Establishing a Capital Structure for a Firm Is Not Simple

question 54

Essay

Establishing a capital structure for a firm is not simple. Although financial theory guides the process,there is no simple formula. List and explain four main items that one should consider in determining the capital structure.

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Definitions:

Legal Sanctions

Penalties or coercive actions that can be imposed by a legal authority in response to noncompliance with laws or regulations.

Morals

Principles or habits with respect to right or wrong conduct, guiding an individual's behavior in society.

Beyond a Reasonable Doubt

The highest standard of proof required in criminal trials to ensure the defendant's guilt is proven to such a certainty that there is no plausible reason to believe otherwise.

Preponderance of Evidence

The standard of proof in most civil cases, requiring more convincing evidence than the opposing side to win the case.