[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-29944":3,"doc-seo-29944":21},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"file_id":15,"file_url":16,"file_type":17,"file_size":18,"view_count":4,"is_deleted":4,"is_public":19,"is_downloadable":19,"audit_status":19,"update_tm":20},29944,1099514067415,"Rowan","https://ap-avatar.wpscdn.com/davatar_276721f389ce27ea32af1340a28f341c",8,"Research & Report","Business Finance Capital Structure","This document delves into the concept of capital structure within business finance, primarily focusing on the Modigliani-Miller (MM) theory and its implications. It begins by defining the Net Operating Income View of WACC (Modigliani-Miller), stating that in the absence of tax relief on debt interest, a company's capital structure has no impact on its WACC. The theory posits that in 1958, Modigliani and Miller proposed that the total market value of a company, in the absence of tax relief on debt interest, will be determined solely by two factors: the total earnings of the company and the level of operating (business) risk attached to those earnings. Consequently, Modigliani and Miller concluded that the capital structure of a company would have no effect on its overall value or WACC. The document then outlines the key assumptions underpinning this perspective: perfect capital markets, investors having same information, no transaction costs, debt being risk-free and freely available at the same cost to investors and companies alike, no bankruptcy costs, the tax effect of debt on a company's EBIT not being considered, and securities being infinitely divisible. Subsequently, it draws parallels to MM Theory by explaining that two identical firms in all respects, except their capital structure, cannot have different market values or costs of capital due to Arbitrage Process. The concept of Arbitrage is then explained as when a purchase and sale of a security takes place simultaneously in different markets, with the aim of making a risk-free profit through the exploitation of any price difference between the markets. The MM theory asserts that the cost of debt remains unchanged as the level of gearing increases, but the cost of equity rises in such a way as to keep the WACC constant. The document also touches upon working capital management, discussing key factors in determining working capital strategies, differentiating between permanent and fluctuating current assets, and examining the relative cost and risk of short-term and long-term finance, advocating for a matching principle where the maturity of assets should be reflected in the maturity of the finance used to support them.","cbCaihoqs6QIRFxl","https://ap.wps.com/l/cbCaihoqs6QIRFxl","docx",3441547,1,1778285063,{"code":4,"msg":22,"data":23},"ok",{"site_id":24,"language":25,"slug":26,"title":13,"keywords":27,"description":14,"schema_data":28,"social_meta":62,"head_meta":64,"extra_data":66,"updated_unix":20},105,"en","business-finance-capital-structure","",{"@graph":29,"@context":61},[30,47],{"@type":31,"itemListElement":32},"BreadcrumbList",[33,37,41,44],{"item":34,"name":35,"@type":36,"position":19},"https://docshare.wps.com","Home","ListItem",{"item":38,"name":39,"@type":36,"position":40},"https://docshare.wps.com/document/","Document",2,{"item":42,"name":12,"@type":36,"position":43},"https://docshare.wps.com/document/research-report/",3,{"item":45,"name":13,"@type":36,"position":46},"https://docshare.wps.com/document/business-finance-capital-structure/29944",4,{"url":45,"name":13,"@type":48,"author":49,"headline":13,"publisher":51,"fileFormat":54,"description":14,"dateModified":55,"datePublished":55,"encodingFormat":54,"isAccessibleForFree":56,"interactionStatistic":57},"DigitalDocument",{"name":9,"@type":50},"Person",{"url":34,"name":52,"@type":53},"DocShare","Organization","application/vnd.openxmlformats-officedocument.wordprocessingml.document","2026-05-09",true,{"@type":58,"interactionType":59,"userInteractionCount":4},"InteractionCounter",{"@type":60},"ViewAction","https://schema.org",{"og:url":45,"og:type":63,"og:title":13,"og:site_name":52,"og:description":14},"article",{"robots":65,"canonical":45},"index,follow",{"doc_id":7,"site_id":24}]