--%>
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 : Gains from the Exchange Even people who

    Even people who are extremely good at everything couldn’t encompass: (i) absolute benefits in approximately everything. (ii) Much higher incomes than average. (iii) Comparative benefits in everything. (iv) Superior natural endowments of talent.

    Q : Possession protection of property rights

    Why possession protection of property rights and private property promotes the market system?

    		•
  • Q : What are the limitations of Circular

    What are the limitations of Circular Flow Model?

    		•
  • Q : Business Strategies Cingular and Alltel

    Cingular and Alltel involve in aggressive and expensive advertising for cell-phones. A reason for this advertising may be: (1) attempts to increase market share. (2) predatorily drive other firms by the market. (3) to increase the use of cell phones.

    		•
  • Q : Define explicit cost and implicit cost

    Briefly describe the term explicit cost and implicit cost?

    		•
  • Q : Illustrate the 4th role is the

    Illustrate the 4th role is the reallocation of resources?

    		•
  • Q : Positive task of speculators in market

    A positive responsibility played through speculators within a market economy is to: (1) find out price levels for entrepreneurs. (2) predict the quantity at that long run equilibrium would be attained. (3) inform government organizations of consumer p

    		•
  • Q : Negatively association to probability

    Adam Smith would have agreed mostly along with the concept which wages are: (i) positively associated to physical comfort when working. (ii) negatively related to the cost of learning the business. (iii) positively associated to the s

    		•
  • Q : Explain the shapes of the

    Specify and explain the shapes of the marginal-benefit and marginal-cost curves and use these curves to determine the optimal allocation of resources to a particular product.  If current output is such that marginal cost exceeds marginal benefit, should more or l

    		•
  • Q : Checkout problem A grocery store chain

    A grocery store chain is considering ways to improve the performance of the waiting lines at their checkout stands. A heavily trafficked checkout stand is monitored for 120 min. In that period, 60 customers have their groceries rung up, and depart from the store. The

    		•