Category Archives: Writing Essay

The capital structure of an organization is one of the decision-making that is key along side investment decisions and distribution decisions.

The administrative centre structure shows just how much financial leverage a company is wearing its books in relation to other capital such as equity. Potential investors glance at the capital structure and identify the quantity of debt raised by the ongoing company and this helps them to assess the risk of financial distress. A high risk of financial distress is associated with bankruptcy. Yet, having debt that is too little the books can possibly prevent the company from keeping up with the industry growth rates. Therefore, it’s important to understand the important components associated with capital structure as well as its impact on company value (Chowdhury and Chowdhury, 2010). Continue reading