UNIT-3 Strategic Financing & Dividend Decisions
Capital Structure, Theories and Value of the firm
What is Capital Structure? Capital structure refers to how a company finances its assets, speci...
Net Income Approach
The Net Income (NI) Approach, proposed by Durand, suggests that a company's capital structure (th...
Net Operating Income approach
The Net Operating Income (NOI) Approach, also suggested by Durand, presents a contrasting view to...
Traditional Approach
The Traditional Approach to capital structure sits between the two extremes of the Net Income (NI...
Modigliani-Miller (MM) Approach
The Modigliani-Miller (MM) approach provides a fundamental framework for understanding how capita...
Determining the optimal capital structure
Determining the "optimal" capital structure (the ideal mix of debt and equity financing) is a com...
Concept of leverage
Leverage is a financial strategy where a company uses fixed costs to potentially amplify returns ...
Operating Leverage
Operating leverage arises when a company has fixed operating expenses that remain constant regard...
Financial Leverage
Financial leverage focuses on how a company's financing decisions impact its earnings available t...
EBIT-EPS Analysis
EBIT-EPS analysis is a tool to help companies compare different financing options (equity, debt, ...
Combined Leverage
Combined leverage examines the total effect of both operating and financial leverage on a company...
Dividend decision
Distributing Profits vs. Reinvesting in the Business Dividends represent a portion of a company's...
Factors Affecting Dividend Policy
Balancing Profits and Shareholder Value A company's dividend policy – the decisions it makes abou...
Gordon's Approach
Dividend Policy Theories: Relevance vs. Irrelevance The impact of dividend policy on a firm's val...
Walter's Model
Walter's Model, proposed by Professor James E. Walter, argues that dividend policy always affects...
MM Approach
I. Modigliani and Miller (MM) Approach: Dividend Irrelevance Revisited Modigliani and Miller (MM)...
Signaling Theory
Dividends as a Message to Investors Signaling Theory recognizes that corporate actions, including...
Forms of Dividends: Cash, Bonus Shares, and Stock Splits
Companies have several options for distributing value to shareholders, with cash dividends being ...