How do financial managers determine the firm's capital structure?
Debt financing enables firm to finance activities without requiring owners to put up more money. When firm earns more on borrowed funds than it pays in interest, excess goes to the owners which magnifies return on the investment. Interest payments on debt are tax deductible. Equity financing is safer and more flexible than debt financing.
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Finance
- How do financial managers evaluate capital budgeting proposals?
- How do financial managers acquire and manage current assets?
- How are the major sources of funds evaluated to meet a firm's short-term and long-term financial needs?
- What are the tools financial managers use to evaluate their company's financial conditions and develop future plans?
- What is the goal of financial management and what issues do financial managers confront?