Define ‘Capital Structure’.
According to Gerstenberg, Capital structure refers to “the makeup of a firm’s capitalisation”. It is the proportion of a company’s capital, financed through owners and borrowed funds. In other words, it represents the mix of long-term funds such as equity shares, preference shares, long-term loans, retained earnings etc., in the total capitalisation of a firm.
How does ‘Inflation’ affect the working capital requirements of a company? State.
State any four factors which affects the requirements of working capital of a company.
Explain the following as factors affecting the requirements of fixed capital:
(i) Scale of operations;
(ii) Choice of technique;
(iii) Technology upgradation and
(iv) Financing alternatives.
Explain any four points that highlight the importance of financial planning.
