Theories of capital structure

I have already discussed the meaning of capital structure. Today I will discuss the different theories of capital structure.

1.)    Net income approach: this theory is given by Durand. As per the theory the value of firm can be increased and its cost of capital can be reduced by increasing proportion of debt in its capital structure. The approach is based upon following assumptions:- Continue reading “Theories of capital structure”

What is Financial management

I will discuss the various concepts related to financial management. But first thing we need to understand the definition of financial management. Finance is like the blood for the business as blood is essential for the human body; similarly finance is essential for the business. No business can run without adequate finance. That’s why it is very essential to manage the finances of the business. Financial management means to plan and control the financial resources of the firm. Continue reading “What is Financial management”