📝 One-liners · 36 cards
Capital Structure and Cost of Capital
Highly Leveraged / Geared — Meaning / Risk-Return Profile?
Meaning: Ratio of debt capital is very high.; Risk-Return Profile: High financial risk; low cost of capital; magnified returns on equity (good times) and magnified losses (bad times).
Low Leveraged / Geared — Meaning / Risk-Return Profile?
Meaning: Ratio of debt capital is low.; Risk-Return Profile: Lower financial risk; higher cost of capital; stable but moderate returns on equity.
Capital (₹ lakh) — A: 100% Debt / B: 50% Debt / 50% Equity / C: 100% Equity?
A: 100% Debt: Debt 4.00 / Equity 0; B: 50% Debt / 50% Equity: Debt 2.00 / Equity 2.00; C: 100% Equity: Debt 0 / Equity 4.00
EBIT (₹ lakh) — A: 100% Debt / B: 50% Debt / 50% Equity / C: 100% Equity?
A: 100% Debt: 2.00; B: 50% Debt / 50% Equity: 2.00; C: 100% Equity: 2.00
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