Why may a company wish to reduce its Share Capital?

Q: Please explain whether a change in the company's capital structure is likely to reduce its overall…

A: Weighted average cost of capital WACC gives the firms combined cost of capital, including the…

Q: How does the availability and cost of outside capital affect dividend policy?

A: The question is based on the concept of dividend policy and factors of dividend policy.

Q: under what circumstances might a company choose not to pay dividends?

A: Dividend Payment and non-payment will be decided by the company based on the future opportunity of…

Q: own stock that they have previously issued?’

A: company wants to repurchase some of its own stock that they have previously issued because of…

Q: why is the cost of financing a project with retained earnings less  than the cost of financing it…

A: Retained earnings are a part of the net income that is withheld by the company to meet sudden…

Q: A. Why is the goal of financial management to maximize the current share price of the company's…

A: The answer for the question on the financial management is discussed hereunder : What is Financial…

Q: Why does Capital Structure Decisions sometimes cause one firm to take over another?

A: Capital Structure of a firm is the mix of its use of debt and equity in its financing needs. It is…

Q: In what situation should a firm split its stock?

A: Firms generally split the stock when the price of the share becomes too high or exceeds the level…

Q: Domestic

A: Journal Entries for Kiona Company's Petty Cash FundMay 1 - Establish the FundPetty Cash ($350.00)…

Q: What is meant by Forfeiture of shares?

A: Common stock: Common stock is the instrument used by the company for raising funds from the general…

Q: When can a company forfeit its shares?

A: The mechanism by which a corporation forfeits the stock of an investor or stockholder who ceases the…

Q: Write down what are the disadvantages of shareholders equity?

A: Equity is one of the common sources to raise finance. Whenever a company requires finance it can…

Q: How might capital rationing conflict with the goal of maximizing shareholders' wealth?

A: Capital rationing means the company has limited capital that must be invested in the most profitable…

Q: What are the best two measures for the profitability of firms that are not publicly traded?

A: Profitability, rate of return, as well as the pre-tax income are all metrics that would be used to…

Q: Under what assumptions market value of a company does not depend on its capital structure

A: One important concept in Modigliani and Miller theorem that market value does not depends on the…

Q: why should a company invest in the stock of another company?

A: When a company invests in the stock of another company, it is known as Inter-corporate investments.

Q: Why does IPO underpricing exist?

A: IPO - IPO stands for Initial Public Offer. When company want to list their shares on the stock…

Q: Why would a firm repurchase its stock? Discuss.

A: Repurchasing shares: It is also called buyback of shares. The company purchases its previously owned…

Q: When does a share capital becoming outstanding?

A: Share capital consists of authorized share capital, issued and paid up share capital.

Q: Companies cannot as a general rule reduce the capital of the business. However, there may be a class…

A: Share capital is the capital which has been contributed by the shareholders of the company by the…

Q: s capital rationing a must for companies in order to stay relevant?

A: Capital rationing help companies selecting the best project and increase the return on investment…

Q: What are the factors that contribute to the temporary drop in a company's share price after a…

A: When a company announces a capital-raising plan, such as a stock offering or issuance of additional…

Q: Why do firms change their dividends policy?

A: Dividends are paid as a reward to the shareholders in lieu of the money given to the corporates for…

Q: How does shareholder value relate to capital structure?

A: The combination of various types of external funds, known as capital, used to finance a corporation…

Q: How does a semi-strong market affect a company’s capital structure? Discuss the possible exposures…

A: Semi-strong is referred to as the form of the market efficiency, which used to exist for the…