Identify a firms major capital structure components Distingu

Identify a firm’s major capital structure components? Distinguish between 10) Book 2) market 3) target value capital structure?

Solution

Capital components refers to the type of capital used by the firms to raise the funds. The firm\'s 3 major capital structure components are

1) Equity

2) Preference Shares

3) Debt

2) The book value capital structure is the value of the company as per its book of accounts. Market value capital structure refers to the value of the company as per the current market value of the company in the market and target value capital structure is simply the mix of debt, preferred debt and equity that will maximise the share value of the company\'s stock price.