Advertisements
Advertisements
प्रश्न
Justify the following statement.
Capital structure is composed of owned funds and borrowed funds.
Advertisements
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.
APPEARS IN
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 internal source of financing.
Working capital stays in the business almost permanently.
Find the odd one.
Answer in one sentence.
Define working capital.
______ are the internal source of financing.
What is capital structure?
What is the debt-equity ratio?
How is the proportion of debt in total capital expressed?
What is the formula for Return on Investment (RoI)?
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 is financial leverage?
What is an optimal capital structure?
When is Trading on Equity advisable?
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 Favourable Financial Leverage and an increase in EPS as debt increases?
Which relationship produces Unfavourable Financial Leverage and a decrease in EPS as debt increases?
