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Capital Structure, Accountancy and Financial management Video Lecture | Accountancy and Financial Management - B Com

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FAQs on Capital Structure, Accountancy and Financial management Video Lecture - Accountancy and Financial Management - B Com

1. What is capital structure in financial management?
Ans. Capital structure refers to the way a company finances its operations through a mix of equity and debt. It represents the proportion of different sources of funds used by a company, such as common stock, preferred stock, bonds, and loans. The capital structure decision is important as it impacts the company's financial risk, cost of capital, and overall value.
2. How does capital structure affect a company's financial performance?
Ans. The capital structure of a company can significantly impact its financial performance in several ways. A well-optimized capital structure can help lower the cost of capital, improve profitability, and enhance shareholder value. On the other hand, an inappropriate capital structure can increase financial risk, increase interest expenses, and limit growth opportunities.
3. What factors should a company consider when determining its capital structure?
Ans. When determining the capital structure, a company should consider several factors, including the cost of capital, financial risk, industry norms, growth prospects, and the company's stage of development. Additionally, the company's ability to generate consistent cash flows, its credit rating, and the willingness of investors to provide funds should also be taken into account.
4. How does accountancy play a role in financial management?
Ans. Accountancy plays a crucial role in financial management as it involves the recording, analyzing, and reporting of a company's financial transactions. It helps in preparing accurate financial statements, assessing the financial health of the company, and making informed decisions. Accountancy provides valuable information for budgeting, forecasting, and evaluating the performance of the organization.
5. What is the significance of financial management in business?
Ans. Financial management is essential for the success and growth of a business. It involves managing the company's financial resources, making investment decisions, raising capital, and monitoring financial performance. Effective financial management helps in maximizing profitability, minimizing risks, allocating resources efficiently, and ensuring the long-term sustainability of the business. It also helps in meeting the financial obligations of the company and creating value for shareholders.
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