Forms of Capital Structure

Combination of Debt-Equity
Equity

Debt

100%

0%

90%

10%

80%

20%

70%

30%

60%

40%

50%

50%

40%

60%

30%

70%

20%

80%

10%

90%

0% Debt is not practical

100% Debt is not practical

Factors influencing Capital Structure

Cost of capital
Degree of Leverage
Nature of Business
Floatation cost
Future cash flows
Capital Requirements
Size of the company
Desire to control

Questions

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