What are the different types of capital structure policy?
A mixture of long -term funding of the company is called its capital structure. This funding usually includes long -term capital sources, including normal capital, preferred shares and bonds. In order to maintain the cost of increasing low capital, many businesses will subscribe to the capital structure policy. Systems differ from society to society, but may include politicians such as weight capital, variability of financial leverage, sinking, design of financial structure and capital structure theory.
Many financial managers use weighted average calculations as part of the company's capital structure policy, as this faces the cost of raising each type of capital. The company can be able to ensure more funds using debt than by offering shares, but due to interest and repayment fees, the debt could become more in the long run. Or it doesn't have to. Dear Each Source of Capital with Costs offers insight into the actualValues of money from each source of funds in capital. A company using data on the policy of the capital structure of the lever capital structure that the amount of the debt affects other aspects of the capital structure, including the prices of shares. When determining the variability of the lever effect, the financial manager generally attempts to find out how much the addition of a new debt will affect other capital sources. The influence of greater debt financing is often dependent on the amount of debt that the company already holds.
businesses using bonds as a source of money include a diving fund as part of the capital structure policy. The sunk fund is a cash reserve reserved for bonds that bond holders decide to earn money before bonds are fully matured. Initial financing from bond calculations assumes that bond bond will always be outstanding, and that if it matures, the debt from the bond will be hovering to the new one. BecauseThe fact that bond holders sometimes earn bonds must maintain the diving fund and consider the costs of it when calculating the capital structure.
When designing the overall policy of the company's capital structure, financial managers calculate the optimal combination of funding sources. Determination of the amount of securities, shares and debt will offer the best financing is partially calculated by the assets of the company and other shares. The theory of taking over the capital structure of the financial manager also plays a role in the creation of politics. Some theories warn that companies should avoid debt financing, while other theories claim that the debt has no impact on the financial health of the company.