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प्रश्न
Justify the following statement.
Capital structure is composed of owned funds and borrowed funds.
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उत्तर
Justification:
- Capital structure constitutes two words i.e.
capital and structure. 'Capital' refers to the investment of funds in the business while 'structure' means the arrangement of different components in proper proportion. - Thus, capital structure means 'mix-up of various sources of funds in desired proportion'. A company can raise its capital from different sources i.e. owned capital or borrowed capital or both.
- The owned capital consists of equity share capital, preference share capital, reserves, and surplus. On the other hand, borrowed capital are debentures, loans, etc. The proportion of different sources are used in the capital structure.
- Thus, it is rightly justified that, capital structure is composed of owned funds and borrowed funds.
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संबंधित प्रश्न
Select the correct answer from the options given below and rewrite the statement.
Manufacturing industries have to invest ______ amount of funds to acquire fixed assets.
Select the correct answer from the options given below and rewrite the statement.
______ means mix up of various sources of funds in desired proportion.
Write a word or a term or a phrase which can substitute the following statement.
The ratio of different sources of funds in the total capital.
Write a word or a term or a phrase which can substitute the following statement.
The internal source of financing.
Find the odd one.
Answer in one sentence.
Define capital structure.
______ is not a component of capital structure.
______ are the internal source of financing.
What is capital structure?
Which items are included in owners' funds?
Which items are included in borrowed funds?
What is the debt-equity ratio?
What is the formula for Return on Investment (RoI)?
Why is debt cheaper than equity?
Which payments associated with debt are compulsory?
How does the cost of equity compare with the cost of debt?
Why is equity riskless for the business?
What is financial risk?
What happens to the cost of funds as financial leverage increases?
What is an optimal capital structure?
How does Company X Ltd.'s RoI compare with its Cost of Debt?
What happens to Company X Ltd.'s EPS as debt increases?
What is the RoI of Company Y Ltd.?
How does Company Y Ltd.'s RoI compare with its Cost of Debt?
What happens to Company Y Ltd.'s EPS as debt increases?
Which relationship produces Unfavourable Financial Leverage and a decrease in EPS as debt increases?
