Financial Management

Financial Management
-Individual assignment (Issues in Determination of Capital Structure for Maximizing the Firm’s value)

1.0 Introduction 3
2.0 Capital Structure 4
2.1 Restraints of Capital Structure 4
2.2 Analysis of Restraints on the Comparative Study of Corporate Value 6
2.3 Evaluation of the Application on organisation’s wealth 7
3.0 Agency Theory 9
4.0 Role of Financial management 11
4.1 Objective of financial management 11
4.2 Addressing problems of agency theory 11
Conclusion 13
References 14

1.0 Introduction
Economic development makes new requirements to enterprise financial management system improvement and development of proposed. How to set scientifically optimal objective of financial management, financial management theory for the study to determine the optimal capital structure, effectively guide the financial management practices has a certain practical significance. This paper from financial management to determine the optimal objective, analysis of financial enterprises and maximize the value of the relationship between capital structure and capital structure using the measurement of indicators, the liabilities of companies operating conditions were analyzed.

2.0 Capital Structure
Capital structure refers to the way a corporation finances its assets through some combination of equity, debt, or hybrid securities, and it is something that every corporation would encounter. Moreover, capital structure is of great significance to economic efficiency of enterprises, and it also serves as a core issue in financing decision of enterprises. An appropriate capital structure contributes to lowering the enterprises’ capital cost through selecting sources and proportion of capital. As financial leverage has its own functions, its benefit maximizes when debt ratio is acceptable. Consequently, proper control of debt ratio in capital sources, balance between risk and cost,...