How Important is a Company’s Capital Structure in Corporate Finance?
Management should try and match the lengthy-time period financing mix to the belongings being financed as intently as possible, in terms of both timing and cash flows. Managing any potential asset liability mismatch or period gap entails matching the property and liabilities respectively according to maturity pattern (“Cashflow matching”) or length (“immunization”); managing this relationship in the quick-term is a significant operate of working capital administration, as discussed below. Other strategies, corresponding to securitization, or hedging utilizing rate of interest- or credit derivatives, are additionally widespread. See Asset legal responsibility … Read More