the manner in which a firm's assets are financed; that is, the right-hand side of the balance sheet. Capital structure is normally expressed as the percentage of each type of capital used by the firm debt, preferred stock, and common equity." (Capital Structure Decision, 2002)

ABSTRACT This paper examines the relative importance of 38 factors in the leverage decisions of publicly traded U.S. firms from 1950 to 2000. The most reliable factors are median industry leverage (+ effect on leverage), market-to-book ratio (-), collateral (+), bankruptcy risk as measured by Altman’s Z-Score (-), dividend-paying (-), log of sales (+), and expected inflation (+). These seven factors all have the sign predicted by the trade-off theory. The pecking order and market timing theories are not as helpful in predicting the importance and the signs of the reliable

The objective of MNC to operate in other countries is to gain competitive advantage through several ways. Firstly, MNC is able to take advantage of difference in country-specific circumstances. For example, MNC may choose to locate its productions in less developed country like Vietnam to gain cheap labor cost. Secondly,

Working capital management is a managerial accounting strategy focusing on maintaining efficient levels of both components of working capital, current assets and current liabilities, in respect to each other. Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses. Implementing an effective working capital management system is an excellent way for many companies to improve their earnings. This chapter discusses the management of current assets, particularly cash, marketable securities, inventory, and receivables. This chapter answers some Basic questions involving working capital management

The study generally aims to fill the gap in the literature by empirically examining the relationship between the use of debt in the capital structure of companies and the factors related to the capital structure. Specifically the objectives of this research are to achieve the following:-