For a business to continue to be successful, it has to invest in new plant and equipment to generate additional revenues. This is the fundamental basis for driving future growth. Finding sources for funding is perhaps one of the most important decisions the management of a company has to take to finance its assets, day-to-day operations and future growth. From a tactical perspective, the capital structure of a company influences everything from a firm’s risk profile, the return its investors expect and its degree of insulation from macroeconomic factors.
One way to pay for these investments is to generate capital from the firm’s operations. The earnings a firm generates can either be distributed as a cash dividend or ploughed back into the firm. But more often than not, the retained earnings of a firm are insufficient to support profitable investment opportunities. In that case, a firm is faced with a decision: to raise new capital either by borrowing (incurring debt) or by selling additional ownership (equity). The combination of the two used to finance a company’s projects is called the capital structure. Hence the capital structure of a firm is a mix of debt, internally generated funds and new equity. But what is the right mixture?
この記事は Dalal Street Investment Journal の February 17, 2020 版に掲載されています。
7 日間の Magzter GOLD 無料トライアルを開始して、何千もの厳選されたプレミアム ストーリー、8,500 以上の雑誌や新聞にアクセスしてください。
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この記事は Dalal Street Investment Journal の February 17, 2020 版に掲載されています。
7 日間の Magzter GOLD 無料トライアルを開始して、何千もの厳選されたプレミアム ストーリー、8,500 以上の雑誌や新聞にアクセスしてください。
すでに購読者です? サインイン
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