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What is Capital Structure and Financial Leverage about?
The document discusses capital structure and its key aspects: 1. Capital structure is the ratio of long-term debt to equity that a company uses. It aims to maximize shareholder wealth, increase share price, and minimize the weighted average cost of capital (WACC). 2. Using debt in the capital structure provides tax shields that increase firm value. However, higher debt also increases bankruptcy costs. 3. According to Modigliani-Miller
- Author
- CHRISTIAN FOKALIE
- Language
- EN