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A Manager's Guide to Financial Analysis by Eliot H. Sherman

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7

Capital Structure and Dividend Policy

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Learning Objectives

By the end of this chapter, you should be able to:

•  Discuss the importance of capital structure.

•  Define trading on the equity.

•  Compute the financial leverage index.

•  Define business risk.

•  Define financial risk.

•  List the critical factors in determining the optimal capital structure for a company.

•  Describe the key factors in developing a dividend policy.

Sharing Ideas on Financing Expansion

As the group convened for the next monthly get-together, the pre-meeting conversation focused on funding the major capital investment program the company had just announced. Al opened ...

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