Project report

Capital

structures refer to the mix of longterm of sources of the funds, such as debentures, long-term debt and preference shares

Every organization requires funds to run and maintain its business the required funds short term sources long term sources a combination both the sources of funds.

 Return
Risk Flexibility Capacity Control

prudent financial policy, as revealed in the maintenance of net current assets. These net positive current assets must be financed by long term sources. Hence long term sources of funds are required to finance for both

 Long

term assets (fixed assets ) Networking capital (positive current assets)

 Estimation

of required funds

(or) Anticipation of required funds

 Capital

is a source of providing investment in a business by expecting the future benefits

 Equity
Debt

The corporate and personal income taxes do not exist.

The business risk is constant over time and is assumed to be independent of its capital structure. The given the assumptions of perfect information and rationality. The business risk is equal among all firms with in similar operating environment.

To know over all the cost capital (KO) and the valve of the firm (V) are independent of the capital structure.
To know the capitalization rate of an equity and premium for financial risk. To know cut off rate for investment purposes is completely independent of the way in which an investment is financed. To make the impact of (Capital) not work in financial performance.

 To

determine if the proportion of debt to equity enables an entity to create wealth without unduly jeopardizing the firm