Accounting team for assessments

Assignment Help Finance Basics

Reference no: EM13751306

The core idea here is the theory that will allow finance managers to compare their capital budgeting processes. Please research the Modigliani and Miller (M&M) theory about capital structure. M&Ms tradeoff theory assumes that there are benefits to leverage, more debt than equity in the total capital budget, within a capital structure up until the optimal capital structure is reached. As the finance manager broadens their scope of responsibilities there will be theoretical decisions open for discussion. M&M leads a finance manager to further verify if a capital budget ratio of, for example, 55% Debt and 44% Equity is most effective. These more advanced and theoretical reviews allow the finance manager to find a common ground for comparison and discussion relative to other firms prevailing capital structure. As in many other cases, the finance manager will work closely with the accounting team for such assessments of capital structure as suggested by M&M.

Reference no: EM13751306

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