Internal factors which influencing the capital structure
Write down the internal factors which influencing the capital structure?
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The internal factors which are influencing capital structure are illustrated below :- 1) Cost of capital : - it is a procedure of raising the funds that engages the cost in planning the capital structure, the employ of capital must be able of earning revenue to meet the cost of capital. There are changes in this due to two reasons: i) Interest rates are least than dividend rates. ii) Interest paid on borrowed capital is a permissible for income tax reasons. 2) Risk factor : Company increasing the capital by borrowed capital, as it admits the risk in two ways: i) Company manages the payment of interest and installments of borrowed capital at prerecorded rate and time devoid of being concerned about the losses and profits. ii) Borrowed capital is safe capital in the case where the company unsuccessful to meet the contract done with the lenders of the money. 3) Control Factor : These factors have been considered through the private companies while increasing extra funds and planning the capital structure. In this company plans to elevate long term funds by issue the preference and equity shares. It does not have relation with the borrowed capital.
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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. Discover Q & A Leading Solution Library Avail More Than 1452038 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads No hassle, Instant Access Start Discovering 18,76,764 1949291 Asked 3,689 Active Tutors 1452038 Questions Answered Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!! Submit Assignment
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