AN EVALUATION OF CAPITAL STRUCTURE AND PROFITABILITY OF BUSINESS ORGANISATION
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF STUDY
The most important decision all corporate managers should take into consideration is the way in which the long-term capital requirements of their companies should be financial. Capital structure is the permanent financing of a firm represented primarily by equity and long-term liability without including all short-term credits. Many factors have to surface in order to determine the capital structure of a business organisation. These factors are what the financial managers consider first in order to determine appropriate capital structure suitable to his firm. Some of the factors are: cost of capital, floation costs, size of the company, government policies and market condition. The combination of debt and equity has some implication. The first is that debt-equity ratio, which is regarded as an indicators of risk. According to Samuel etal (1992:44) high fixed interest commitment which must be paid by the business organisation irrespective of whether profits are made or not. Debt capacity which is the ability of a firm to service its debt payment of interest and
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