--%>
Assignment Help - homework help

External factors which influencing the capital structure

Write down the external factors which influencing the capital structure?

E

Expert

Verified

The external factors that are influencing the capital structure are illustrated below :-

i) Economic Conditions : If the economy is in state of despair, preference is given to equity form of capital that involves fewer amount of risk however it is avoided in some cases where the investor is not set to take the risk. In this case companies go on with the borrowed capital.

ii) Interest Rates level : Form of borrowed capital will be deferred if the funds are accessible in high rates of interest however rising is not favorable.

iii) Lending Policy : If policy is difficult to comprehend and not flexible then it is better to go with the borrowed capital.

iv) Taxation Policy : This policy must be viewed from both the sides from individual and corporate perspective. From the individual viewpoint both interest and dividend will be taxable in hands of lender.

   Related Questions in Business Economics

  • Q : Raising consumer surplus problem For

    For the question below, utilize the given information. The market for gizmos is competitive, with an increasing sloping supply curve and a downward sloping demand curve. With no govt. intervention, the equilibrium price is $25 and the equilibrium quantity is 10,000 gi

    		•
  • Q : Demand forecasting consumer's interview

    consumer's interview method for demand forecasting(point to point explain)

    		•
  • Q : What will be produced in all economic

    What will be produced in all economic systems?

    		•
  • Q : How is productivity of labor based

    In Wealth of Nations by Adam Smith, opined that the productivity of labor based primarily on: (w) workers’ education. (x) divisions of labor. (y) technologically advanced machines. (z) suitable wage rates.

    Q : Loathed monopolization and viewed of

    Adam Smith and most of the typical economists who followed instantly in his footsteps: (i) viewed monopoly as no big problem. (ii) encouraged monopolies due to their research and development abilities. (iii) thought monopoly power was a communist plot

    		•
  • Q : Illustrate a fundamental characteristic

    Illustrate a fundamental characteristic of demand behavior?

    		•
  • Q : Reducing output of other good When the

    When the production possibilities frontier in a proficient economy is not growing, raising the output of one good always needs: (i) Increasing the output price for the other good. (ii) Bigger amounts of resources. (iii) Decreasing the output of other

    		•
  • Q : Illustrate how Macroeconomics examines

    Illustrate how Macroeconomics examines the economy as a whole?

    		•
  • Q : Introduction of the term Cost of

    Give a brief introduction of the term Cost of preference shares?

    		•
  • Q : Formally adopt inflation targeting

    Question: Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment? Answer: