Capital Structure Techniques in Corporate Finance

Finance Decisions and Dividend Decisions for Analyst and Financial Managers

Created byPramod Kesav N

Last updated 8/2022

English

English [Auto],

What you'll learn

Helps conceptualize the subject Corporate Finance
Helps in understanding the similarity between the subjects, Corporate Finance and Financial Management
Helps understand Capital Structure in detail
Learner gets a complete understanding of Capital Structure techniques employed in Financial Management

Course content

7 sections • 15 lectures • 2h 33m total length

Introduction8:36
Explore capital structure concepts, including debt-to-equity ratio, leverage, and the cost of equity, debt, and capital, and learn how wacc guides optimal financing decisions.

Introduction2:48
Explore operating and financial leverage, EBIT and EPS analysis, and the concept of combined leverage within capital structure decisions, linking fixed and variable funding costs to earnings and risk.
Operating Leverage8:23
Operating leverage measures how fixed costs amplify changes in EBIT as sales fluctuate. Use the degree of operating leverage, the ratio of EBIT change to sales change, to assess impact.
Financial Leverage7:01
Analyze how fixed charges from debt affect earnings per share as EBIT shifts, using the degree of financial leverage to quantify EPS sensitivity.
EBIT-EPS Analysis9:46
Explore ebit-eps analysis to compare four financing plans and maximize earnings per share, illustrating that a 50% equity and 50% debenture mix yields the highest earnings per share.
Indifference Point1:42
Explore the indifference point, the ebit level where eps matches under two alternate finance plans, and how financial leverage begins to boost eps.
Combined Leverage1:14
Explore combined leverage, defined as percentage change in EPS over percentage change in sales, derived from operating and financial leverage and tied to fixed costs and total risk.

Financing Decisions26:20
Explore financing decisions, cost of capital, and capital structure theories, detailing cost of debt and equity, the weighted average cost of capital (wacc), dividend decisions, and valuation concepts.
Capital Structure Decisions2:52
Analyze capital structure decisions, including debt-to-equity adequacy and link to firm value. Compare net income and traditional theories with net operating income and Miller Modigliani, noting taxes may alter relationship.
Capital Structure Theories15:03
Examines capital structure theories—including net income, traditional, net operating income, pecking order, trade-off, and signalling theory—and their implications for firm value and cost of capital.
Dividend Decisions9:22
Explore how dividend decisions influence share price, firm value, and capital structure through Walter's and Gordon's models, contrasting with Miller and Modigliani's view of dividend irrelevance.

Requirements

Learner is expected to have completed a basic coursework on Financial Management

Description

Corporate Finance is a Financial Management subject that deals with how corporations report and address long term funding sources and capital investment decision which is Capital Budgeting, Finance Decisions and Dividend Decisions which are Capital structure related and short-term sources of funding which is Working Capital Finance or Current Assets Management.

In this course, Capital Structure Techniques in Corporate Finance, we discuss Finance Decisions and Dividend decisions and what factors fine tune the Capital Structure of a Company.

Basic Financial terms are first explained with relevant definitions of the most commonly used terms in Capital Structure discussions.

In Leverages, Operating, Financial and Combined Leverages are explained and a few excel based problems are worked out.

In Capital Structure, Capital Structure theories are explained along with favorite approaches including, Net Income, Traditional, Net Operating Income and MM Approaches are described along with a few Excel based problems that are worked out.

Dividend decisions are revisited showing Valuation that is relevant in any discussions on the basis of illustrations and problems which are worked out as part of the exercise section.

In the design of Capital Structures, Controls are explained, weights given to Industries, Consultation and Commercial strategies are explained.

The practical implications of obtaining Long-term Finance are discussed, with the importance given to Equity Shares, Debentures, Term Loans subjected to a discussion.

Who this course is for:

Engineers, Analysts, MBAs, Finance Managers, Financial Managers

Capital Structure Techniques in Corporate Finance

What you'll learn

Explore related topics

Course content

Introduction1 lecture • 9min

Leverages6 lectures • 31min

Capital Structure4 lectures • 54min

Capital Structure Design1 lecture • 12min

Determining Capital Structure in Practice1 lecture • 7min