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Factors affecting Capital Structure Decisions | eFinanceManagement.com
Capital structure is important in several ways. First, it determines which part of company’s assets is funded by shareholders and which is attributable to lenders. Second, capital structure affects company’s solvency – key financial ratios like Debt / EBITDA and Debt / Equity are dependent on capital structure. Factors affecting capital structure decision of a firm are therefore critical to financial analysis.