Is it realistic to believe that an optimal capital structure exists or might be achieved by a company?

Q: Please explain whether a change in the company's capital structure is likely to reduce its overall…

A: Weighted average cost of capital WACC gives the firms combined cost of capital, including the…

Q: What is the risk-return tradeoff that arises when . firm manages its working capital? Give tangible…

A: Financial risk is referred as the possibility or chance of losing the investment, basically an…

Q: what is financial leverage and its implications for company performance?

A: Company borrow amounts to buy assets and do business.

Q: How does sales stability affect the target capital structure?

A: Target capital structure: Target capital structure is defined as the combination of debt, preferred…

Q: The financial leverage implications for company analysis?

A: 1. Financial Leverage: To finance the New Assets management borrowed money. it is called financial…

Q: What is a simple capital structure? How is EPS determined for a company with a simple capital…

A: A simple capital structure is a firm that has no outstanding securities that could potentially…

Q: Why should a firm's investments always exceed its cost of capital?

A: The main aim behind any investment is to generate returns for the company. These projects help the…

Q: Explain the following statement: The optimal financial policy depends in an important way on the…

A: The easy it will be to sell an asset for generating cash, the more it will be feasible to utilize…

Q: How can the components of working capital affect the cash position of a firm?

A: The question is based on the concept of working capital and effect of change in working capital on…

Q: Explain how firms choose between sources of capital. Explain clearly with characteristics of each…

A: A business firm may have various sources to finance their capital and an optimum capital structure…

Q: Why does Capital Structure Decisions sometimes cause one firm to take over another?

A: Capital Structure of a firm is the mix of its use of debt and equity in its financing needs. It is…

Q: Explain what is the Weighted Average Cost of Capital (WACC) and why is it important for a company…

A: Weighted average cost of capital is the rate at which a company is expected to pay for its…

Q: What types of risks should shareholder wealth-maximizing managers seek to offset in a firm they are…

A: Explanation:- The principle of maximizing shareholder value (SWM) states that the goal of every…

Q: What do we mean by the optimal capital structure for a company

A: The answer is stated below:               Note: Answering the first question as there are multiple…

Q: What is a firm’s net working capital? And what does it tell you about the liquidity of the firm?

A: Working capital of the firm means net assets of the firm. Working capital can be find as total…

Q: two crucial presuppositions we make when we choose to use the present cost of capital of a firm to…

A: The net present value (NPV) of a project lets a company know the true rate of return of the project…

Q: How will a company view working capital – positive, negative, or a necessary evil?

A: The difference between current assets and current liabilities is used to calculate working capital.…

Q: What capital components are typically included when estimating a firm’s corporate cost of capital?…

A: Before we address the question, let's understand a bit about the capital itself.Capital:Capital is a…

Q: Which is more important to a company capital or O&M? Why?

A: Capital Expenditure Capital expenditure is one of the important  factors of the company.  It is the…

Q: The wealth maximization objective of a firm is superior to its profit maximization objectives.Do you…

A: The primary objective of every firm is to maximize its profit. Wealth maximization is the broader…

Q: Under what assumptions market value of a company does not depend on its capital structure

A: One important concept in Modigliani and Miller theorem that market value does not depends on the…

Q: Under what conditions might capital structure policy affect the value of the firm. Discuss and…

A: Capital Structure is the structure which is a mixture of debt and equity. The capital structure…

Q: What is the use of Capital Investment Decisions in a business as well as its role, function and how…

A: Investment appraisal or evaluation is the two-fold task of balancing risk pertain to a definite…

Q: What are the advantages and disadvantages of a company raising capital through the issuance of…

A: Equity is the owner’s share of capital in the company.  Equity share capital is the owned capital.…

Q: How do a company’s investment opportunities, capital structure,and working capital policies affect…

A: Shareholders are the subscribers of the firm’s capital. They are the owners of the company. A…

Q: Does capital structure influence the value of a firm? Why or why not?

A: The capital structure refers to the combination of different sources of capital in the capital base…

Q: Explain in detail why company valuation is influenced by capital structure decisions.

A: Capital structure of a company shows how has the company raised its capital. A company's capital…

Q: What does working capital mean? Why is working capital management of a business firm important?

A: Working capital means the difference between a company’s current assets like cash, accounts…

Q: According to the theories, companies opt their capital structures to maximize the value of firm.…

A: Capital structure is referred to as the mixture of various sources of finance which are also called…

Q: What is Weighted Average Cost of Capital or WACC? How can current economic and political…

A: Weighted average cost of capital is the cost of capital to the firm inclusive of the cost of capital…

Q: a. What is a firm's cost of capital? b. Why is the company's cost of capital important in financial…

A: The Answer:

Q: Why is the WACC (weighted average cost of capital) important? When is it useful to a company?

A: Weighted average cost of capital is important to determine the minimum required return of all the…

Q: How can the fundamental price of a firm contribute to the wealth maximization of a firm?

A: The fundamental price of a firm depends on its intrinsic value which is dependent on the present and…

Q: What are three factors under the firm’s control that can affect its cost of capital?

A: Introduction: Cost of capital is nothing but the minimum yield expected on the financial investments…

Q: In what ways the operating, investing and financing cash flows of a growing firm might be different…

A: Cash flow statement has three sections operating activities, investing activities, and the financing…

Q: How can a company raise capital

A: A corporation or a company is a separate entity that is established legally and is identified as a…

Q: Describe the ways in which capital can be transferred from suppliers ofcapital to those who are…

A: One of the functions of a financial market is the facilitating of funds from those who have in…

Q: What is Hedging principle and how it can be used to manage the working capital of the firm?

A: Investment in current assets has been used to fund the company's working capital requirements.…

Q: What are some factors that affect capital structure decisions made by management? What are the…

A: Capital structure is the mix of debt and equity carrying by the company. The debt and equity are…

Q: What is meant by capital structure, what are the characteristics of it's main components, and how…

A: Meaning of Capital Structure: - It is the most important factor of a company. A company can not run…