The capital structure shows simply how much leverage that is financial company has on its books with regards to other capital such as for example equity. Potential investors look at the capital structure and identify the quantity of debt raised by the company and also this helps them to assess the possibility of financial distress. A risk that is high of distress is related to 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 is important to comprehend the important elements regarding the capital structure and its particular impact on company value (Chowdhury and Chowdhury, 2010).
Companies have now been participating in mergers and acquisitions (M&A) for many decades. In fact, this has been one of several major modes of growth for companies operating in saturated markets. Continue reading