Companies in many countries, especially developing countries, may need assistance from the government to sustain and grow. The companies in these countries may be provided with reduced interest on the loans they acquire from the market or investors. These reductions are offered by the governments and are known as subsidies.Subsidized ... Read More

The ultimate capital structure formed with debt, equity, and preferred debt that a company strives to obtain is known as the target capital structure of a company. The target capital structure of a company is decided depending upon some factors that are related to the financial condition of the company.Usually, ... Read More

Issue costs are one-time costs that are incurred while raising funds by debt and equity financing for a project. As the name suggests, every company needs to spend money while issuing securities in the stock exchange. It is incurred while offering the IPOs or raising debt from the market through ... Read More

Levered beta indicates the systematic risk a stock has in the capital asset pricing model (CAPM). In CAPM, the function of the financial debt versus equity represents the levered beta or equity beta.The debt a company collects from the markets and the equity it has in its reservoir make up ... Read More

The choice of using Capital Cash Flow (CCF) in evaluating an investment project is related more to convenience than theoretical grounds. CCF is not the only approach for evaluating an investment project. It is used to evaluate a project when some certain conditions are present. In this article, we will ... Read More

The asset beta or unlevered beta of the assets of a company is a representation of the systematic risks of the assets. The asset beta is the weighted average of debt beta and equity beta of the assets. It is also called unlevered beta because it can be determined from ... Read More

Free Cash Flow (or, FCF) is a term widely used in Corporate Finance. It is the extra cash flow available with the company after deducting the working capital expenditures and the expenses towards fixed assets. It is significant because it shows the flexibility of a company to meet newer expenditures ... Read More

Financial FlexibilityFinancial flexibility refers to the capability of a company to respond to its cash flow or an investment opportunity set in a timely and value-maximizing manner. The concept of financial flexibility is not new, but the most corporate approach has been via the Miller and Modigliani model of capital ... Read More

Free Cash Flow (or FCF) is a widely used metric in finance and it is sometimes known as the unlevered cash flow. But before we dive deeper into why FCFs are called so, let's begin with what FCFs are.What is Free Cash Flow?Free Cash Flow is a cash component that ... Read More

In Free Cash Flow (FCF) method, the interest tax shield is adjusted in the discount rate which is also called weighted average cost of capital (WACC). The adjustment is not done in cash flows of the firm. We can take an alternate measure to adjust the cash flow where the ... Read More